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Blockchain: Danish companies should profit from the potential in China

08. maj 2018

Authenticity and storytelling are two major keys to the hearts of the Chinese consumers. Blockchain technology could be instrumental in the effort to succeed in China.

China has great potential for Danish companies – that is the belief of the Danish-Chinese Business Forum (DCBF), which with the project Verified Danish seeks to strengthen Danish business relations with China through authenticity and storytelling. These two key concepts are used partly to document a product's journey from factory to consumer, partly to consolidate the Dannebrog – the Danish flag - in the mind of the Chinese consumer.

"Due to earlier food scandals in China, such as the melamine-poisoned infant formulas that sent 300,000 children to hospital in 2008, Chinese consumers have lost faith in their locally produced food," explains Secretary General in DCBF, Hans Henrik Pontoppidan, and continues:

"Faith has reached a low where consumers would rather shop online through a warehouse geographically located in Denmark than through a warehouse with the same products and the same sender geographically located in China."

Danish companies should therefore focus on delivering a product which clearly has Denmark as sender and the journey of which from factory to China is clearly documented, recommends DCBF.

"Two of the tools that Danish companies can use to their benefit, intellectual property rights and blockchain technology, seem meant for each other in this context. A right such as a patent or a trademark is more than a time-limited exclusive right – it is also a means by which the consumer can be sure of the sender," states patent attorney Niels Peder Møller.

Authenticity in high demand
If intellectual property rights are combined with a blockchain solution enabling documentation of a product's journey through a reliable media such as today's Supply Chain Management, Danish companies can use China's internal challenges to their own advantage. Looking at the patent databases, as many as 93% of the patents mentioning the word "blockchain" also mention the concept "supply chain" – an indication of the patent-active companies' awareness of using the technology in relation to the verification of a product's journey. Looking exclusively at China, the percentage is as high as 98%.

"The interest and the need for storytelling, authenticity and traceability is going to explode in China in the coming years, providing an opportunity that Danish companies must not let pass them by," predicts Pontoppidan, adding that China with the country's latest 5-year plan has presented an ambitious plan including massive investments within areas such as Big Data, Internet of Things (IoT) and, not least, blockchain technology. In other words, China is about to become one of the most technologically advanced countries in the world.

"It is too late for Denmark to become first movers, but we should avoid becoming last movers," advises Hans Henrik Pontoppidan, Secretary General in DCBF.

At Chas. Hude, we are experts in both patents and trademarks. At the same time, we have a strong network of Chinese patent attorneys. So if you are wondering how to best patent your idea – whether it is related to a product you wish to sell or a blockchain technology you wish to use – we are ready to help you on the way.

Blockchains, and especially the cryptocurrency bitcoin, have quickly started to figure in the media headlines. In a series of articles, Chas. Hude will draw an IPR-relevant picture of the technology that is predicted to become just as important as the advent of the internet in the 1990s.

Facts about blockchain:
In short, a blockchain is a digitally distributed database, where a cryptocurrency – such as bitcoin – is used as compensation for the work required for its maintenance. The digitally distributed aspect means that the blockchain relies on a large network of computers cooperating to verify the authenticity of the blockchain.

Figuratively, a blockchain consists of a series of digital blocks linked together in a chronological chain. Each block can store specific information – such as information about a specific transaction or part of a medical register. Due to the technical means by which a blockchain is built, it is not possible to go back and change the information stored in a specific block. This means that blockchains can increase the transparency and authenticity of the stored information – something that is not necessarily given by already known systems typically managed by a central institution, such as a bank.