Blockchain technology empowers coal trade

On July 23-24, the 2019 Summer National Coal Trade Fair was held. The reporter found in the booth outside the venue, whether it is a traditional large state-owned enterprises, or emerging coal trading institutions, will be its online trading platform as a business recommendation, reflecting the coal trade mode of information technology electronic has been recognized by the industry as the direction of development. At the Coal Trading Market and Blockchain Development Forum held at the same time, the China Coal Trade Blockchain Standard Working Group (hereinafter referred to as the "National Standard Group") was also formally established. In this regard, Feng Yu, vice president of China Coal Transportation and Marketing Association, said: "The combination of production and financing is the future development direction of the coal industry, and blockchain technology can inject new vitality into the coal trade. The establishment of the National Standard Group will help improve the industry standard and promote the application of blockchain technology in coal trade."

  Can Reduce Financing Costs

  The so-called blockchain is a database maintained by participants through encryption. Blockchain technology can promote the logic of supply chain finance from the "point" to the "chain", and then to the "network" structure evolution, the formation of effective data precipitation of the industry and enterprises, and complete the construction of the credit system. Credit system construction.

  On July 9, the "Guiding Opinions of the General Office of the China Banking and Insurance Regulatory Commission on Promoting Supply Chain Financial Services for the Real Economy" issued by the CBIRC clearly pointed out that banks and insurance institutions are encouraged to embed new technologies such as Internet of Things (IoT) and blockchain into the trading process to improve the level of intelligent risk control.

  So why does coal trade need blockchain technology?

  "The coal supply chain structure is complex, the degree of non-standard is high, there are many intermediate links and complex transportation units, and the traditional offline paper document information flow method of trust is costly." Zhou Xinsheng, executive vice president of the Shanghai Coal Exchange, told reporters that the use of blockchain as a way of information transfer, its non-tampering distributed bookkeeping, can make information transfer more trust advantage.

  Wu Wenxin, president of AIC Trust, expressed similar views. He believes that, like other supply chain finance, the difficulty and high cost of financing for small and medium-sized enterprises in the coal industry chain has always been a pain point in the industry. Banks for risk control considerations, banks are only willing to provide factoring business to enterprises, or its downstream dealers to provide advances, while more small and medium-sized enterprises such as the second and third levels can not participate in, at the same time, many coal enterprises accounts receivable rights and face-to-face operation is also very difficult.

  The reporter noted that Sichuan Coal Group, for example, had defaulted on its bonds eight times in three years, leading to financing difficulties; and coal enterprises in Shanxi, the main coal-producing region, had seen their financing costs continue to rise between 2015-2018.

  "But blockchain and supply chain are a 'match made in heaven', which can help coal enterprises understand the 'past life' of each transaction, reduce the cost of trust, break the information silos, solve the pain points of supply chain finance, and effectively reduce the financing costs of coal enterprises." Wu Wenxin said.

  Zhou Xinsheng further introduced that in the current coal industry, the various trading markets and coal-using enterprises lack cooperation ties, and the use of blockchain technology can allow all parties to truly cooperate, reduce the operating costs of the coal industry chain, and better realize the combination of production and financing, production and technology.

  There is still a long way to go to play a real role

  The reporter noted that the first batch of members of the national standard group, in addition to the China Coal Transportation and Marketing Association (National Coal Trading Market Specialized Committee), the Blockchain Specialized Committee of the Communications Industry Association of China (CICIA), and the three initiators of the Shanghai Coal Exchange, also includes seven regional coal trading centers such as Shaanxi Coal Trading Center, as well as AIC Trust and Kikkun Science and Technology, and other financial and blockchain technology institutions.

  Gao Bin, deputy director of the Blockchain Specialized Committee of the Communications Industry Association of the Ministry of Industry and Information Technology (MIIT), frankly said, "This year is the first year of the blockchain industry, and the current bottleneck of the blockchain is how to open up the industrial chain. So the establishment of this national standard group has a 'milestone' type significance, because it will blockchain technology to truly realize the application of the industrial end." Feng Yu believes that the potential of blockchain technology applied to coal trading is great. "There are about 4 billion tons of coal traded in the supply chain every year in China, and the size of the market is not to be underestimated."

  But does this mean that blockchain technology can already be well applied to coal trading?

  An industry insider who did not want to be named told reporters that the coal industry is currently characterized by the "acquaintance economy". How to break through the coal "acquaintance economy" restrictions, respect the financial attributes of coal as a bulk commodity, so that the transaction link more smoothly, in addition to technological innovation, but also need to break through the mechanism.

  "Blockchain technology is still mainly used in two aspects of cost reduction for stock customers and allowing more customers to gain the trust of funders." Li Hongguo, chairman of Northeast Asia Coal Trading Center, believes that, in fact, all domestic trading centers are currently doing supply chain finance, and there are also "blockchain-like" technologies.