Aluminum Coils Move from Henan to Changzhou: Zhaolu Network's Full-Chain E-Commerce Model Supports Flexible Packaging Foil Supply

On the morning of August 3, 2016, at the headquarters of Zhaolu Network—an aluminum e-commerce challenger located at No. 18 Guyang Avenue, at the foot of Nanshan in Zhenjiang—four 50-ton trucks were loaded with aluminum coils from an aluminum sheet manufacturer in Henan. The shipment was set to travel 70 km to another large aluminum foil enterprise in Changzhou, where the coils would be further processed into flexible packaging aluminum foil.

Flexible packaging remains one of the main markets for deep-processed aluminum. Aluminum foil is non-toxic, offers strong heat conduction and light blocking, and provides moisture, gas and aroma barrier advantages. It is a premium packaging material that has yet to be replaced, widely used in food and pharmaceutical flexible packaging. China's role as the world's factory continues to generate enormous demand for flexible packaging foil.

For the Henan aluminum sheet producer, Zhaolu Network's Zhenjiang warehouse acts as a logistics node serving Jiangsu and the broader East China market. Semi-finished aluminum sheets are shipped continuously through Zhaolu Network to downstream foil manufacturers.

This Henan sheet producer is only one customer of Zhaolu Network. Industry names such as Weiqiao Aluminum, Xinfa Aluminum, Shenhuo Aluminum, Zhongfu Industry, Dongqing Aluminum, Qinghai Ping'an and Dongfang Hope have also joined the platform. Its product chain runs from aluminum ingots and rods to finished aluminum sheets, strips, foils and profiles, with a broad range of specifications. Zhaolu Network describes itself as China's first e-commerce platform covering the entire aluminum industry chain.

China's First Full-Industry-Chain Aluminum E-Commerce Platform

In simple terms, Zhaolu Network builds an online trading venue where aluminum buyers and sellers can match suitable materials and acceptable prices, complete transactions, and receive goods through logistics.

Actual operations are more complex. Zhaolu Network operates across aluminum processing and the internet. As transaction volume grows, providing fast logistics services becomes harder.

Yet its first half-year was smooth, showing little sign of a novice-run operation. The management team had prepared for challenges before entering the sector. In the first half of 2016, monthly aluminum transaction volume exceeded 10,000 tons, and the company expected to meet its full-year target of RMB 1 billion. Its five-year plan, set at the end of 2015, projected RMB 1 billion in 2016, RMB 2 billion in 2017, RMB 5 billion in 2018, and over RMB 10 billion by 2020.

Beyond team effort, a direct driver of rapid volume growth is e-commerce's ability to remove middle-agent layers and cut buyer costs. Traditional trading uses agents, general distributors and sub-distributors, adding margin at every level. Zhaolu Network uses the internet's massive, fast and open nature to make supply-demand messages, applications, specifications, performance, prices and logistics transparent and transactable online.

Zhaolu Network began planning in 2013 and formally entered aluminum e-commerce at the end of 2015. By then, several aluminum e-commerce players had already taken early positions. Zhaolu Network does not view them as direct enemies. Some are aluminum channels or departments under ferrous metal e-commerce platforms, mainly trading basic materials such as aluminum ingots and rods, without deep-processed products. Some specialized aluminum e-commerce platforms focus on aluminum profiles but have not entered aluminum sheet and strip series; even the few that have done so have not covered special or unconventional materials.

Zhaolu Network positions itself as an online megastore for aluminum: from aluminum ingots and rods to sheets, foils, strips and specialty aluminum, and further to profiles. Its applications span aviation, electronics, packaging, shipping, transportation, food, energy and construction, forming a complete industry-chain product portfolio. Founder Xue Weilong, general manager of Yuanlong Aluminum, said Zhaolu Network is the only full-industry-chain aluminum e-commerce platform with the widest product range; at least for now, no other aluminum e-commerce player has such a long and complete product chain.

The megastore logic is clear: more product varieties, more complete specifications and suitable prices attract more buyers and stronger traffic. This full-chain feature is another reason Zhaolu Network stood out within half a year.

For those familiar with Yuanlong Aluminum, one question lingers. Zhenjiang Yuanlong Aluminum was founded in 2003, has invested tens of millions of yuan in production equipment, and grew from initial annual sales of just over RMB 10 million to RMB 400 million in 2015. Unlike many aluminum processors, it avoids homogeneous direct competition and uses a differentiated strategy in niche markets; its central air-conditioning aluminum foil accounts for one-sixth of China's market share. Whether in business operations, social responsibility, among aluminum processing peers or in Zhenjiang, Yuanlong Aluminum enjoys a strong reputation and enviable industrial foundations. Why did it suddenly enter a completely new e-commerce field? From manufacturing to Internet Plus, how has its corporate strategy changed?

Finding a New Fulcrum

Yuanlong Aluminum sees itself as a private SME that grew from grassroots roots. The aluminum processing industry has many giants and financial groups; a grassroots company cannot compete with them head-on. In recent years, Yuanlong chose to deepen specialized aluminum markets, adopt differentiated competition, and maintain advantages in a few technically strong niche segments rather than pursue total scale. Later, it realized that without scale, a company lacks market influence and cannot grow into a large enterprise.

Many central and western regions, leveraging nearby aluminum raw materials, have extended their industrial chains toward deeper processing with higher technical difficulty and margins, investing hundreds of millions or billions of yuan in large aluminum sheet and strip projects and hot rolling projects. In Yuanlong's view, China's aluminum processing market is mainly in East and South China. Raw aluminum ingots and semi-finished sheet and strip from central and western China mostly move by logistics into East and South China, where local companies further process them into high-end final products for nationwide and export markets.

Seeing this demand linkage among upstream raw material suppliers, semi-finished producers and downstream end users, Yuanlong began planning a transformation after the financial crisis. Instead of heavy new investment to expand manufacturing capacity, it planned to use its geographic advantage in East China's end market to build a comprehensive aluminum supermarket and megastore. This would attract material producers and end users from across China to source and trade on one platform.

An ancient Western philosopher said, 'Give me a fulcrum, and I shall move the earth.' At a turning point, Yuanlong Aluminum needed a new fulcrum to leverage the traditional aluminum market. Where would that fulcrum be?

Yuanlong kept searching and did not act rashly. Then, in the previous two years, Alibaba, JD.com, Taobao and other e-commerce players rose rapidly. In particular, Zhaogang.com, a comparable e-commerce platform, achieved a successful breakthrough with annual transaction volumes reaching billions or tens of billions of yuan. This inspired Yuanlong's thinking and helped it identify the new fulcrum.

That fulcrum is an e-commerce platform rooted in aluminum manufacturing. Unlike other e-commerce players, Zhaolu Network indirectly owns a modern manufacturing plant of considerable scale—a unique advantage most e-commerce platforms lack. With Yuanlong Aluminum's complete production lines—including aluminum sheet and strip rolling mills, shears, slitters, punching machines and annealing furnaces—plus advanced processes and an experienced technical service team, Zhaolu Network connects manufacturing technical consulting through online services. It creates technical solutions for member companies' different needs, carries out further processing, and improves order execution success. Most e-commerce platforms do not touch production or processing and only build platforms and match business. Zhaolu Network's competitive approach is more grounded, with a user-service mindset running through many details.

As an e-commerce platform, Zhaolu Network inevitably faces a common challenge: whether the logistics system can run efficiently and whether overall logistics costs can be reduced. These are key success factors and core competitiveness indicators for e-commerce. How, then, should Zhaolu Network build outstanding logistics management?

Zhaolu Network clearly understands how important logistics services are to its strategy, and its goal is explicit. At the entrance, a sign prominently states the company's vision: to become China's largest aluminum logistics center.

To that end, Zhaolu Network chooses third-party logistics partners with good reputation, strong capabilities and similar service philosophies, and is gradually building an effective logistics management system that can support tens of billions or over RMB 10 billion in annual transaction volume in the future... (The original text is long; this is an excerpt.)