Guizhou Province Launches Blockchain-Based Financial Service Platform
The wave of aggressive blockchainification in China has reached the southwestern province of Guizhou, where local reports have shown that a new international trading platform was recently deployed. While launching various digital services is barely considered news in China, the move from Guizhou province is set to have a lasting impact on how business is conducted in the region.
A Jul. 29 report from Chinese media outlet Haiwainet showed that the Guizhou branch of the Export-Import Bank of China has successfully issued a cross-border, blockchain-based financial platform. This is the first time a major blockchain project was conducted in the region and the first time the Export-Import Bank dabbled with the technology.
The project, according to local reports, consisted of establishing a partnership between the Export-Import Bank and the State Administration of Foreign Exchange, which enabled the smooth issuance of financial funds.
As a policy bank, the Guizhou branch of the Export-Import Bank of China began looking for ways to better solve the problems faced by small and medium-sized enterprises earlier in July. The bank’s research led to the realization that it was extremely difficult, both due to policy and technical capabilities, to finance foreign trade enterprises in the country. After a meeting held by the Guizhou branch of the State Administration of Foreign Exchange at the beginning of the month, the bank began actively exploring various business models that could solve this.
In mid-July, the bank funded the Guizhou Dongyu Electric Industrial Co., a key foreign trade enterprise in Tongren City. Under the guidance of the Provincial Administration of Foreign Exchange, the Export-Import Bank of China decided to abandon the traditional due-diligence processes of manually reviewing paper documents of the company. The process usually takes weeks, is incredibly labor-intensive, and requires face-to-face contact with the company’s representatives.
Instead, the bank utilized a blockchain platform to identify inconsistencies in the company’s financial documents. This effectively solved the problem of information asymmetry often seen between banks and enterprises—the bank managed to complete the due diligence process in two working days and approve 7.76 million yuan in export financing.
As the test with the Guizhou Dongyu Electric Industrial Co. turned out a success, the bank has decided to launch the platform and apply the model to other companies. According to Haiwainet, the bank’s blockchain platform is set to alleviate the difficulties faced when financing small, medium, and micro foreign trade companies and simplify the complex process of document verification and due diligence.
With drastically reduced corporate financial costs and the vastly improved financial efficiency, the Export-Import Bank of China is set to have a hugely successful year. The bank will continue to play its role as an important institution for financial policy and actively participate in the promotion and application of cross-border financial blockchain services platforms.
“At its core, the bank will continue to enrich and improve online cross-border financial products and financial support for the rapidly developing foreign trade industry in Guizhou province,” the bank said in a statement to Haiwainet.