Chen Bin, General Manager of Wanxiang Blockchain: The practice of electronic bills of lading in international commodity trade

On November 24, Chen Bin, general manager of Wanxiang Blockchain, was invited to attend the key forum of the 2nd Global Digital Trade Expo - “Seminar on Trade Facilitation of Digital Free Trade Zone under the Perspective of High Standard Economic and Trade Rules”, and met with Li Mingtao, chief expert of e-commerce of China International Electronic Commerce Center of the Ministry of Commerce and President of CIECC Research Institute, Li Yongjian, researcher of the Institute of Financial Strategy of the Chinese Academy of Social Sciences, Sun Huawei, chairman of Zhejiang Electronic Port, senior researcher of the Political Research Office of the Party Working Committee of Nansha Development Zone (Nansha Area of the Free Trade Zone), BAO XIAOLING, DIRECTOR OF OPERATIONS OF THE GLOBAL TRACEABILITY CENTER, LIVINGSTONE MWANGI WAHURO, COMMERCIAL COUNSELLOR OF THE EMBASSY OF KENYA IN CHINA, AND OTHER GUESTS HAD A DIALOGUE ON THE TOPIC OF “BUSINESS AND TRADE FACILITATION”.

Roundtable dialogue

Chen Bin first introduced that Wanxiang Blockchain is the first financial technology company to promote blockchain technology in China and study the application of blockchain technology in business scenarios. Wanxiang Blockchain focuses on the operation of trusted digital assets, and the development of digital trade and digital economy is inseparable from the processing of digital assets.

Chen Bin said that in the past two decades, the wave of Internet technology has swept all walks of life, but the development of digitalization in international trade, especially in the field of bulk commodity trade, is very slow, and the reason is that the commercial privacy leakage caused by digitalization is the biggest concern of international trade participants. In international trade, all the details of trade can be deduced once the most important information about logistics, capital flows, and transaction flows is fully grasped. For example, the logistics and shipping information of the transoceanic trade of bulk commodities is transparent to the world, the trade is settled through the SWIFT system, and the information of the capital flow is also transparent to the operator, and the transaction flow has been used as a medium through the paper bill of lading for more than 100 years, and only the issuer and the holder know the document information. If the bill of lading is also digitized, then a centralized electronic bill of lading operation agency can grasp the information in the entire trade, and if combined with logistics and capital flow, the trade details can be seen at a glance, bringing the problem of business privacy leakage. This has also been a major obstacle to the development of digital technologies in the past in the process of trade facilitation.

Founded in 1998, Bolero, a centralized bill of lading registration system platform company, has gone through more than 20 years of development, but it is still relatively slow to promote the process of electronic bill of lading. Since 2015, with the development and application of blockchain technology, there have been some electronic bill of lading platforms based on blockchain technology, using cryptography, privacy computing, distributed ledger and other technologies to realize the credibility of data confirmation, as well as the availability of data is invisible, which can protect the commercial privacy in the transaction process, partially solve the concerns of the participants in the international trade of bulk commodities, and have been developed to a certain extent. However, due to the construction and operation of a centralized company, it will also face the challenges of data security and confidentiality.

In the implementation plan of DEPA, the state specifically mentions the need to promote fintech enterprises to solve the practical application difficulties of electronic bills of lading in international settlement. Based on this background, in 2021, Wanxiang Blockchain and Sinochem Energy, PetroChina International, Macquarie Commodities and Global Markets, COSCO SHIPPING Energy, Bank of China, Saudi Aramco Energy Fund, China Construction Bank, China Merchants Shipping, and Mitsui & Co. jointly initiated the establishment of the electronic bill of lading platform operating company “TradeGo”, which is called “Bulk Easy Travel” in Chinese. TradeGo is an electronic bill of lading system for international trade in commodities based on blockchain technology, and this year it has obtained the “electronic bill of lading license” from IGP&I (International Group of P&I Clubs) and China P&I Association, and is one of only ten platforms in the world to receive this license.

Chen Bin, general manager of Wanxiang Blockchain

Since the beginning of this year, international trade facilitation and electronic bills of lading have ushered in greater development opportunities. In February 23, the Digital Container Shipping Alliance (DCSA) announced that the world’s 9 largest container shipping companies have committed to digitizing 50% of bills of lading within 5 years and 100% by 2030. On the same day, five international organizations announced the establishment of the Future International Trade Alliance (FIT) with the mission of standardizing the digitalization of international trade and facilitating the acceptance and adoption of electronic bills of lading by regulators, banks and insurance companies. The Baltic International Shipping Council (BIMCO), the world’s largest international shipping industry association, has issued a “25x25” declaration, in which the world’s leading bulk shippers Vale, BHP Billiton, Rio Tinto and Anglo American have committed to achieving at least 25% of the annual seaborne trade volume of at least one commodity by 2025 using electronic bills of lading.

Chen Bin mentioned that the traditional paper bill of lading has the risk of being easily forged, damaged, and tampered with, and the circulation efficiency is low, which will affect the rapid settlement of income for the shipowner, and may cause the shipowner to pick up the goods without a bill. For financial institutions, there is a risk of duplicate pledges, and it is impossible to use goods in transit for pledge financing. The digital documents based on blockchain technology can not only greatly ensure the uniqueness, authenticity and efficiency of the bill of lading, but also effectively protect business privacy through point-to-point information transmission. In particular, the digital bill of lading with property rights also has traceability, which can solve the problem of property rights and transfer of goods in the process of international trade and transportation, and when the goods arrive at the port and are unloaded and put into storage to generate digital warehouse receipts, the authenticity and transfer of goods can be solved, and the safety channel between assets and funds can be effectively established, and the bankability of inventory assets can be enhanced.

In June this year, TradeGo achieved the world’s first electronic bill of lading to electronic warehouse receipt pledge financing business in Qingdao Free Trade Zone. This business is a rubber procurement trade for Malaysia, and overseas carriers generate and issue electronic bills of lading on TradeGo for cross-border trade document flow. After the goods are cleared, enter the digital warehouse of Qingdao Free Trade Zone, and after the confirmation of the right of TradeGo electronic bill of lading, the only electronic warehouse receipt is generated on the digital warehouse platform to realize the conversion of electronic bill of lading and electronic warehouse receipt, and the free trade zone sub-branch of Qingdao Branch of China Construction Bank completes the rapid verification of the right to the goods based on the electronic warehouse receipt, and issues a pledge financing loan to the consignor on the day of warehousing.

The multi-party shared electronic bill of lading platform built by blockchain technology can greatly improve the convenience and bankability of international trade, and blockchain technology will become an important core technology in the commercial infrastructure of international trade.

It is worth mentioning that TradeGo’s paperless innovative application platform for international trade in bulk commodities and Wanxiang blockchain supply chain financial service platform were also selected as the first and second batches of “2023 Provincial System Innovation Cases in Zhejiang Pilot Free Trade Zone” released during the forum, respectively.

Source: Golden Finance