State of the (Blockchain) Union: Baidu, Ant Financial and Tencent

Written by Leilei Wang || March 12 2018

Blockchain technology's momentum has grown significantly in China and it’s clear that this technology is here to stay. Since Chinese New Year, frequent good news has accelerated this trend – The People’s Daily published a whole page talking about how to develop this technology, and it’s been a hot topic even in the ongoing “two sessions” National Party Congress.

The top three tech giants in China -  Baidu, Alibaba and Tencent, previously did not talk much about their blockchain development, but with a much more receptive public and regulatory environment, they have revealed a bit more about where they have been focused.

Finance, charity and logistics

Baidu – Financing, Games

Baidu's initial focus on blockchain has been on finance. In 2016, Baidu invested $60 million in blockchain-based payment company Circle. In 2017, Baidu Finance issued 400mm RMB in funding to a blockchain-based, auto-consumer asset-backed security (ABS) project. In the ABS project, Baidu Finance built up a consortium blockchain, producing real-time trade updates. This February, Baidu started a Crypto Dog game – similar to the idea from CryptoKitties, but of course not cryptocurrency related. Baidu, in the long term, is trying to fill the information gaps between banks and enterprises in financing.

Alibaba - Charity, Logistics

Alibaba started looking into blockchain in 2015. They set up “Ant Blockchain” and their first project was a platform for tracking charitable donations. According to Ant Charity’s 2017 mid-year report, since the launch in 2H-2016, the blockchain project has raised RMB 1.45 million and helped 46 children. All spending can be tracked on the donation platform.

20180312 what do BAT use blockchain for

Alibaba’s other initial application is logistics tracking for milk powder from Australia which has since expanded to tracking baijiu (a Chinese spirit) from the famous Maotai baijiu brand.

To finally create a “Trust Connected Infrastructure,” their flagship project, Ant Finance will follow the “BASIC” strategy for technology development: "Blockchain, AI, Security, IoT and Cloud Computing." Ant Finance now has 49 blockchain-related patent applications. 

Tencent – People search and infrastructure

In May 2016, Tencent launched a blockchain technology project which allows cross-platform people search. The company also worked with Huaxia Bank to develop blockchain platforms for supply chain finance which has been implemented in logistics companies. Tencent published a blockchain platform TrustSQL whitepaper in April 2017. Based on this, Tencent sees chances to further develop digital payment certificates, digital gold, digital clearing houses, and intelligent property-protection products.

Other famous tech companies are also showing increased interest in blockchain. JD, the second biggest e-commerce platform, announced they are using blockchain for logistics tracking. Qihoo 360 Technology together with Qtum and BTN Fund, set up a blockchain lab focused on cyber-security. Clearly the attitude towards this new space has become more open.

Dear Blockchain, you are welcome in China, but leave your tokens at home...

Although there is increased interest and momentum behind blockchain technology, token projects are strictly prohibited. The Chinese version of Facebook, Renren, tried to issue 1 billion "RRCoin" as a payment token on their social media platform. After releasing a whitepaper on January 2nd 2018, their stock price increased by 76% within two trading days. Regulators issued notice to Renren immediately. The project has been stopped and Renren refunded their RRCoin private equity investment.

The regulators' statement is clear: blockchain is welcome, but crypto-currency is not. There are two routes for blockchain applications – improving existing problems or totally disrupting existing businesses. In China, the former is a more stable approach and so is the focus for most companies. Despite this, the finance, supply chain, charity, and logistics industries are the most promising.

The potential of blockchain technology in China is certainly massive with many potential applications likely still to be discovered, but, at least as China is concerned, maturity of the technology is key.