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Business trends

Alibaba leads China’s drive to secure new blockchain technologies

Tech companies forge ahead in patent applications for alternative uses

Chinese companies are developing blockchain technology for various uses, including the authentication of agricultural products. (© Nikkei illustration)

TOKYO -- Alibaba Group Holding has filed more than 10 per cent of the world's patent applications for blockchain in a sign of China's ambitions to dominate the next generation technology in uses beyond cryptocurrencies.

China filed more patent applications than the U.S. last year, with technology companies such as Tencent Holdings and Baidu accounting for 56% of the worldwide total of 406, according to data collated by Thomson Reuters.

Applications from the U.S. came a distant second at 22%. The U.S. still has the largest number of cumulative applications, but on an annual basis, China is in the lead. Chinese companies are keen to exploit blockchain, a rapidly growing technology which ensures that data cannot be altered, for applications such as guaranteeing the origin of brands and products.  

"Blockchain is a new technological landscape where it could be very profitable for Chinese companies to grab significant territory in their patent claim language," said Taiwan-based John Eastwood, a partner at Eiger Law who specializes in intellectual property and technology. "Holding several patents helps to give an aura of legitimacy that helps many companies in the blockchain field to attract investors or acquirers."

Alibaba's payment subsidiary Ant Financial and Alipay last week announced a partnership with the municipal government in Wuchang, in northeastern Heilongjiang Province, to use blockchain to ensure the authenticity of rice produced there. Alibaba alone filed 43 blockchain-related patents in 2017, some of which are still awaiting approval, and Tencent filed 11.

From Sept. 30, every packet of Wuchang rice on sale at a flagship store on Alibaba's Tmall platform will be tagged with a QR code. By scanning the code using the Alipay app, customers will be able to track shipments and access related information including where it was harvested and the type of seed used. The new system will also cut delivery time.

The region is well-known for its high-quality rice, but in recent years, counterfeit versions have flooded the market, hitting the livelihoods of farmers and the credibility of the local government.

Although China bans cryptocurrency deals, Alibaba has been expanding its blockchain-related businesses with the development of different applications, positioning itself as a global leader in the field.

"Blockchain technology can help overcome the challenges of security, sustainability and inclusion," Alibaba founder Jack Ma said at the launch of the company's blockchain-based remittance service in Hong Kong in June. "It could change our world more than people can imagine."

This service, operated by Ant Financial and its Philippine counterpart GCash, promises to transfer money internationally faster and cheaper than banks can. Senders and receivers can trace the funds every step of the way. This blockchain application has huge potential in Asia, where there is a large population of migrant workers who remit money home regularly.

The e-commerce company has also teamed up with accountancy firm PwC, Australian health supplements company Blackmores and New Zealand dairy producer Fonterra, as well as postal services in two countries to develop blockchain-based tracking systems to reduce food fraud, similar to the rice project. Under the partnership, PwC will provide professional staff.

Alibaba is also exploring the potential of health care, having partnered with the city of Changzhou in eastern China to secure medical treatment data over blockchain. This allows authorized doctors instant access to patients' medical histories.

Other technology companies are also on the move. Tencent has started a pilot project with the city of Shenzhen to develop an electric invoice system called Fapiao that employs blockchain. Using its social media app WeChat, the system enables residents to trace invoices and prevent falsification. The project will subsequently be explore prevention of tax evasion.

Earlier in April, Baidu launched a blockchain-related photo storage service Totem aimed at protecting the copyright of individual photographers and photo agencies. Photos are recorded with time stamps, which are linked to photographers' profiles. Baidu's artificial intelligence system scans each picture, so that it gives exclusive rights to the user only if the same picture does not already exist in its system.

Banks have also been eyeing the use of blockchain. The People's Bank of China and its subsidiaries filed for 68 patents, more than twice the 33 requested by Bank of America, according to a report by IPRdaily, a Chinese website dedicated to intellectual property news, and incoPat, an innovation research indexing center.

Outside of China and the U.S., Japan and the U.K. are the only two countries to have more than one company with blockchain patents. Japan has five and the U.K. two. 

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