Today, Hong Kong-based Assured Asset Management launched a blockchain-based supply chain finance solution with property developer Shui On Group. The ‘Traceable Accounts Payable’ (TAP) platform plans to onboard suppliers of Shui On and will provide finance to them from banks and other financial institutions.
Shui On Group is the parent company of the Shanghai-based Shui On Land which has a market capitalization of about $1.8 billion on the Hong Kong Stock Exchange. The flagship subsidiary is engaged in large scale property development projects across mainland China.
As with all supply chain finance solutions, the starting point is the buyer, in this case, Shui On. Through its involvement, banks can be sure that invoices are legitimate and can see when Shui On authorizes them for payment or disputes them.
TAP will record the transfer of goods and services and provide verifiable data on a supplier’s involvement with Shui On and other enterprises going forward. The blockchain solution will provide data to banks and credit investors so they can fund the suppliers’ receivables against the credit profile of the big enterprise. This addresses the issue of SMEs that may lack a good credit history or any credit rating at all.
In theory, blockchain should also provide an immutable record for audit purposes and can help to prevent double-financing.
“The TAP platform enables end-to-end financing within the entire supply chain using modern technologies to resolve the difficulties of SME credit risk assessment and address the unique financing needs of SMEs,” said Robert Cheung, CEO of Assured Asset Management.
Shui On will initially implement the solution for its vendors within the Chinese construction supply chain. Onboarding of suppliers will begin later this month, and the platform will open up to financers and banks in the first quarter of 2020.
“A robust supply chain is instrumental for Shui On. By creating an immutable audit trail, the TAP platform will benefit SMEs within our supply chain as well as our core business by illuminating transactions deep within our supply chain and reducing the risk of fraud and error,” said Allan Zhang, Executive Director of Shui On.
Last month, China-based Real Can (or Ruikang) Pharmaceutical announced a blockchain solution for supply chain finance with Zheshang Bank. The Chinese subsidiary of DBS bank has launched its blockchain platform for Chinese SMEs.
In Singapore, the division of Malaysian bank CIMB is working with SESAMi Holding and Capital Match to finance invoices for suppliers digitally.
A few months ago, Standard Chartered completed a blockchain supply chain finance transaction with Linklogis, for upstream suppliers of a joint venture between Tencent, China Unicom, China Telecom and China Mobile.