The 2016 Fintech Global Summit is held here. Among multiple major events, the founding of the Blockchain Application Sub-Committee initiated by China Federation of Logistics & Purchasing (CFLP) enjoys most of the spotlight. As an emerging industry, blockchain has a promising future. And as the initiator and organizing body, Shenzhen Digital Singularity Ltd is the only private company providing blockchain technology support. The company will lead by setting standards and rules for the industry.
Blockchain for Logistics
The 2016 Fintech Global Summit marks the founding of the Blockchain Application Sub-Committee initiated of the China Federation of Logistics & Purchasing. It has been learned that the Sub-Committee was initiated by a blockchain startup, logistics companies and financial institutions. The Sub-Committee will be focusing on the promotion of blockchain technology in logistics by introducing blockchain technology and business training, R&D standards of blockchain for logistics, blockchain-based company credit mechanism and finally the total upgrading and re-direction of the logistics supply-chain industry.
Liu Yang, CEO of Shenzhen Digital Singulariy Ltd told us that blockchain by nature enjoys high accountability, anti-counterfeiting ability and immutability. As of the past the technology was mainly used for Bitcoin, while nowadays, in the financial sector, the application of the technology is witnessing a mandatory trend. Liu Yang went on and said that the procedures of logistics are so long that problems occur constantly. Problems like the loss and mistakes of cargo delivery require powerful tracing ability. It is obvious the blockchain technology can perform well for logistics in that regard. The China Federation of Logistics & Purchasing has foreseen the incoming profound impacts from blockchain technology with overseas counterparts launching similar researches. So the Association takes the lead by founding this Sub-Committee, hoping that the introduction of blockchain technology can tackle the existing problems in logistics as well as tapping into the financial sector.
Liu Yang told us that Shenzhen Digital Singularity Ltd previously has her business mostly focusing on Bitcoin, for example, www.bitkan.com, and thus have developed sound R&D capabilities of the blockchain technology. For the Sub-Committee, Digital Singularity will be the only blockchain technology provider, responsible for the making of standards. Liu Yang will also run for the presidency of the standard committee. Liu Yang expressed the wish to promote the standard-making in the industry as well as to provide comprehensive blockchain solutions that are capable of addressing real problems in cooperation with traditional logistics and procurement companies.
Blockchain Technology Expected to Significantly Improve Operational Transparency
Recent years saw the rapid rising of the logistics supply-chain in China with accelerating competition and merging. Logistics companies with sound supply-chain management capabilities are rising, along with improving third-party supply-chain management abilities. However, upper stream of the supply-chain are mostly small and mid-sized companies with low credit ratings. They are regular turned-aways of the banks’ funding services. The conflict of the capital demand and availability is deepening considering their importance on the supply chain. Logistics, Capital and Information are 3 factors pivoting the supply-chain; while the Capital is the main hindrance for the mid and small-sized the companies and their ability on continued service. This will take a toll on the national economy as a whole if the theory goes on. As a central government demand, the finance should serve for the development of tangible economy; the Association also did tremendous work on improving the environment. But, the credit issue is still turning these companies into homeless kids.
Liu Yang considers blockchain technology to be the cure by his analysis. Blockchain can be served to tag and anchor the credit rating of supply chain companies if with the cooperation from upper and lower stream participants. Liu Yang believes that the blockchain industry is still in her infancy and every party is just starting to explore. As of this moment, according to Liu Yang, the focus is on traceability and efficiency. On-Credit orders are big concerns for the industry, that upper stream company cannot have timely payment from big companies, like, 1 month of delay is commonly seen. With layered re-contracting, the chauffeurs will hurt. Chauffeurs cannot pay on credit, they pay in advance. That’s why terminal small companies are struggling. Banks will simply turn away: they need factories and warehouses as collaterals. Blockchain technology, however, will save the day by turning the companies’ financials transparent to the extent that the financial institutions can understand their operational status thus ultimately removing the hindrance for loan.
Blockchain Technology to Dramatically Sharpen Logistics Efficiency
With the founding of the Blockchain Application Sub-Committee, Digital Singularity is taking the lead. Liu Yang considers this a proof of the company’s might. The four founders of the company were formerly with Huawei and Tencent, rich in the experience of large system standard making. The complexity of logistics is just as much as that of the telecommunication industry. Standardization is the answer to the former’s procedures. Digital Singularity thus enjoys obvious merits. On the other hand, Digital Singularity is well-known for the rich foundation in Bitcoin. Their prototype product came live on early 2013, and the reputation is unquestionable both at home and abroad. The blockchain technology reserve and momentum of Digital Singularity speaks for itself.
From the value transfer of Bitcoin in her early days to the transfer of physical objects in the real world, Blockchain is growing her applications. Liu Yang believes that in the near future, the perfect combination of blockchain technology and logistics industry will tackle the financial hindrances in logistics, and significantly improve the efficiency. Internet has had her days of information propagation; Jack Ma also wishes the logistics efficiency can be improved to a new high. With blockchain technology, this day may come sooner than you think.
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