Published by ChinaMNC · Jingmen

China's First Railway Freight Certificate Business: What Foreign Founders Need to Know

Sinopec's Jingmen Petrochemical completed China's first railway freight certificate transaction, a new supply chain finance tool that could help foreign founders manage logistics costs in China.

China's First Railway Freight Certificate Business: A New Tool for Managing Logistics Costs

For foreign founders operating companies in China, managing cash flow and logistics costs is a constant challenge. A recent development in supply chain finance could offer a new way to ease the pressure of upfront freight payments. In October 2026, Jingmen Petrochemical, a subsidiary of Sinopec, completed China's first “railway freight certificate” transaction, valued at 4 million yuan. This was also the first such transaction within the Sinopec system, marking a breakthrough in integrating logistics and finance.

What Is a Railway Freight Certificate?

The railway freight certificate is a freight supply chain finance product launched by China State Railway Group in collaboration with commercial banks. It operates on the 95306 platform, which provides companies with real and stable freight transaction scenarios and complete logistics data. With this certificate, enterprises can use a bank letter of credit to finance freight payments upfront and then repay according to the agreement. This enables immediate payment and immediate shipment, effectively improving logistics efficiency.

According to a finance staff member at Jingmen Petrochemical, the process is similar to using a credit card: you finance the freight cost first and repay later, which alleviates cash flow pressure. The product is designed to free up working capital, broaden financing channels, and greatly reduce the financial burden caused by prepayment of railway freight. For foreign founders, this could mean better cash flow management when shipping goods via rail in China.

How Does It Work in Practice?

The railway freight certificate relies on the 95306 platform to verify the authenticity of freight transactions. Companies can apply for a letter of credit from a partner bank, which is then used to pay freight costs. The entire process includes signing agreements, issuing the letter of credit, presenting documents, and negotiation. Jingmen Petrochemical's finance team worked closely with planning and operations departments, as well as with the cooperating bank and China Railway Wuhan Group, to complete these steps smoothly.

Since there was no prior experience with this financial business within Sinopec, the team had to study the relevant rules and discuss solutions. They actively coordinated with the bank and railway authorities to ensure the first transaction was successfully completed. This case demonstrates that the process is feasible and could be replicated by other companies, including foreign-invested enterprises.

Why Foreign Founders Should Pay Attention

Foreign founders setting up a company in China often face challenges related to logistics and financing. Prepaying freight can tie up significant capital, especially for businesses that rely on rail transport for domestic distribution or exports. The railway freight certificate offers a way to defer payment while ensuring goods are shipped promptly. This can improve cash flow and reduce the need for large upfront cash outlays.

Moreover, the product is backed by the national railway operator and commercial banks, which adds a layer of credibility and reliability. For foreign founders, using such official financial tools can also help build a positive credit history with local banks, which is beneficial for future financing needs.

Practical Steps for Foreign Founders

If you are a foreign founder operating a company in China and are interested in using the railway freight certificate, here are some practical steps to consider:

• Understand your eligibility: The product is offered to enterprises with real freight transactions on the 95306 platform. Ensure your company has a valid business license and is registered for railway freight services.
• Choose a partner bank: Collaborate with a commercial bank that offers this product. Banks may have specific requirements for issuing letters of credit, so discuss your needs with your bank.
• Prepare documentation: Be ready to provide freight contracts, invoices, and other relevant documents to prove the authenticity of the transaction.
• Coordinate with logistics providers: Work with your railway logistics partner to ensure smooth communication and timely shipment.
• Seek professional advice: Consider consulting with a local financial advisor or legal expert to understand the terms and conditions.

While the Jingmen Petrochemical case involved a large state-owned enterprise, the product is designed for a wide range of businesses. Foreign founders should assess whether this tool aligns with their operational needs and financial strategy.

Conclusion

The successful launch of the railway freight certificate business in China signals a new option for managing logistics costs. For foreign founders, staying informed about such innovations can help them optimize their operations in China's dynamic market. As with any financial product, it's important to understand the details and consult professionals before proceeding.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

Foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535 for help registering and operating a company in China.