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China’s trade watchdogs use blockchain to tackle counterfeit products


Last week, a Chinese province introduced a new platform that uses AI, big data and blockchain to weed out counterfeit products in e-commerce.

China’s Zhejiang Provincial Market Supervision Bureau and State Administration of Market Supervision launched the ‘National Network Transaction Monitoring Platform’. The bodies fulfil a similar role to the Federal Trade Commission in the U.S. and the Trading Standards Institute in the U.K. though it may have access to more data about transactions.

The new system will monitor sales of products sold online. It will collect relevant information, including after-sales reviews, return records and product promotions, to identify fake products in the market.

On January 1st a new law came into force in China to crack down on counterfeit trading on e-commerce outlets. In addition to counterfeits, it addresses false advertising, data protection and consumer protection more broadly.

Although the Bureaus did not mention any networks by name, China has numerous e-commerce marketplaces, including large ones such as TMall from Alibaba, and KaoLa by Netease. has 300 million customers in China, and it has its own anti-counterfeit supply system. Its blockchain-based Zhiyi supply chain now tracks 60,000 products.

Back to the state-run network, in addition to monitoring the big networks, the trade watchdogs will also use the blockchain platform to track sales at e-commerce stores, social media e-commerce, retail mobile applications and other venues.

By comparing this data with a centralized database, the trade bodies expect to identify which products and firms are legitimate.

One of the functions of the platform is network behaviour monitoring. For this, the market watchdog is employing AI to identify suspicious behaviour, target risky networks, and discover suspected illegal trades.

Blockchain is being used for recording this data collated from various market source. The idea is to build a single source of truth regarding suspected illegal activities and ensure that the monitoring data is traceable and trustworthy. Additionally, the platform can also analyze the data and provide real-time notification in case of corrupt trade practices.

Some Chinese jurisdictions have online arbitration forums and courts where transaction data is used to settle disputes between buyers and sellers. Potentially the data might be used for this.

Feng Shuihua, director of the Zhejiang Bureau outlined the platform’s purpose to state-run Xinhua News Agency. He said that technologies such as big data, artificial intelligence, cloud computing and blockchain can be deeply applied and are at the forefront of market supervision. They help to improve supervision, manage the risks of market networks and strengthen cyberspace governance.

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