Wanxiang Blockchain Supply Chain Finance Platform Helps SMEs to Raise Over 1 Billion RMB with Blockchain Technology
The amount of money raised through Wanxiang Blockchain Supply Chain Finance Platform has accumulated to over 1 billion RMB (about 155 million US dollars), benefiting about 200 enterprises on this platform.
The difficulty of getting necessary financial services at a reasonable cost has long been a great challenge for SMEs in traditional supply chain finance industry. This challenge can be partly attributed to the lack of reliable information on the operating and financial conditions and the prospects of SMEs that is critical for financial institutions to decide whether it is safe and worthwhile to lend the SMEs the money they require.
By recording key data of the transactions between core enterprises and suppliers at all levels on blockchain, Wanxiang Blockchain Supply Chain Finance Platform helps to provide significant evidence to the credit of SMEs as records on blockchain are born to be tamperproof and traceable. Besides, the trusted data on blockchain can help financial institutions to have a better understanding of transactions happening in the supply chain so that they can provide necessary services to suppliers at a controllable risk.
Moreover, data recorded on this blockchain platform breaks the data island between SMEs and financial institutions, which helps financial institutions to know better about the operating conditions of the SMEs that apply for their financial services.
On top of that, it usually takes a long period for small and medium sized suppliers to balance their account receivables, which may cause a poor financial liquidity and restrict their development. By digitizing documents in traditional supply chain, Wanxiang Blockchain Supply Chain Finance Platform contributes to improve the efficiency of the whole process, largely shortening the period for small and medium sized suppliers to balance their account receivables.
Specifically speaking, financing on Wanxiang Blockchain Supply Chain Finance Platform happens in this way: Firstly, financial institutions on this platform extend credit to core enterprises. Then, core enterprises divide the credit to their suppliers by issuing an electronic voucher of the account receivables to the suppliers. The suppliers can further divide the voucher to their suppliers in the lower end of the supply chain. The electronic voucher of account receivables can be taken as a reliable evidence to the credit of those suppliers and make it easier for them to get necessary services from the financial institutions.
In Jan. 2021, Wanxiang Blockchain has reached a cooperation agreement with Singapore Info-communications Media Development Authority (IMDA) to build blockchain solutions for cross-border trade and finance. The Supply Chain Finance Platform developed by Wanxiang Blockchain has been integrated with IMDA’s TradeTrust, marking Wanxiang Blockchain’s first step in the cross-border trade and finance industry.
“It is difficult for SMEs to get necessary financial services in traditional credit and loan model and some individual needs can hardly be met due to the data island between SMEs and financial institutions. Therefore, it is imperative to build a credit system for SMEs that may make it easier for them to apply for financial services. Fortunately, the emerging and integration of new technologies like blockchain, IoT, big data and AI are building a trusted data pedestal for the supply chain finance industry.” said Vincent Y. Wang, Executive President of Wanxiang Blockchain.
To sum up, Wanxiang Blockchain Supply Chain Finance Platform not only makes it easier for SMEs to get financial services by dividing and passing the credit of core enterprises to their suppliers but also improve the efficiency of the supply chain finance s by making the data in the process more reliable and transparent. More importantly, the logic behind this platform can be extended to other scenarios like Industrial Internet and cross-border trade and finance, supporting the development of blockchain solutions for those industries.