Blockchain Financing Solution Helps China’s Firms in Corona Virus Situation
During the much anticipated Chinese Lunar New Year holiday, there was the corona virus outbreak that put much of the businesses in China on hold, and more than 1,500 people were killed due to the virus up to this date. The holiday was extended until 2nd of February 2020, but more than half of the Chinese population delayed work commencement by a further week. Even now, many parts of the country are still to be operating normally. This surely affected the Chinese economy, and many small to medium sized businesses in China has suffered financially from the effects of the corona virus.
Chinese authorities has rushed to support these businesses through a cross-border pilot blockchain financing platform, with more than 170 corporate banks joining, along with 22 provinces and autonomous regions. Since the Lunar New Year holiday, 87 businesses based in China had received more than 1,400 million yuan worth of loan through this platform.
“Due to the impact of the virus, the negative effects of previous pain points such as lack of trust in business, verification inefficiency, lack of information sharing and difficulty of timely supervision have been further amplified…”
Said Henry Ma, chief information officer at Tencent-backed online lender WeBank.
“The cross-border, financial blockchain services platform can play a bigger role, and help medium and small-sized enterprises improve the efficiency and convenience of getting export trade financing and other financial credit support.”
These smaller businesses are accounted for more than half of China’s national economic growth and employment, and among these smaller businesses, the privately-run businesses have been hit the hardest by the virus effects. Hence, Chinese government tried to improve these businesses’ access to financing options when there was no clear credit score records establishments, and change the preference for state-run businesses of the financing institutions.
Back in October 2019, Chinese President Xi Jinping had emphasized the need for the country to become a leader in the technology field, and has pushed the nation in the development of blockchain technology and application. This blockchain financing platform has helped to this cause, creating a permanent record of key documents that can be easily accessed. This allows the lenders to quickly assess the clients of how much money should or can be safely loaned. In contrast to the traditional loan applications, it can take just a day to apply and receive loans on the platform. With the blockchain technology, regulators can quickly examine transactions to identify potential fraud and risks. This type of application is what President Xi’s wanted from blockchain, bringing value to the people.
CyberVein heeded President Xi’s proposal for blockchain application development, and has been looking at numerous ways to use blockchain to solve society needs and concerns. A project in the past was to deal with taxation. Businesses use invoices to record their spending, which is reported to the tax bureau to get an accurate taxation at the end of the fiscal year. However, the process of doing so is often complex, and there needs a way to verify these invoices. Employees can use invoices to get an reimbursement from the company on any work related expenses that’s been generated, but the process can be long as the company needs to check things to prevent fraud. CyberVein has created a blockchain-based platform for the taxation departments in Shanghai, which accurately records various accounts of invoices. The nature of the blockchain technology prevents the document to be tempered with, and has helped to decease the cost for taxation departments or reimbursement companies to verify the documents. The documents are also securely protected by encryption and data isolation methods, based on blockchain and DAG technologies. It has helped enterprises to lower the cost for verification and storage for the invoice documents, reduced the complexity of the process for employees to obtain a reimbursement, and has overall reduced the cost for the tax bureau for its regulation and services. Trust is regained in this process of taxation, eliminating tax avoidance and tax evasion.
Apart from this, CyberVein has done some work in the medical field as mentioned in the previous articles, using blockchain and federated learning as the base technologies. Fundamentally creating value and trust between different parties, allowing a smoother, safer and more reliable service.
CyberVein will continue to explore more blockchain application uses, along with its research center at Zhejiang University. Blockchain technology has been questioned about its value and purpose besides from powering cryptocurrencies. It’s not that blockchain has little or no value, it’s just that its true value has not been widely realized.