Since the blockchain boom in China, the entire industry has been constantly exploring various implementation scenarios. It can be said that the blockchain is so attractive that it has attracted countless entrepreneurs to compete. So what are the advantages of blockchain in supply chain finance? What are the pain points in the traditional model? What new business models can blockchain create to solve these problems? How should blockchain startups enter this field? ?
Moody's, the world's leading bond rating agency, has given 127 blockchain cases, from points to transaction settlement, from document storage to supply chain management, from cross-border payment to supply chain finance, Various applications emerge in endlessly.
Among so many applications, the field of supply chain finance has attracted much attention, and commercialization has made rapid progress.
This is because first of all, the supply chain finance scene has a trillion-level market size, and the ceiling is high enough. Secondly, this scene naturally requires multi-party cooperation, but there is no traditional centralized organization to govern it. Blockchain is needed to establish trust. At the same time, technically this scenario does not require high concurrency, and current blockchain technology can satisfy it.
1. Supply chain finance is a trillion-level market
Supply Chain Finance: refers to the core enterprises in the supply chain and their related upstream and downstream enterprises. As a whole, it relies on core enterprises, takes real trade as the premise, and uses self-reimbursement trade financing to provide comprehensive financial products and services to upstream and downstream enterprises in the supply chain.
According to different financing collaterals, financial institutions divide supply chain finance into accounts receivable, prepayment and inventory financing, among which the scale of accounts receivable is particularly huge.
Data from the National Bureau of Statistics show that at the end of 2016, the accounts receivable of my country's industrial enterprises above designated size were 12.6 trillion yuan, a year-on-year increase of 10%, which created huge financing needs for enterprises. Compared with the huge accounts receivable, my country's annual commercial factoring volume in 2015 was only about 200 billion yuan. It can be seen that there are still a large number of supply chain needs that have not been met, so the supply chain finance industry has huge room for development.
2. How does blockchain solve the pain points of supply chain finance
Pain point 1: Financing is difficult and costly for small and medium-sized enterprises in the supply chain
Due to bank dependence What is important is the core enterprise's ability to control goods and adjust sales. For risk control considerations, banks are only willing to provide factoring business to upstream suppliers (limited to first-tier suppliers) that have direct accounts payable obligations of the core enterprise, or to Its downstream distributors (first-tier suppliers) provide advance payment or inventory financing.
This has resulted in the needs of second- and third-tier suppliers/dealers with huge financing needs not being met, the business volume of supply chain finance being restricted, and small and medium-sized enterprises not being able to receive timely financing. Financing can easily lead to product quality problems and harm the entire supply chain system.
Blockchain solution:
We issue and run a digital ticket on the blockchain, which can be split and split at will with openness and transparency and multi-party witnessing. transfer.
This model is equivalent to making credit in the entire business system transmissible and traceable, providing financing opportunities for a large number of small and medium-sized enterprises that were originally unable to obtain financing, and greatly improving the efficiency and flexibility of bill circulation. nature and reduce the capital costs of small and medium-sized enterprises.
According to statistics, in the past, traditional supply chain finance companies could only provide financing services to 15% of suppliers (small and medium-sized enterprises) in the supply chain. After adopting blockchain technology, 85% Suppliers can enjoy financing facilities.
Pain point 2: As the main financing tools of supply chain finance, commercial bills and bank bills at this stage have limited usage scenarios and are difficult to transfer.
The use of commercial bills is subject to the credibility of the company, and the arrival time of discounted bank bills is difficult to control. At the same time, it is not easy to transfer these bonds.
Because in actual financial operations, banks are very concerned about the legal effect of the "transfer notice" of accounts receivable claims. If the core enterprise cannot sign back, the bank will not be willing to grant credit. It is understood that the bank is very cautious about the legal effects of signing the "transfer notice" of the creditor's rights, and even requires the legal representative of the core enterprise to go to the bank to sign in person. Obviously, this method is extremely difficult to operate.
Blockchain solution:
A consortium chain can be created between banks and core enterprises, which can be used by all member enterprises in the supply chain, using blockchain multi-party signatures, The non-tamperable feature makes the transfer of creditor's rights accessible to many parties and reduces the difficulty of operation.
Of course, the system design must be able to achieve the legal notification effect of bond transfer. At the same time, banks can also trace transactions at each node and outline a visible transaction flow chart.
Pain point 3: It is difficult for the supply chain finance platform/core enterprise system to prove its innocence, resulting in high capital-side risk control costs
In the current supply chain finance business, banks or other In addition to worrying about the company's ability and willingness to repay, the financial side is also concerned about the authenticity of the transaction information itself, which is recorded by the core company's ERP system.
Although ERP tampering is difficult, it is not absolutely trustworthy. Banks are still worried that core enterprises and suppliers/distributors collude to modify information, so they need to invest manpower and material resources to verify the authenticity of transactions, which increases additional risk control costs.
Blockchain solution:
As a "trust machine", blockchain has the characteristics of traceability, security and decentralization, and the blockchain All data are timestamped. Even if the data of a certain node is modified, it cannot cover the sky with one hand. Therefore, the blockchain can provide an absolutely trustworthy environment, reduce the risk control cost on the capital side, and solve the bank's problem of information tampering. doubt.
3. How should blockchain companies enter supply chain finance?
In terms of market selection, we believe that blockchain startups should choose segments with high ceilings, such as home appliances. , automobile, retail, clothing, pharmaceutical industry, etc. On the one hand, these industries have a vast market; on the other hand, their supply chain management infrastructure is relatively complete, and the upfront cost of adopting blockchain is relatively small.
We believe that there are two models for blockchain companies to enter supply chain finance.
The first is to cooperate directly with core enterprises/platforms to provide them with underlying blockchain solutions. After accumulating enough data, build an alliance chain to connect with funds to provide financial services. (Consortium chain model)
Given that the blockchain itself cannot solve the problem of risk control, enterprise-level risk control at this stage still needs to revolve around strong core enterprises. At the same time, obtaining the support of core enterprises can also be effective. Solve the problem of customer acquisition, because a large core enterprise usually has thousands of suppliers of various types.
At present, domestic blockchain companies include Bubi, Wanglu Technology, etc. from core enterprises. Bubi has launched a consortium chain "Buno" specially built for supply chain finance, integrating banks with , core enterprises, factoring companies, etc. are all linked. Bunuo is based in Guangzhou and Shenzhen, radiates business in the southeast region, and digs deep into the field of supply chain finance. It has previously signed a strategic cooperation agreement with Yigang.com.
The second model starts by providing supply chain management services, such as traceability, tracking, visualization, etc., integrating information flow, logistics and capital flow, and engaging in financial services on this basis. (Private chain mode)
This mode is equivalent to building an application scenario using blockchain. Just like Alipay back then, if Jack Ma had just started Alipay, it would have been difficult to do it because there was no application scenario, so he first started Taobao to serve the real economy. With Taobao, Alipay emerged as a centralized trust scenario, and other applications were grafted onto Alipay to create Ant Financial.
Among the domestic blockchain companies currently, those that adopt the supply chain service model include BITSE and Food Excellence.
For example, VeChain provides an anti-counterfeiting traceability method by implanting an NFC chip into each product, registering the product on the blockchain, so that it has a digital identity, and then authenticating through *** The maintained ledger records all the information of this digital identity to achieve verification effect. At present, Vechain products have connected with more than 10 industry benchmark customers, and millions of IDs are running on the chain.
4. Three steps to build a supply chain financial exchange
From the perspective of implementation path, the application of blockchain in the field of supply chain finance can be realized in three steps.
As a premise, we need to first create a blockchain + supply chain finance alliance. Participants in the alliance include supply chain finance platforms, core enterprises, professional financial intermediaries, funds, and factoring institutions. wait.
Each participant needs to assume corresponding obligations. For example, the platform is responsible for providing supply chain information, customer information and other basic services similar to water and electricity, while core enterprises understand the industry conditions and have control over enterprises in the supply chain. Responsible for risk control.
Professional financial intermediaries can integrate and analyze platform information and provide customized supply chain financial products, such as personalized blockchain electronic bills. Funding parties include banks, Internet financial institutions, etc. who are responsible for connecting customers with corresponding risk preferences.
After the alliance chain is established, you can start the three-step strategy.
The first step is to put the data on the chain, put the data in the supply chain alliance on the chain, use the characteristics of the blockchain to make it tamper-proof, and provide data confirmation, traceability and other services.
The second step is to digitize assets, turning warehouse receipts, contracts, and blockchain notes that can represent financing needs into digital assets, which are unique, non-tamperable, and non-replicatable.
The third step is the trading of digital assets. The supply chain finance platform will be transformed into a financial asset exchange, transforming non-standard corporate loan needs into standardized financial products, tokenizing them, and connecting investment and financing. Demand and conduct value transactions.
Ultimately, blockchain technology will effectively enhance the liquidity of supply chain financial assets, mobilize new financing tools and risk control systems to help cover the long-tail market for small and medium-sized enterprise financing, and give birth to supply chain finance as a service. .