Zhongnan Construction (SZ:000961) announced that the company plans to contribute 297 million yuan(~43 million USD) to set up Zhongnan Constrcution Blockchain Agricultural Company in Shenzhen. Along with Beidahuang(SH:600598), the new branch company will set up a joint company to build a agricultural product trading platform and financial platform on the basis of the agricultural data, and establishes a supply and certification traceability system based on blockchain technology for agricultural products. The Zhongnan Company invest 299.99 million yuan, holding 80% stake in the joint company, while Beidahuang invest 1 yuan to hold 20% shares.



Beidahuang partners with Zhongnan to build a blockchain-based farming information network

As both companies are listed in China A share stock exchange, public data shows that Beidahuang (the Great Northern Wilderness) is China’s largest commodity grain production base, with most automated level of cultivation among listed companies in China. The Company controls the output of 11,58 million mu (~7,720 km2) of arable land with clear advantages on business scale, resources, technology, equipment, management and green products.

According to the announcement, Beidahuang Company will provide data of its agricultural e-commerce platform, farm management system and agricultural internet of things (IOT). Such data includes but not limited to the land, farmers, planting and transaction collected by Beidahuang or via a third party. Beidahuang has completed the construction of IOT network for its 16 subsidiaries. Probably that’s how Beidahuang managed to swap the data with 20% shares of the joint company for merely 1 yuan.

This is another major move of Zhongnan Construction in just 3 month. Zhongnan is seeking to be a leading player utilizing big data and blockchain technology. On November 8, 2016, Zhongnan Construction announced that it planned to participate in the pre-B round of convertible negotiable instruments investment of PeerNova in the United States and set up domestic joint ventures to promote blockchain technology in areas such as banking industry. On 15th December 2016, Zhongnan Construction announced to invest 100 million yuan in Gingkoo, aka the first blockchain listed company, holding 33.33% of the total shares.

The joint company will utilize the data generated from the agricultural IOT to build agricultural product trading platform and financial platform and a blockchain-based product tracking system. The blockchain can assure customers with food quality that could be verified by customers themselves. Also the company can use the big data credit system to provide financial services for farmers.

Food safety has become a serious social problem and one of top concerns for Chinese. Numerous reports of companies faking food or using illegal additives has worried Chinese in the past few years. By integrating blockchain technology with agricultural products, Zhongnan is targeting to bring safety back to the dining table.