Legal Insights

Australian Blockchain Mission to Shanghai 2018 – Part 1

By Michael Zheng

• 12 September 2018 • 2 min read

Maddocks senior associate Michael Zheng reports from on the ground as part of the Australian delegation in Shanghai on 11 September 2018.

Upcoming blockchain trends and learnings from top Chinese financial services companies have been my two main takeaways from the start of the mission, which is an initiative of Austrade and the Australian Digital Commerce Association.

On Day 2 of the mission, the delegation heard from a panel of Australian and Chinese blockchain development companies, Chinese investors and blockchain consultants about the current state of the global blockchain industry and likely trends in the year ahead. There was a firm belief that the issuance of security tokens (i.e. tokens classified as financial products) would become more widely adopted by blockchain companies to tap into funding from institutional investors. The regulation and disclosure requirements applicable to security tokens will provide more assurance to institutional investors who are looking to invest in value rather than speculation.

The importance of setting up a quality local team in overseas jurisdictions was also a hot topic on the panel. Whether it is Australian projects developing in China or vice versa, the panel agreed that having a local team which could speak the language and understand the market and culture was a key factor to successfully expanding overseas in the blockchain industry.

On Day 3 of the mission, the delegation attended a number of major Chinese financial services companies who are leading the field in blockchain technology. The companies include Ant Financial (a subsidiary of Alibaba), Ping An (a leading insurance and financial services company) and Dian Rong (one of the top Chinese fintech unicorns). Each of these companies is investing significantly in blockchain technology – for example, Ping An invested over RMB10 billion into fintech in 2017!

Trade financing and invoice financing are the two major areas where these Chinese finance companies are using blockchain technology. Blockchain is being applied to verify information along the supply chain, transmit customer information more securely and create new forms of security. For example, Dian Rong has developed a blockchain system which allows accounts payable from a tier-one company to be authenticated and commoditised which can then be used by that tier-one company's suppliers as a tradeable asset or security for financing.

These Chinese finance companies are also looking at other forms of technology to enhance their business. The key areas of technology form the acronym “ABCD”: A for AI, B for Blockchain, C for Cloud Computing and D for Data Analytics and Big Data. These four technologies form a framework for their innovation and projects often include one or more of these technologies working together.

Other events at the start of this mission included the launch of the Blockchain Centre in Shanghai, visiting Gingkoo (a leading blockchain consultant and connector) and learning about how it is solving business problems through blockchain, and the mission opening dinner which was attended by over 100 Chinese and Australian companies.

Next up is the Wanxiang Global Blockchain Summit.

Need advice on blockchain?

Contact the Banking & Finance team.

By Michael Zheng

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