China’s potential as a lucrative market for supply chain finance was evident last month as more than 800 people from banks, financial institutions, tech firms and logistic agencies descended on the economic hub of Shenzhen for the sixth China Supply Chain Finance Innovation Summit.
The event – organised by the Chinese company 10,000Link – was typically well-attended by domestic companies while increasingly attracting more attendees from Europe and the US, all eager to collaborate with Chinese firms.
Each year the event sees the release of fresh research on SCF trends in China, with 10,000Link CEO Luke Cai launching this year’s white paper on supply chain finance innovation and practice in China. He told delegates that the role of financial technology in supply chain finance was developing at an increasingly fast pace – partly driven by new policies implemented by the Chinese government.
Song Hua, professor at the business school of Renmin University of China, told attendees about the importance of financial technology to support the effective processing of data that form the backbone of supply chain finance programmes.
“Financial technology is a necessity for the identification and collection of useful information, for the filtration of unnecessary information, and for the structured processing of data and information. Otherwise, assets cannot be penetrated, nor can blockchain and supply chain finance be achieved at all,” he said.
He also said it was “important” to establish a social credit system in China. Such a system in currently being set up by the government and would involve the recording of data on people and companies’ payment behaviour and other forms of social behaviour. This would be used to calculate a “social rating” that could be used to deem the creditworthiness of the individual or company (see Michiel Steeman’s comment on this idea).
Michiel Steeman, founder of the Supply Chain Finance Community, returned to Shenzhen again this year, with his keynote speech outlining three major market challenges; surplus value, ownership and cashflow.
He explained to delegates about how a shift to an increasingly circular economy – where products are sold and then increasingly reused or recycled – could impact supply chains.
“Today, many large companies in Europe and the United States are facing such challenges as transformation, in particular in the development of the circular economy. The shift from a linear pattern to circular requires the redesign of circular supply chain and requires the coordination of all aspects in supply chain for solutions of supply chain finance,” he said.
The event was also attended by executives from the World Bank, Standard Chartered, GE China, C2FO, TCL Group and Linklogis. Attendees had the chance to exchange ideas at four roundtable events taking place alongside the main conference.
A delegation of Chinese SCF practitioners, led by Luke Cai of 10,000 Link, is visiting SCF Forum Asia in Singapore on 23rd May. SCF Briefing readers can benefit from a 10% discount on the standard ticket price by using this link or entering the code SCFB10 at checkout. For more information, visit www.scfforumasia.com.