Alibaba to explore blockchain in fight against counterfeit food

Australia Post recently joined an initiative to combat the rise of counterfeit food being sold across China. The company joins Chinese e-commerce juggernaut Alibaba and nutritional supplement maker Blackmores. The project aims to track food from, “paddock to plate.”

The project will explore new technologies, including blockchain technology, to increase the traceability of food products, reducing the risk of fraud and ensuring Australia remains a trusted exporter of high quality food. Alibaba is leading the effort, while PwC is named as the advisor to the project and brings its blockchain expertise to the table.

"The initiative will increase the traceability of food products, reducing the risk of fraud and ensuring Australia remains a trusted exporter of high quality food."
— – Australia Post

China has had an increasing number of food quality problems, including counterfeit eggs, soy sauce and spices, and numerous Australian products. Sometimes these foods show up at a street hawkers booth, at other times they make it all the way into the supermarket. In both settings they can be deadly, as safety standards are often ignored.

The Pew Research Center showed a whopping 71 percent of Chinese people in 2015 considered food safety to be a serious problem: “Serious concerns about food safety have nearly tripled since 2008.”

As the world’s largest retailer, surpassing Walmart in April 2016, Alibaba has been criticized by businesses and governments around the world for failing to remove counterfeit goods of all types from their listings. The Chinese behemoth operates in over 190 countries, and is one of the largest Internet companies. The company generates more revenue than Amazon.com and eBay combined. The vast marketplace for business-to-customer and business-to-business sales, both domestically and internationally, is valued at US$270 billion.

According to TechInAsia, the company sees more than its fair share of counterfeit items, which has had a suppressing effect on sales due to a lack of customer confidence in the merchandise. Late last year, the eCommerce giants consumer-to-consumer marketplace, Taobao, joined a list of notorious counterfeit platforms curated by the US Department of Trade Representative’s. Alibaba was last on the list in 2012.

Jack Ma, the CEO of Alibaba and second richest executive in China says that his company removed 380 million listings, closing 180,000 stores in the year leading up to being placed on the list. The CEO has made repeated calls for China’s government to clamp down on counterfeiters, comparing the offence to drunk driving, with severe penalties like seven days in jail.

“Because counterfeiting is such a low-risk crime, it’s hard to imagine how we can effectively rid society of counterfeit goods.”
— – Jack Ma, Alibaba CEO

Alibaba invited The Australia Post to create the innovative news platform after the two companies signed an agreement last month, extending Australia Post online storefronts beyond China to Malaysia, Singapore and Indonesia. The storefronts will operate on South-East Asia’s leading eCommerce network Lazada, which Alibaba has a majority stake, creating a powerful online platform for Australian businesses to sell products to the millions of consumers across the region.

Australia Post is owned by the Australian Government, and responsible for the primary mail service in the country. The Post’s Executive General Manager of Parcels and StarTrack CEO, Bob Black, explained that the new platform was designed to help guarantee genuine products arrive in the hands of Chinese consumers.

Joining the team is Blackmores, one of Australia’s leading manufacturers and distributors of vitamins, minerals, and nutritional supplements. Australia Post and Blackmores have agreed to contribute to the new platform by conducting testing and providing information from across their own supply chains for other members.

Professional service firm PwC joins the initiative as an advisor. The company has been offering blockchain services to partners around the world since 2015. The multinational professional services network has offices in most of the world’s countries and claims over 200,000 employees. By most measures, PwC is the largest professional services firm in the world. In January 2016 the firm opened an office in London specifically for a “blockchain team,” where more than 15 dedicated specialists work on the firm’s blockchain solutions.

“Now there is growing interest and a real demand from our clients to help understand the implications of blockchain and how to respond to it. So, as the blockchain juggernaut continues to gather pace, PwC will be well placed to service our clients’ needs at a global level.”
— – Steve Davies, PwC Partner and Fintech Leader

This project is not the first time Blockchains have been explored of used for this type of farm-to-shelf supply chain tracking. London startup Provenance has already laid the groundwork by testing the process for several types of products, including foods and consumer goods.

However, Walmart, IBM, and Tsinghua University were the first to tackle the food supply chain problem in China with a blockchain. Described as, “A new model for food traceability, supply chain transparency and auditability using IBM Blockchain based on the open source Linux Foundation Hyperledger Project fabric,” the project tracked pork products from the farm to shelves. The project was later tested in the United States.