Governments, State-Owned Enterprises to Lead Blockchain Adoption
The much-expected blockchain adoption in China would be spearheaded by governments at different levels and state-owned enterprises (SOEs) that operate under them, EY global consultancy has surmised at a recent gathering where it showcased its most recent blockchain projects as proof of concepts (PoC) or in production.
At EY’s Asia-Pacific blockchain summit which took place for the second time in Shanghai on November 6, EY China’s Blockchain Leader, Warren Wang, presented two blockchain projects their firm has been running together with local governments or SOEs – one enables inter-companies transactions for State Grid Zhejiang (a SOE) and the other is a digital ecosystem for Shanghai’s Customs Free Trade Zone.
Despite it’s the state that charged Chinese to ‘seize’ the opportunities presented by the technology, the consultancy believes large organizations like the two mentioned stand to play a huge role in blockchain adoption in China. This view has been shared right from the past DevCon 5 by the EY Global Blockchain Leader, Paul Brody, who had stressed their belief in enterprise blockchain deployments shifting from permissioned to public in the future.
That blockchain is being used for the interoperability of shipping and finance data among companies with wide-reaching global networks adds as a prime example of a related development to the effect of China’s recent endorsement of the technology.
Last week, shipment management technology solution provider, CargoSmart, says it completed an interoperability PoC with the Hong Kong Monetary Authority’s (HKMA) trade finance blockchain, eTradeConnect, to offer supply chain shipping data with trade transactions involving PwC, HSBC, COSCO, Hong Kong’s Bank of China and Standard Chartered Bank, OOCL, and the Bank of East Asia.
The entire process involves the PoC to connect two blockchain networks for banks in the eTradeConnect network to gain access to relevant records from ocean carriers and terminals to shorten the customer validation process and accelerate trades finance. It is to show that global trade could be improved through enhanced collaboration among shippers, banks, terminal operators, and ocean carriers ahead of the formation of the Global Shipping Business Network – eTradeConnect member banks can leverage trusted data to streamline their trade finance approvals, improve risk management and extend credit to small and medium enterprises.
With other initiatives, these adoption drives could forge blockchain growth in China, where the renewed interest in blockchain seems to have started, all over again. Like the country launching a blockchain-based smart city identification system with a focus on supporting interoperability between infrastructure, data and cities. The City IDcode system is put together by the Chinese Urban Development Research Association, the Chinese Academy of Social Sciences, Zhongguancun Industry & Information Research Institute of Two-dimensional Code Technology and the Global Urban Smart Engineering Technology Research (Beijing) Centre.
There is also the plan for several free trade zones in China to use blockchain to improve administrative efficiency, enhance trade convenience and increase mutual trust among companies as East China’s Shandong Province grants the first digital business license for blockchain-based storage and information transmission.
So far, investment in blockchain startups directed at companies based in China at €2.8 bln (21%) trail US companies’ €4.4 bln (33%) and European companies’ €2.9 bln (22%), according to the EU. But bridging the investment gap may have started with these reported new developments and particularly, as indicated by the EU, that a key reason for the gap in the first place is European blockchain start-ups’ more use of alternative forms of finance such as ICOs between 2009 and 2018.
With the EU Commission expected to have announced its first dedicated equity investment fund for Artificial Intelligence and blockchain technologies at Convergence – the Global Blockchain Congress in Spain – this week, the global blockchain adoption drive will sure gain from more interest shown by enterprises with time.