Wanxiang Group Invests In The Blockchain Sector

摘要: Who would have known Wanxiang, an enterprise from Zhejiang province, would be one of the earliest companies to pour in the blockchain sector? Will there be another Zhejiang enterprise legend in the blockchain era?

(Chinese Version)

Xiao Feng, deputy board chairman and executive director of Wangxiang Group

Xiao Feng, deputy board chairman and executive director of Wangxiang Group

Ever since the rise of new economies such as the Internet industry, Wanxiang seems to be gradually fading away from the public attention as fewer people would know about this legendary enterprise. Founded in 1969, Wanxiang started as an individual workshop that focused on agricultural machines. Later Wanxiang grew and expanded to the point that it became the first Chinese OEM company that manufactured components for General Motors and one of the earliest Chinese companies that acquired American companies. Wanxiang’s founder Lu Guanqiu’s family ranked the 10th on the 2015 Huren Fortune Report with a total asset of 65 billion.

Wanxiang continues to surprise the public and the business world even in today’s Internet age as it starts to invest in blockchain technology recently. It’s something you don’t really expect from a giant enterprise with an annual revenue of billions that started from a machinery workshop. “Wanxiang starts to keep tags on the development of digital currencies such as bitcoins since 2014. The company then subsequently started to pay attention to blockchain technology, which is the foundation for bitcoins,” Xiao Feng said, believing that fintech, which is closely connected to blockchain technology, is going to stir up the world.

The third blueprint

On the top 500 Zhejiang enterprise chart made by Businessman of Chekianga (Zhejiang), five companies such as Zhongda Group, Geely, Hailiang, Wanxiang Group and Alibaba had all achieved an annual revenue of over ¥100 billion last year. It was the first time that Alibaba achieved such amount of revenue while Wanxiang Group had already made it in 2012.

Wanxiang Group originally took off by manufacturing components for automobile makers. It later invested strategically in the agriculture industry but nothing really came in return. The company literally has been losing money for it investment for a decade. It wasn’t until recently that the company’s investments finally began to make money. The finance sector is a brand new area for the group as it only entered the sector a couple of years ago. Wanxiang Holdings, where Xiao Feng is at, is in fact Wanxiang Group’s financial platform. In 2002, Wanxiang Holdings invested ¥120 million in Minsheng Insurance and then invested in China Zheshang Bank in 2004. At present, Wanxiang Holdings possesses licenses in financial lines including banking, insurance, foundation, trust fund, and futures etc. If the company is able to get its hands on a securities license, then it would be able to cover almost all financial lines.

Xiao Feng joined Wanxiang Holdings in 2011, planning to enter a new financial realm. In 2012, Wanxiang Holdings invested in a few companies focusing on cloud computing and machine learning, which marks the beginning of the company’s new round of financial activities. Although Internet finance, like P2P and crowdfunding, had been extremely hot during 2013 and 2014, Xiao Feng still tended to invest in actual fintech projects and started to pay attention to the development of blockchain technology.

In September 2015, Wanxiang Holdings established its blockchain lab with Vitalik, founder of Ethereum, and Shen Bo, founder of Bitshares, as the lab’s founders. Vitalik is appointed as the lab’s chief scientist. Later in October, the lab hosted the first global blockchain summit in Shanghai. In the very same month, the lab also rolled out its Wanxiang blockchain lab report series.

Up till now the lab has already published three books such as Blockchain Society. In April this year, the lab together with other ten Chinese enterprises established the ChinaLedger. To accelerate the development of blockchain technology, Wanxiang blockchain lab launched a blockchain technology fund named BlockGrantX in November 2015, in an attempt to encourage and support quality blockchain projects and the fundamental research of encrypted algorithm, consensus mechanism, and trade performance improvement etc. To nurture relevant talents for this area, the lab had initiated a blockchain training course and partnered with Deloitte & Touche to host a blockchain hacker marathon activity in Shanghai that boasted a reward of $100 thousand. The most profound move from Wanxiang Holdings is actually its investments in blockchain startups. By the first half of August 2016, Wanxiang Holdings had invested in 29 blockchain startups globally, with an amount of $25 million. Even though Wanxiang Holdings only invested a certain proportion of the money in one company, ranging from $200 thousand to $1 million, it still gives Wanxiang a good shot at building an ecosystem that links the global blockchain communities.

“We are also doing our research and studies while watching these startups grow. We are looking for where we can go in the future.” Wanxiang blockchain lab is going to the second global blockchain summit in this month, which will host about 700 people. It took the lab six months to invite mainstream industry insiders around the world. In August, Xiao Feng appeared at every dialogue activity for the new book Blockchain Society to tell the audience and the media how important blockchain is. The author of the book and founder of ChainB, Gong Ming also showed up at the dialogue activity in Beijing and introduced the core content the book illustrates with 258 industry cases. “Many people fear that bubble have been generated from the overly stimulated blockchain industry, but in fact bubbles can help the industry gain momentum and receive more attention, which will actually push the application of blockchain,” Xiao Feng stated. “After the bubbles vanish, the valuable companies and talents that remain will be the ones that drive the industry further. From this perspective, we might even need bigger bubbles.”

Using new technology to compete with Internet companies

According to Xiao Feng, investing in financial technologies such as blockchain is to keep up with the development of new technologies. “Only in this way can we gather mature technologies and apply them to transform Wanxiang’s current financial businesses that include insurance, trust fund, third-party payment, banking, foundation, and futures etc.,” Xiao said. “Wanxiang is hoping to use new technologies such as fintech to fight against the invasion of Internet finance companies.”

“Internet finance is a revolution in application scenarios while blockchain technology is a technological revolution,” Xiao Feng said, believing that fintech will be the terminator of Internet finance represented by Alibaba and Tencent etc. In the Internet finance era, traditional banks are overwhelmed by Internet companies, drastically losing users. The reason for their failure is simple. Internet companies have the scenarios, among which Alibaba covers most scenarios. Alibaba is an e-commerce company at core. When user purchase items on its platform, the first thing they need to do is pay the bill through Alibaba’s payment platform. This is in fact a very strong scenario. Tencent on the other hand didn’t have much connection with payment scenarios in the beginning, but later the red packet scenario brought life to WeChat Payment.

As for traditional financial organizations, the lack of Internet scenarios holds them from fighting Internet companies back. But fintech is different. Fintech, empowered by big data, consists of two core technologies: AI and blockchain technology. In simple term, Blockchain is a clearing method, which will create a new form of transaction model. When it comes to AI and blockchain technology, Internet scenarios are longer that important, and it gives traditional organizations the chance to surpass Internet companies. “The top 50 financial organization in America have all set up their blockchain lab. The wallstreet is also investing in blockchain startups. You can also find that the biggest shareholder of famous blockchain startups is either Morgan Stanley or Goldman Sachs,” Xiao Feng said. Nowadays Internet companies are massively poaching talents from traditional financial organizations because they need people who understand financial businesses.

Meanwhile, even though Gong Ming believed blockchain would mainly disrupt and revolutionize traditional financial organizations, he still wrote in his book many cases in other industries. This also confirms the fact that the core of blockchain is a digital solution to a multi-parties trust mechanism. Bitcoin is the first successful global application, but it doesn’t necessarily mean blockchain is only for the finance sector. That said, blockchain technology gives traditional enterprises another chance in the Internet era. Let’s look at the next-gen storage solution for example. MaidSafe is an English startup that utilizes blockchain technology to make use of the free hardware resources on the Internet to form a digital data center that provides cloud storage service. With MaidSafe, users no longer need cloud service providers such as AWS and Rackspace etc. since developing on MaidSafe’s network is free of up-front fees. MaidSafe is the first self-authenticated, self-run network that doesn’t need an actual server.

On August 16th, Chinese blockchain startup Onchain, Microsoft, online contract and trusteeship SaaS service platform FADADA jointly announced the establishment of the first large-scale commercial digital receipt blockchain alliance Falian. The endeavor aims to store digital contracts’ information such as sign date, sign body, and the hash value on the nodes of Falian’s members. Once the information are stored, no party can rewrite them, which satisfies the demand of digital legal evidence.

In the future, Chinese users can enter FADADA’s system and sign a digital contract and send it to clients there via Office 365 operated by 21stVIANET. With Onchain’s blockchain technology, every digital fingerprint information of the digital contracts will be broadcasted to the nodes of every blockchain member. The hash value of the contracts will simultaneously be stored in judicial expertise center’s database. Professor Han Feng, director of Tsinghua University’s maker space i-center believes that blockchain technology has to potential to become the next core technology that will bring about the fifth round of revolution, following the steam machines, electricity, information and Internet technology. I guess we will just have to wait and see whether blockchain would slay Internet finance and the Internet business model that AWS and Uber have been using. “To become a new species, you have to experience playing different roles that are other than you,” Kevin Kelly wrote in his book Out of Control.

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[The article is published and edited with authorization from the author @Wu Ningchuan, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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