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Walmart, IBM and Tsinghua University to use a blockchain for food supply chain tracking in China

Retail giant Walmart, IBM and Tsinghua University are collaborating to improve the way food is tracked, transported and sold across China, using blockchain technology. The project creates, “A new model for food traceability, supply chain transparency and auditability using IBM Blockchain based on the open source Linux Foundation Hyperledger Project fabric,” and coincides with the opening of a new Walmart Food Safety Collaboration Center in Beijing.

Retail giant Walmart, IBM and Tsinghua University are collaborating to improve the way food is tracked, transported and sold across China, using blockchain technology. The project creates, “A new model for food traceability, supply chain transparency and auditability using IBM Blockchain based on the open source Linux Foundation Hyperledger Project fabric,” and coincides with the opening of a new Walmart Food Safety Collaboration Center in Beijing.

IBM logo“By harnessing the power of blockchain technology designed to generate transparency and efficiency in supply chain record-keeping, this work aims to help enhance the safety of food on the tables of Chinese consumers.”
— – IBM

"China’s food safety challenges are well known,” states the Brookings Institution. From melamine-tainted milk to gutter oil, fake eggs, and contaminated strawberries, "exposés of unsafe foods have become all too common.” Pew Research Center shows a staggering 71 percent of Chinese people considered food safety to be a serious problem, “Serious concerns about food safety have nearly tripled since 2008.”

Many Chinese authorities have since developed new regulations and national food safety standards, such as the China Food and Drug Administration. A New Food Safety Law came into effect last October that strengthens regulation, and enhances oversight along the supply chain. "It is considered to be the most stringent Food Safety Law ever passed in China," stated the EU SME Centre, a European Union initiative supporting small and medium-sized enterprises (SMEs) in China.

China is also shifting its focus from supervision and inspection at ports, towards manufacturers in the country of origin. Dr. Martina Gerst, an EU SME Centre Market Access Advisor, explained, “More documentation and recordings of foreign manufacturer credentials, as well as inspection and testing of food imports for exporters are required.”

Chinese Premier Li Keqiang has since announced a zero tolerance policy for food safety failings. Vice-Premier Zhang Gaoli said that China has made some progress in terms of food safety, although the country is still prone to frequent food safety problems. “It will require continued efforts and management for some time,” the Vice-Premier said, while calling for a scientific and exhaustive food safety management system.

Premier Li Keqiang"China needs to innovate procedures and increase efforts to improve the supervision of food production and sales to ensure safety […] The government, producers and other parties concerned should all be held responsible for safeguarding food safety, which concerns everyone’s health."
— – Premier Li Keqiang

Rebecca Migirov, Head of Communications at blockchain software technology company ConsenSys, explained how blockchain technology disintermediates the supply chain last March. Blockchain technology can help verify the origins of a given food product, Migirov said, “Everything from the identities of producers and methods of production to the health and history of the soil (or air or water) a piece of produce was grown in.”

Venture Capital professional Wilco Schoonderbeek states that blockchain technology has, "Ground-breaking implications" for the Food and Agricultural industry. Last October he explained that the average Food and Agri supply chain is “a heterogenous loosely coupled large-scale network of entities with a minimal degrees of communication and trust between the actors.”

Hundreds of actors, thousands of processes, millions of products and possibly billions of data points are involved. “It is a data hungry industry that, historically, has not been served very well,” Schoonderbeek said.

Wilco Schoonderbeek“Today’s technologies are having a hard time to respond adequately and cost effective. Costs involved are crucial because the margins in the food system are very tight. The blockchain technology removes the need for formally identifying both parties to the transaction thus major cost savings can be achieved.”
— – Wilco Schoonderbeek

IBM asserts that blockchains save time, remove cost, and reduce risks. The technology also increases trust between participants, pinpoints source of compromised food, and reduces unnecessarily recalls, while improving co-ordination in the food supply chain.

IBM also announced its expansion of the Bluemix ecosystem in China on Wednesday. The company has incorporated blockchain, Internet of Things (IoT) and advanced cloud data services into its cloud platform. IBM and 21Vianet, a leading Internet data center services provider, brought the cloud platform to China in 2015.

IBM Research – China is developing blockchain solutions for financial services and the Internet of Things tailored to the Greater China local market’s requirements. Their research team is dedicated to solving “practical problems with enterprise-grade solutions and to push extensive adoption of blockchain technologies across areas of finance and the Internet of Things.”

bridget van kralingen“Advanced technology has reached into so many aspects of modern life but it has lagged in food traceability, and in particular in creating more secure food supply chains. Our collaboration with Walmart and Tsinghua University is a step of global significance to change that."
— – Bridget van Kralingen, IBM Senior Vice President, Industry Platforms

Walmart has a vested interest in China, having started operating in China in 1996. In January 2014, the company was involved in a scandal forcing it to recall donkey meat, a popular snack in some areas of China, after it was found to contain the DNA of other animals such as fox. The company was fined for selling duck meat past its expiry date in 2011.

The company formed a strategic alliance with China’s second largest online retailer, JD.com, in June. Walmart nearly doubled its stake in JD.com earlier this month. “We believe this strategic alliance will help us grow e-commerce even faster in China,” a Wal-Mart spokeswoman told the Wall Street Journal.

The company is using the blockchain pilot project to build trust, transparency and efficiency in the food supply chain, and is investing $25 million in food safety research over five years.

Frank Yiannas"As advocates of promoting greater transparency in the food system for our customers, we look forward to working with IBM and Tsinghua University to explore how this technology might be used as a more effective food traceability solution."
— – Frank Yiannas, Walmart Vice President Food Safety

The third partner in the blockchain project is Tsinghua University, a research institution in Beijing. It is one of the nine members of the C9 League, the Chinese version of U.S. Ivy League.

Last April, the University’s PBC School of Finance and Huobi, China’s leading bitcoin exchange, launched a joint Digital Assets Research initiative. The focus was to understand “how digital innovation is transforming finance and economics for individuals, businesses, governments, and the international system.


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