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March, 2018

JD.com bets on blockchain to ensure integrity of beef supply chain

Original article: Cnet News

Chinese e-commerce giant JD.com will begin tracking its beef imports from an Australian supplier with blockchain technology, the company said in a March statement. JD.com is partnering on the initiative with Australia's InterAgri. Information about the raising of livestock, meat processing and product transport will be recorded in a distributed ledger accessible to both businesses and consumers. 

Analysis:

JD.com is hungrily eyeing China's burgeoning imported beef market, the world's second largest. Data compiled by Meat & Livestock Australia show that China imported $737.3 million of Australian beef in 2016. Dutch bank Rabobank forecasts that up to 20% of the beef China eats in 2020 will be imported. 


Ensuring the integrity of the beef supply chain will be integral to JD.com's prospects. Among Chinese consumers, food safety is a top - if not the top - concern. For years, counterfeiters and other criminals have frustrated efforts to make China's food supply chain safer. The most infamous scandal occurred in 2008, when melamine-tainted milk powder poisoned hundreds of thousands of Chinese babies. That was far from an isolated case. O2O Brand Protection has reported on Chinese counterfeiters sullying chocolate, all types of alcoholic beverages and even table salt: by substituting toxic industrial-grade salt. 


By introducing transparency to the food supply chain, blockchain technology could make counterfeiters' jobs much harder. The less counterfeiting, the less malfeasance in the food supply chain. "We’re increasingly implementing blockchain-enabled traceability solutions to give consumers confidence that they are buying safe, reliable products for their families," Chen Zhang, JD.com’s CTO, said in a statement. Consumers in China...want to know that they can trust how and where their food is sourced, and blockchain helps us deliver this peace of mind.”


JD’s initiative is an example of private, or permissioned blockchains, says Jeff Chen, a business-intelligence analyst at fintech research firm ViewFin in Shanghai. These require proper permissions to become part of the network—an intranet, as opposed to the internet. 


For supply chain logistics, one advantage of blockchain is interoperability, Chen observes. "Storing records on a permanent, decentralized record could reduce the time delays, added costs, and human errors that sometimes occur as products change hands at many points between manufacture and sale." 


Meanwhile, Chen points out that as consumers, we must trust that manufacturers and retailers at the end points of supply chains are being honest with us. "When it comes to private blockchains, their success will depend on who implements them and how they are implemented," he says.  


Lee Cheng-hwa, a senior industry analyst at the Market Intelligence & Consulting Institute (MIC) in Taipei, agrees. "Blockchain is a good idea to guarantee the authenticity and safety of JD.com's beef as long as the original data input is accurate," he says. 

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