Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
"Baoding Hong'an Packaging" is the supplier of Luckin Coffee's "Little Blue Cup" packaging.
However, in cooperation with a large company like Ruixing Coffee, the payment period is long, and it takes more than half a year for the supplier to actually get the money. This has brought a lot of trouble to the operation of small and medium-sized enterprises.
At the beginning of this year, Hongan Packaging entered the blockchain-based "Feiluo Supply Chain Platform". Within an hour, the factoring company completed the risk control review and granted credit to the company, and more than 1 million yuan was transferred to the company's account first.
This enterprise is just one of the cases where blockchain transforms supply chain finance.
In the "Blockchain and Supply Chain Finance White Paper" led by the China Academy of Information and Communications Technology released in October last year, among the 42 financial blockchain cases that have actually been implemented, 16 supply chain finance cases accounted for more than 1/3.
The blockchain mainly solves the "three difficulties" of traditional supply chain finance-difficulty in obtaining loans for small and medium-sized enterprises, difficulty in risk control of financial institutions, and difficulty in supervision by relevant departments, thereby increasing the penetration rate of supply chain finance in the B2B market (current penetration rate less than 20%). Specifically, the blockchain enables supply chain companies whose data is not interoperable to mutually verify information, thereby reducing financing costs and improving the efficiency and market size of supply chain finance.
Because of this, blockchain + supply chain finance has been recognized by regulatory authorities.
In July this year, the China Banking and Insurance Regulatory Commission issued documents to major banking and insurance institutions to encourage the use of blockchain and other technologies to improve risk control and promote supply chain finance to serve the real economy.
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What is supply chain finance?
Usually when we buy things, we usually pay for them and deliver them at the same time, but this is not the case among enterprises.
For example, a large enterprise such as Foton Motor has more than 1,500 parts suppliers and more than 2,000 dealers. This makes Foton Motor (the core enterprise) have many choices, while suppliers/distributors are in a dependent (weak) position, which in turn leads to the prevalence of credit sales for core enterprises.
For example, supplier A said to Foton Motor, you sign a 10 million purchase contract with me, and I will give you a few months of payment period, and I will give you parts to produce cars and sell them, and then pay the full amount after the payment is received. Forehead.
In this way, the order is obtained, but there are also disadvantages. For example, suppliers will have a tight cash flow due to a large amount of accounts receivable. Once the capital chain is broken, they will need to borrow money to survive or even face bankruptcy. At the same time, core businesses will also face pressure to honor payments early.
To solve this problem, supply chain finance, which promotes financial integration, came into being.
In layman's terms, this business will give loans to these supply chain companies based on accounts receivable/advance payments and inventory. The loan amount (or financing amount) is usually 70%-80% of the accounts receivable itself, and the inventory goods 30%-50% of the value.
As of 2018, the domestic supply chain financial market has reached 2 trillion yuan.
But there are still many hidden worries behind this data. For example, the penetration rate of the supply chain finance market in the B2B market is less than 20%; in 2018, the domestic accounts receivable financing demand exceeded 13 trillion yuan, but the actual loan funds were only 1 trillion yuan, and the funds were mainly provided by large banks. There is a financing gap of nearly 12 trillion yuan for small and micro enterprises in the long tail of the supply chain, which are the first-tier suppliers serving super-large core enterprises.
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Supply chain financial fraud occurs frequently
On July 5 this year, the news that Luo Jing, the actual controller of Camsing International Holdings (02662.HK), was criminally detained revealed the tens of billions of supply chain financial "scam" of the "Camsing System".
According to reports, the Chengxing Group is an upstream supplier of large enterprises such as Suning, JD.com, and China Mobile. Because of the credit accounts of these enterprises, there is a great pressure on the cash flow of the Chengxing Group. Products are issued on various financial platforms, raising tens of billions of funds.
However, after the incident, JD.com announced to the outside world that Chengxing was suspected of forging a business contract with JD.com to defraud the outside world; Suning also denied the authenticity of the accounts receivable.
It remains to be investigated which part of the fraud occurred, but this matter has sounded the alarm for the industry. How to improve the authenticity of the three streams of supply chain capital flow, logistics, and business flow (the circulation of commodity value) has become a rigid need of financial institutions.
Multi-party verification seems to be the "correct solution". However, there is still a lack of a unified business information system among enterprises. The supply chain management system SCM, enterprise resource management system ERP, and financial system used by each entity are different, making it difficult to connect.
In addition, there is still a problem in supply chain finance. The credit of the core enterprise can only be passed on to the first-tier supplier, while the second-tier supplier behind the first-tier supplier has difficulty obtaining high-quality loans because there is no account receivable note issued by the core enterprise. Ultimately, it makes it difficult for businesses to get loans. The root of this problem is that the current bills have poor circulation and cannot be split, and can only be circulated between core enterprises and first-tier suppliers.
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How does the blockchain solve it?
Some people may ask, can Internet technology alone solve the above problems?
Difficult, there is at least one barrier here.
Inter-enterprise systems built with traditional technologies cannot guarantee that data will not be tampered with and at the same time meet the rigid needs of enterprises to protect core data privacy. This requires data storage to have strong anti-interception and anti-cracking capabilities.
The blockchain technology that incorporates cryptography can just solve these problems. The most basic "configuration" is that the supply chain system builds a blockchain + supply chain finance alliance. The participants of the alliance include core enterprises, suppliers, and financial institutions. If necessary, they can also join the supply chain platform creator and related supervision mechanism.
With this set of infrastructure, as in the above example, after the financial institution receives the loan application from Chengxing, it immediately applies to the relevant parties on the chain to verify the authenticity of the contract and whether the contract has been verified multiple times (multiple loans). Then, companies such as JD.com and Suning gave truthful feedback, so that financial institutions would not fall into the trap.
At the same time, with the help of the blockchain, the accounts payable of the core enterprise can have corresponding vouchers, which will be split by the first-tier suppliers and handed over to the second-, third-tier... suppliers on the same chain to help them finance. And core enterprises can also use this to know whether the whole chain is running normally, relieve the pressure of emergency payment, and improve the security of the whole process of supply chain finance.
In addition, blockchain-based supply chain financial solutions can also improve the efficiency of settlement. The settlement between various links in the traditional supply chain cannot be reconciled in real time and completed automatically. Smart contracts in the blockchain can automatically clear and settle after specific conditions are triggered, reducing manual operations. Banks and other financial institutions can reduce costs and improve efficiency in terms of trade data acquisition and verification.
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Who are the big players in the vertical?
It is precisely because of this vast space that in the past two years, more and more industrial supply chains have chosen the blockchain + supply chain financial platform.
According to iResearch, participants mainly include four categories:
Blockchain technology (or solution) service providers, such as Qulian Technology (which owns the Feiluo supply chain platform mentioned above), Wanxiang Blockchain;
(financial) technology companies, such as Ant Financial, Tencent;
Financial institutions, such as the state-owned four major banks;
Core enterprises/warehousing enterprises, such as Suning, Foxconn, Foton Motor, etc.
Judging from public data, blockchain + supply chain finance has achieved impressive results.
For example, the Chinese enterprise cloud chain jointly initiated by ICBC, Postal Savings Bank of China, and 11 central enterprises has covered 48,000 enterprises since its establishment in 2017. Cumulative transactions reached 300 billion yuan.
As of the end of 2018, Tencent Micro-enterprise Link, which has been in operation for less than a year, has joined 12 cooperative banks, served 71 core enterprises, and nearly 3,000 suppliers, covering real estate, energy, automobiles, medicine and other fields, covering first- and second-tier suppliers , the amount of financing is nearly 30 billion yuan, and the interest rate can be reduced by 2 to 8 points compared with traditional bank loans.
In December 2018, IEEE and Ant Financial Services jointly launched the compilation of "Blockchain Standards in Supply Chain Finance". This is IEEE's first financial industry blockchain standard, which defines the general framework, role model, typical business process, technical requirements, security requirements, etc. of supply chain finance based on blockchain.
Of course, blockchain is not a panacea.
In the foreseeable 3 to 5 years, there are still some difficulties in using blockchain to help physical (inventory) financing. A major problem in inventory financing is that it is impossible to effectively monitor the movement of goods in and out of the warehouse. Among the current possible solutions, in addition to the blockchain, IoT technologies such as RFID, AGV, and video analysis need to be coordinated to ensure controllable ownership of goods and increase the success rate of loans.
Secondly, the cost of transformation and construction of the existing platform for the blockchain business also requires a period of adaptation. According to the statistics of iResearch Consulting, if ordinary enterprises want to join the blockchain supply chain financial platform initiated by blockchain technology service providers or financial technology companies, they usually need to pay 500,000+ annual service fees.
References
References
"The Implementation Strategy and Development Trend Analysis of Blockchain Supply Chain Finance", iResearch, August 2019
"Funbushi Capital Research Report: Blockchain + Supply Chain Finance", June 2018
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