From Chanel handbags to baby formula, the issue of fake products in China hits every product category. As brands seek out new technologies to get one step ahead of counterfeiters, they’re hoping blockchain can be their new secret weapon to help them win the fight.

The luxury industry has been especially eager to pursue blockchain technology in the battle against counterfeits. In May, Hong Kong jeweler Chow Tai Fook announced that it had introduced blockchain ledger technology to verify the provenance of diamonds from its new T Mark brand that was founded last year. The company is working with luxury-focused blockchain solutions provider Everledger and IBM Blockchain Platform to create a digital record for each diamond with information on its sourcing and quality rating from the Gemological Institute of America.

This information will be accessible to consumers through T Mark’s mobile app, which features digital certificates of authenticity. Shoppers can also use the app to show off their purchases on social media and scan product QR codes in-store to create a wishlist. Chow Tai Fook’s adoption of blockchain technology follows in the footsteps of De Beers, which announced a pilot blockchain platform called Tracr in January to track its supply chain.

One major benefit of blockchain for luxury brands is the ability to create a “permanent and immutable” record of an item’s provenance, according to Everledger’s CEO. In addition to written records of quality and authenticity, the technology allows brands to create a permanent “digital twin” of the diamond with high-definition photography and ultrasounds. This builds trust by ensuring that the diamond that makes it to the end of the supply chain is the same one that started at the beginning of it. And the ability to track whether the diamond has been ethically sourced can appeal to allegedly diamond-wary, socially conscious millennials.

Another major player in the blockchain luxury authentication space is Shanghai-based VeChain, which places chips in products to allow for authenticity verification and stop illegal overstock trading. Its brand partners include Givenchy and BMW, and it has backing from PwC. Although its technology is applicable to a wide range of industries, luxury is a major focus: the company was founded by the former Chief Information Officer of LVMH China, and LVMH recognized it as a runner up in its 2018 Innovation Awards. 

It’s not just handbags and diamonds that are being verified with blockchain, but also another type of luxury in the China market: organic lettuce. E-commerce giants Alibaba and JD.com have both rolled out blockchain verification programs to allay upper middle class Chinese shoppers’ concerns about food safety. Alibaba’s connected Hema supermarket chain allows users to scan codes on food items with a mobile app to see the item’s place of origin including photos of the farm it came from, harvest date, delivery date, temperature in the delivery vehicle, distributors’ business licenses, and food safety certificates. JD.com also has a blockchain tracing program for food and other products that currently tracks over 400 brands and 11,000 SKUs.  

The development of blockchain technology in China can be expected to see continued expansion as the Chinese government is working to encourage the industry through funding and policy. While domestic cryptocurrency exchanges are banned, the use of blockchain technology for other purposes is listed as a priority in the Chinese State Council’s 13th Five-Year Plan.

Daily Insights in Your Inbox

Edit your preferences or unsubscribe