The National cotton resource monitoring system (NCRMS) developed by China National Cotton Reserves Corporation (CNCRC) has been launched officially on September 22. This marks the inspection work of national cotton market monitoring system will reach a new level. It also means that the internet thinking and big-data technology is formally applied to the most traditional cotton industry and helps the cotton sector to achieve modernization. From now, the cotton and textile enterprises in our country finally have a national level public information platform which supports enterprises independently in carrying out business from online to offline.  

Liu Keman, CEO of CNCIC, provided a detailed  introduction of NCRMS

1. What is NCRMS?  
A public information service platform for cotton-related enterprises committed to supporting off-line independent transaction among enterprises by dint of on-line information, i.e. an O2O public platform for cotton. As a daring innovation to apply modern internet thinking and mass data technology into the field of cotton circulation, it is another practical measure taken by China National Cotton Reserves Corp to officiate social responsibilities of the central enterprises.

2. What resources are available from the platform?
At present, 8 categories of cotton-related resources about cotton in stocks, state-reserve cotton for sale, warehouse receipt of Zhengzhou cotton futures, imported cotton, cotton yarn and cotton products, cotton byproducts, capacity of professional warehouses, transport capacity for cotton and etc. Relevant enterprises could release and query information on resources mentioned above.

3. Who will be served by this platform?
Seven categories of cotton-related enterprises are the target clients of this platform including policy-making department for national macro-control on cotton, cotton purchasing and processing enterprise, cotton enterprise, textile enterprise, cotton spot and futures market, cotton warehouse, cotton transport enterprise, cotton financial-service enterprise and etc.

4. What are the basic functions of the platform?
(1) Release and query detailed information on supply and demand; (2) Synchronized service available both on PC and mobile terminals, help enterprises access to forefront of the market anytime and anywhere; (3) Interaction based on massive online information, support off-line independent transaction; (4) Support enterprises to set up enterprise-level O2O information platform on their own; (5) Evaluation system for integrity rating of the enterprise which everyone could participate in; (6) Any demands on purchase and sale, logistics and finance submitted to the platform can get the professional response on service.



 The current situation of cotton circulation in China

1. The chain between the cotton production and users’ demand is quite long, thus causing the barrier between the cotton production and demand and also causing the cotton blending problems to the cotton enterprises. 

The links of cotton production, processing and sales are mutually independent and the production and demand information is not readily available. The cotton production is mainly conducted by cotton farmers on a small scale, so the cotton products depend on the prices of cotton seeds and marketing models, having weaker connection wit the textile demands. The cotton varieties in a certain area reach 100 or more. However, it is quite common to purchase and process the mixed cotton varieties, thus causing the poor cotton quality and also causing the cotton blending problems to the cotton enterprises.

2. The separation of the cotton spot trading  from the logistics and financial service, so the information is exclusive.

The current major models for the cotton spot trading is the spot trading in the production area and the warehouse spot trading. The cotton quality, price and payment mode are the trading elements. After the transaction, the buyer pays off the amount and the logistics is to be solved by the buyer. Particularly during the September-December busy season each year, the warehouse facilities and transport resources are extremely insufficient, the purchase enterprises have to devote a lot of human labor, material resources to competing for the logistics resources, so the logistics cost increases but the efficiency remains much lower. When supply is more than demand, it is universal that the buyers adopt the credit business. Of course, sellers have the higher risks of bad debts. To avoid the bad debt risks and transaction risks, buyers and sellers will generally establish the cooperation, which is certainly exclusive, so the resources and the price information lack the transparency.

3. Due to the lack of the credit and integrity certification system, the transaction is mainly based on the Sale by spot inspection, so the circulation cost is rather high.

As there are various cotton quality indicators, each indicator is directly concerned with the price and spinnability, the enterprises using cotton pays more attention to the cotton quality. Yet, the domestic cotton enterprises currently lack the efficient credit and integrity certification system, so the cotton trade is dominantly featured with the Sale by spot inspection. Even if there is a distance of several kilometers away, the purchasers will dispatch the representative at whatever cost to the purchase site for inspecting the cotton, so the cotton circulation cost is artificially increased, thus aggravating the waste of the social resources. With the change of the supply and demand situations, the breach of contract is more and more frequent and many buyers and sellers are forced to raise the price or lower the price.  

4. The resources information is quite confusing, so the information asymmetry leads to the lack of fairness for the cotton price.

It is required by the 3rd Plenum of the 18th CPC Central Committee to give full scope to the leading role of the resources allocation. The precondition of the market-dominated resources rational allocation calls for the full availability and transparency of information. The studies of the US cotton industry indicate that the flexible resources supply and price information statistic release system is the vital guarantee for the mature US cotton market. However, in view of the domestic cotton market, due to the scattered resources, the most of the enterprises within the whole industry currently obtains the extra profits from the information asymmetry, and some of the relevant stakeholders even stop at nothing at falsifying the information for the purpose of raising the price or lowering the price. Due to the unsmooth cotton resources information channel, the purchasers of the cotton enterprises tend to inspect the spot cotton by “blindly traveling around nationwide” but fail to find the proper raw materials, but a great deal of the cotton owned by the sales enterprises is overstocked in their warehouses, thus continuously increasing the risks of the safety and the capital turnover, which can greatly increase the overall operation cost of the industry and easily causing the waste of the resources, unfavorable to the efficient allocation of the resources.


 NCRMS -- O2O Public Platform for all cotton-related enterprises

National Cotton Resources Monitoring Information Platform  is the public service platform model (Enterprise O2O Public Platform Model) by applying the modern Internet and Big Data technology into the traditional cotton production and supply chain, relying on the cotton comprehensive information service platform, supported by the quality guarantee and credit and integrity system building, fully integrating the transaction, information, logistics, financial service and the relevant resources and adopting the online information and offline enterprise independent transaction to achieve the production and demand supply chain flattening and sales channel precision and fully improve the efficient allocation of the market resources and the overall competitiveness of the cotton industry.

National Cotton Resources Monitoring Information Platform represents the bold innovation of China National Cotton Reserves Corporation (CNCRC) in a view to better completing the national cotton market monitoring task, applying the modern Internet and Big Data technology into the traditional cotton circulation field and the current monitoring business. China National Cotton Reserves Information Center closely integrates the monitoring business with the cotton sales and demand of the relevant enterprises and the purchase demand by relying on currently 12 representative offices of the relevant enterprises and 200-odd cotton enterprises and textile enterprises under the national cotton market monitoring system to build the online platform for the cotton-related enterprises for the direct access to the accurate purchase and sales information and also provide the more accurate market monitoring information for the relevant government authorities for making the Macro-control policies.



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