Chinese liquor producers are getting on the chain

Supply chain blockchain

Wuliangye, one of the biggest liquor producers in China, has announced the launch of its digitalization strategy on April, 26th. They will build a partnership with IBM in cutting-edge techs like blockchain, cloud computing and artificial intelligence.

Blockchain, is the tool Wuliangye wants to use for a solution for supply chain traceability. They are also the third Chinese liquor producer to leverage blockchain technology, coming after Moutai and Yanghe.

Blockchain’s distributed ledger can provide trace records from products’ manufacturing date to every transactions made thereafter, which help consumers avoid being scammed by fake products.

 

Big names coming in

Big companies like Tencent, JD.com and Huawei have all launched their blockchain solutions for supply chain traceability. And liquor producers also proactively seek for a solution.

Wuliangye actually has partnered with IBM since last year. They signed a strategic partnership agreement on December 27th, 2017 in Chengdu. This time, the partnership has moved to next phase. Wuliangye will implement upgrades in mechanics, logistics, packaging, finance and health with the help of IBM’s digitalization experience and technology.

Moutai, the biggest liquor producer in China, is even quicker on the blockchain adoption. They were endorsed by Guizhou Provincial government and Pony Ma, Tencent’s CEO last May. Pony Ma believes blockchain-based anti-forgery technology will be far more efficient than traditional ones.

In the Global Blockchain Hangzhou Summit in March this year, Zhang Hui, the director of Ant Financial’s blockchain department, told press that Ant Financial has struck a deal with Moutai to fight forgery. And blockchain-as-a-service is a key in this plan. The blockchain-based anti-forgery system is in internal test stage and is estimated to go online later this year.

According to Zhang Hui, the system will be an integration of blockchain’s DLT and Moutai’s physical anti-forgery technique. All the physical certifications on Moutai’s liquor, such as QR code and trace code, will be bound with a distributed ledger. And all the information on blockchain can be traced.

Yanghe, another famous liquor producer in China, also signed an agreement with JD.com to explore blockchain applications. Consumers can scan the RFID tag on each Yanghe’s liquor and find all the information, from production, circulation and logistics of the liquor in JD’s app.

As a matter of fact, high-end liquor producers are not the only companies in China to explore potentials in blockchain-based supply chain. Walmart, JD.com, IBM and the E-commerce trade lab of Tsinghua University has jointly launched the first Blockchain-based Food Safety Alliance last December. They want to enforce the whole process of food safety, from food trace, food protection to anti-forgery and improve the transparency of food industry in China.

 

Promising future for blockchain-enabled supply chain

Blockchain is still in its infancy and there are few applications other than cryptocurrency. Liquor industry just gets on the train as the first batch of clients.

Wang Peng, founder of Traceability Chain, believes that blockchain can be applied in product tracing, and if a consensus can be struck among certification institutions, governments, consumers and technique providers, blockchain-enabled supply chain can improve the transparency of various industries.

There are other areas where blockchain can be applied for food and beverage, Wang Peng added, “raw materials, additive and their corresponding logistic records can also be used to trace the source of each product. Blockchain can guarantee the authenticity of high-end products, build trust for a whole industry and cut unnecessary costs.

 

Big player’s solutions

Tech giants in China such as Tencent, Alibaba, JD and Huawei have been studying blockchain for a long time and they have released their blockchain solutions respectively. All their solutions have mentioned supply chain traceability.

Tencent: Blockchain can improve supply chain efficiency. Since the data can be transparently shared among all parties in a trade, a comprehensive information stream can be formed for the supply chain, so a single mistake in the chain can be spotted by every party of the trade, and solutions can be designed as early as possible.

Blockchain can also help solve disputes in a supply chain. Since all the data and timestamp are immutable, it is easy to find the liable party.

JD: Supply chain consists of multiple parties and a huge amount of interactive operations. Data is separately stored in each party’s system and untransparent. When the market grows bigger and logistics expand to multiple areas, this untransparency and inefficiency will be a bigger problem. Blockchain’s immutable ledger can be a tool to realize a decentralized or multi-centered trace system and make the supply chain more transparent.

Huawei: Huawei is trying to build a credibility system for supply chain and make every trade authentic. And they have categorized supply chain trace into three types: First, food, including meat, vegetables, sea food etc. Second, high-end consuming products and fine arts. Third, certifications such as academic certificate and property ownership certificate.

Alibaba: Alibaba has partnered with PwC in March, 2017 to build a cross-border traceable supply chain. It is used to trace all the way from producer to consumer of a product. Tmall Global, Alibaba’s sub-brand, announced a global trace initiative, and will cover 63 countries and districts, 3700 categories and 14,500 brands in the future and it will be an open system for the whole industry.

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Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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