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November, 2017

China aims to use blockchain to strengthen food safety

Original article: New Food Magazine

Walmart, the world's largest retailer, will deploy blockchain technology in its China stores in a bid to boost food safety in the world's No. 2 economy. Walmart is working together with IBM to develop the technology, which has been successfully tested on pork in China and mango in the United States. 


Blockchain, the technology used in cryptocurrencies, represents a secure transaction ledger database in a distributed network. By recording and storing all transactions in the network, blockchain boosts transparency and accountability. 


Frank Yiannas, Walmart’s Vice President for Food Safety, told the South China Morning Post that all of the firm's 400 China stores were “in active conversation to accelerate the progress” of blockchain. That technology "is a game changer in the food industry and China is probably the place to scale its adoption as the Chinese government is already interested in tracing [the food supply chain] and Chinese consumers are so tech-savvy,” he said.

Analysis:

Food safety is among the top concerns of Chinese consumers. Loosely-regulated local supply chains have caused a near-endless string of food safety scandals over the years. In 2008, six babies died and an estimated 300,000 fell ill after consuming milk powder tainted with the industrial chemical melamine. Chinese authorities punished the guilty and vowed to enhance food safety. Yet progress has been slow. Last year, Chinese regulators discovered 500,000 food safety violations between January and September. 


In an August report, the South China Morning Post pointed out that lack of transparency in the food supply chain causes many food-safety problems, notably food-borne illness and cross-contamination. "It can take weeks to identify the precise point of contamination, causing further illness, lost revenue and wasted product," the report said. 


Bi Jingquan, who heads China Food and Drug Administration, was quoted in a Dec. 2016 Reuters report as saying "deep-seated" problems remain in ensuring food safety in China. Top offenses are the use of counterfeit products and ingredients, the sale of contaminated items, and false advertising. TIPG has previously reported on the prevalence of counterfeit salt in China. Sometimes the salt simply lacks iodine. But in other cases, counterfeiters package industrial salt, which contains carcinogenic agents, as a consumer product. 


Blockchain technology could foil many counterfeiter schemes. If all parties involved in the food business can access information about the source of the products - and their current state - from a secure database, it is much harder for criminals to infiltrate the supply chain. “By tracking how and where the food we sell is produced, blockchain provides new levels of transparency and accountability – responsible systems result in safer food," Walmart's Yiannis said. 


For Walmart, which hopes China will account for a quarter of its global retail growth by 2021, it's a smart move to focus on food safety - an area in which Beijing continues to welcome foreign investment. Further, Walmart has wisely chosen to partner with Tsinghua University - one of China's top schools and President Xi Jinping's alma mater - in addition to IBM. 


Walmart plans to invest a total of US$25 million in the next five years to support food-safety research in China, the company says. 

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