Blockchain: lessons from China

I just moved back to the US after five rewarding years in Hong Kong and China. Many of those rewards were personal, but I was in Asia to do a job: help local and multinational organizations deploy emerging technologies to meet their business needs.

When you work with new technologies, you often start a job with a set of knowledge, then add to it. You learn from the hands-on work you do, adapting quickly — evolving technology to real-world conditions. This is what I love about technology, it is always changing.

Here’s some of what I learned about blockchain in China.

It’s going to rewire commerce

I grew up in the age of eCom and saw it from the beginning with the launch of the browser and the move to sell everything online.. I am once again excited to see a technology like blockchain begin to permeate all aspects of commerce. In China, I saw this happen FAST. I saw a generation of mobile-only consumers thrive buying everything in the online eCom world. Then blockchain entered the picture, and you can see the excitement increase with a flurry of startup activity.

It’s not just the Chinese who see the potential. A recent PwC survey interviewed 600 executives from all over the world. 84% reported that their enterprises were actively involved with blockchain, ranging between R&D, pilots and live implementations.

So, the movement is global, but China is especially focused on emerging technologies like blockchain. The government may have banned initial coin offerings, but they’re eager to foster blockchain use to solve real-world problems.

In our survey, while just 13% (slightly below the average) of Chinese companies had live projects, what’s going on in the lab is more telling. China ranks as one of the most active territories for blockchain development, with 43% of respondents having projects in the works. In Hong Kong, it rises to 48%.

Supply chain transparency, product authenticity, cash management, trade finance, payment processing, energy trading, healthcare, you name it—someone in China is likely working on a blockchain for it.

That’s probably why a plurality (30%) of our survey respondents said that they expect China to become the global leader in blockchain in the next decade, moving ahead of the US, perceived as most advanced today.

Gartner recently forecast that blockchain will generate $3.1 trillion in business value by 2030. Similar to their approach to artificial intelligence, China’s government and enterprises intend to have a big piece of that pie.

Blockchain success depends on strategy

Blockchain is going to be big, but not every blockchain project is going to work out. What should companies in Asia —and everywhere — remember when they pursue blockchain? In the analysis that accompanied our survey (full disclosure: I helped author that analysis) we identified four key strategic measures:

Start with a business case. The organizations advancing with blockchain aren’t trying to be trendy. They’re using it to tackle those specific business problems that blockchain is best suited to solve. (Ask me about the 6 criteria you should always have in order to use blockchain) Build an ecosystem. It’s possible to create a powerful blockchain that works just inside one organization’s walls, but when an enterprise brings suppliers, customers, and sometimes even competitors on board, its power grows enormously. Think Extraprise, not just Enterprise. Design deliberately. That may sound obvious, but in the case of blockchain, it means a set of specific choices on measures to keep data safe and support the ecosystem. Navigate regulatory uncertainty. In China, the government is aware of the need for better blockchain regulations and industry is actively talking with the authorities. That’s an example US firms could follow: get engaged and help shape a future regulatory framework for blockchain.

The takeaway? Don’t wait for the dust to settle

With some technologies, it makes sense to let someone else take the risks and work out the kinks. You can then go shopping after the technology has become a commodity.

Blockchain doesn’t work that way. Given the power that a blockchain ecosystem provides, it may prove similar to digital platforms: those who take an initial lead will be able make that lead bigger and bigger as the years go by. Think back to some of the leaders today, did they have a technology advantage, or was it just speed and agility to stay ahead...

So my advice is not to wait—big Chinese technology, retail, and financial services companies most certainly aren’t. Start looking at business applications for blockchain today. Business is better with blockchain, so start now!