VeChain, a Business-as-a-Service blockchain project with a particular focus on the luxury goods, liquor, and agriculture industries, announced on Twitter a strategic partnership with China’s National Research Consulting Center (NRCC).
The primary goal of this partnership will be to offer blockchain-based solutions for China’s tobacco industry via interactions with the government-controlled State Tobacco Monopoly Administration and China National Tobacco Corporation. This includes integrating proof-of-origin and anti-counterfeit technology with Chinese-produced tobacco products all across the supply chain.
This partnership is being conducted under the guidance of DNV GL, an international accredited registrar that has a network of over 80,000 companies across the world. The NRCC focuses on developing domestic companies.
In the long term, VeChain has significantly more disruptive plans for China’s tobacco supply chain. The current model includes manufacturers, distributors, retailers, and users. In supply chains across the world and across industries, there is a heavy dependence on intermediaries (“middlemen”). This can reduce the efficiency of the process. It also incurs a high cost. Blockchain is a technology that can turn this industry on its head.
Specifically, VeChain wants to implement blockchain and IoT solutions to collect user data and send it back to internal supply chain entities so that they can develop more tailored products for end users. The hope is that this will reduce distribution bottleneck, increase revenue, and save manufacturing costs.
VeChain also announced recently that it would be entering the financial services industry by partnering with Beijing Baisheng Technology Co. to help improve the delivery of banking products for one its subsidiaries, Fanghuwang. This entity is a real estate mortgage firm that utilizes cloud computing and big data analysis to deliver services efficiently. This will be VeChain’s first foray into this industry.
What Is VeChain?
VeChain is a Chinese-based venture that merges blockchain and IoT technology. It provides enterprise-level solutions for products and information. Their goal is to eventually offer a scalability level of 10,000 transactions per second. In their bid to become the main player in this particular blockchain–IoT space, they have gathered experience working in the luxury goods, pharmaceutical, liquor, agriculture, logistics, supply chain, and food and cold storage industries.
Their past partnerships include the Renault Group, China Unicom, and D.I.G.
Using smart-chip technology, VeChain permits products to be verified through a smartphone. This is an attempt to prevent product counterfeiting. Manufacturers can choose from RFID, NFC, or QR options to protect their wares. Once attached to a product’s label, users can use VeChain’s app to verify the authenticity of the product. This is demonstrated in the video below:
VeChain’s market cap valuation is currently $2 billion. The coin itself is valued at $8.21 (as of January 24, 2018). There has been a sharp rise in investment over the turn of the year.
The Tobacco Industry Remains a Hefty Revenue Stream
China is one of the world’s largest manufacturers of tobacco products, with their markets accounting for nearly 30% of the total tobacco consumption in the world. China Tobacco enjoys a monopoly in the Chinese market, with the company running over 100 factories.
In the first half of 2017, tobacco products generated 772 billion Yuan in sales. Clearly, this is a large market with plenty of room for new technologies to come in and generate profit.
Moreover, China is a powerhouse in the blockchain world. Vechain is not the first Chinese company to see partnerships with global companies. One way to cement your position in the cryptocurrency space is by finding enterprise solutions which are more long-lasting, if more narrow, ways of finding a spot in the market. Software giant Microsoft made its business on enterprise, not consumer service.
It is a also positive sign that blockchain projects are attempting to bring the technology into the supply chain business, which is ideally suited for the technology’s inclusion. Such a technology could reduce costs on both the manufacturer’s and consumer’s side.
VeChain is likely to see a significant boost in adoption following this partnership. China’s tobacco industry is massive, and direct interaction with a governing body like the NRCC will only open up further avenues for them. For blockchain projects of this nature, B2B partnerships with government organizations are crucial for progress. There is also potential for them to partner with other blockchain projects working in the supply chain industry, which could be very lucrative.
The supply chain industry is worth many hundreds of billions. Anticipation in the blockchain world is high for the technology to demonstrate its disruptive potential, as this could remove the middlemen that drive product costs up. VeChain’s foray into the Chinese tobacco industry is a foreshadowing of what’s to follow. Expect VeChain, and other blockchain projects, to be spurred on by this development and seek out further domination by partnering with other industry giants.