Logistics, government and medical industries stand to benefit most from blockchain technology

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Standardised policy will be critical for blockchain development 

Hong Kong, 9 May 2018 - PwC and VeChain today jointly unveiled the 2018 Market Survey Report for (Non-financial) Application of Blockchain in China. Survey findings highlight logistics, government and medical industries as areas that stand to benefit most from adapting blockchain technology. Further, while industry-specific concerns exist, there is common agreement among respondents that the most pressing challenge now is the formation of standardised policy structuring continued development of the technology.  

A total of 85.7% of respondents stated a core feature of blockchain is that the technology is “tamper-resistant”. More than half of respondents believe that blockchain will have a significant impact on the business community. Also of note, respondents’ understanding of blockchain appears to have a substantial impact on attitudes of the technology. Altogether, 48.4% of respondents who have a “basic understanding” hold an optimistic attitude. Further, 84.2% of respondents who are “working in the industry” also have an optimistic attitude.  Additionally, 85.7% of respondents “with experience of applying blockchain technology” are optimistic about the technology.  

In terms of industry, traditional industries are more optimistic about the potential of blockchain than new technology industries, according to the report. Respondents from retail, education and science formed the highest percentage of participants who recorded seeing a “significant impact” from, and remaining optimistic about blockchain. These were followed by the manufacturing industry, service industry, IT or high-tech industry and media.

Logistics is viewed as the industry most intrinsically predisposed to utilising blockchain outside of finance, and ranks highest in terms of scope for innovative applications of the technology that create value. Government follows as the second most suitable arena for putting the technology to use, notably offering clear means for demonstrating use, and influencing aspects such as credit enhancement. As such, application by government can be expected to rapidly enhance awareness of blockchain. Medical industries ranked third, due to their especially rigorous demands for verifying authenticity of information. The need for authenticity verification relating to personal and medical records as well as drug information is anticipated to continue driving the application of blockchain across health industries.

“Blockchain’s tamper-resistant and distributed data storage features enable us to improve traceability and transparency for logistics and supply chain management. These characteristics will be put to use in optimising business transactions and trade relations,” said Sunny Lu, CEO of VeChain, who went on to note, “With people’s increasing awareness and knowledge of blockchain, ‘killer’ applications are sure to emerge, and initially these are most likely to occur outside of the financial sector.”

The survey also explored views from respondents whose companies have already implemented blockchain. Among these participants, 50% stated their use of the technology was for security traceability, more than any other field of application.  Other fields of application that saw more than 20% of respondents using blockchain included distributed data storage, identity authentication, shared data & application and supply chain management.  

The survey also found that among enterprises that have already implemented blockchain, 53.3% have set up in-house blockchain R&D teams. This was more popular than the three alternative approaches of cooperating with blockchain start-ups (30.0%), cooperating with well-known companies (13.3%) and investing in or acquiring external blockchain start-ups (3.3%).

PwC China Partner Chun Yin Cheung said, “Blockchain has transformative potential, its implementation can affect a company’s underlying business model. When it comes to technologies that impact the underlying architecture of the business model, an enterprise usually prefers to build a R&D team of its own. An in-house R&D team can facilitate system maintenance and information security while reducing costs. At the same time, many enterprises prefer to keep the underlying architecture of the business model under their control.”

As indicated in the China Blockchain Technology and Application Development White Paper, published in April 2017, China is home to the world’s second largest number of blockchain-based enterprises, after the United States. Blockchain technology was listed on the “13th Five-Year Plan” as a strategic cutting-edge technology. Still, development of blockchain technology is not without challenges in China.

Survey findings reveal that management decisions have the greatest impact on implementation of blockchain for respondents, while input cost have the least influence. Feedback from respondents that had not applied blockchain indicated that the biggest challenges to their application rested with management having not yet decided to pursue use of the technology. This was followed by lack of corresponding industry standards. Only 10% of respondents indicated ‘no budget’ to be the major reason why their companies had not yet adopted blockchain. 

Although concerns from various industries differ, standard policy is recognised by respondents from all fields as the most pressing challenge standing in the way of continued development of blockchain technology. Chun Yin Cheung remarked, “A great many more enterprises will begin using blockchain when the technology is supported by comprehensive policy. When policy is established, enterprises that have already applied blockchain will have made substantial headway, and will stand to reap the benefits.”

 

Note to editors

About the Survey

2018 Market Survey for (Non-financial) Application of Blockchain in China is a world-wide survey jointly conducted by VeChain and PwC in the forms of online questionnaire and focus group discussion from November to December 2017.

The respondents are mainly VeChain's and PwC’s clients. Totally, we received more than 130 questionnaires, and held two focus group discussions engaging more than 40 respondents. Respondents were from nearly 20 industries, involving more than 10 functional departments. As Blockchain technology was at the emerging stage, only a few people really knew about it. Our quantitative research data came from people who had a considerable level of knowledge and research on Blockchain technology.

We designed a set of questionnaire that covered over 40 questions, which focused on three major topics, namely, the understanding of Blockchain, the opinions on the application of Blockchain, and the opportunities and challenges faced by Blockchain technology.

 

About VeChain

The VeChain project started in June 2015. VeChain aims to connect blockchain technology to the real world by providing a comprehensive governance structure, a robust economic model as well as advanced IoT integration, and pioneers in real world applications.

VeChain has built a first-class Research and Development team over the past 3 years with over 90 employees including more than 50 professional blockchain application developers. Headquartered in Shanghai, the business now has 5 satellite offices. VeChain has built the VeChainThor public blockchain platform as the underlying infrastructure for the blockchain applications.

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