China has seen an explosion of companies registered with “blockchain” in their names from January to July 16, almost sixfold the number for the whole of last year.
The country is now home to more than 4,000 such firms that identify with blockchain, the distributed ledger technology behind cryptocurrencies like bitcoin and ethereum, according to estimates made by the South China Morning Post based on government data gathered by Qixin.com.
There were 3,078 companies that have qukualian, the Chinese translation of blockchain, in their registered names during the past six-and-a-half months, up from 555 for the whole of last year, according to Qixin.com data.
In comparison, there are currently a total of 817 companies in the US and 335 in the UK using blockchain in their registered names, according to a search on OpenCorporates.com, which gathers corporate registry data from dozens of countries globally.
The blockchain name game in China echoes the trend during the internet bubble in the late 1990s, when many companies around the world added “dot-com” or “dot-net” to their names to capitalise on investor appetite for internet-related enterprises.
In 2015, China added nearly 400 new companies focused on artificial intelligence (AI), accounting for more than 25 per cent of the world’s total new AI firms set up that year. In 2016, that figure went down to about 10 per cent, according to a report published last year by the state-backed Wuzhen Institute.
In a separate search targeting lines of business from the Qixin.com data, the Postfound a total of 16,600 companies that were established within the past 12 months with blockchain listed as part of their lines of business. More than 3,800 of those firms each had a registered capital of more than 10 million yuan (US$1.5 million).
The numbers extrapolated from that data showed that interest in China remains high for blockchain technology, despite the central government’s mixed feelings on cryptocurrency exchanges, initial coin offerings and crypto mining, which is the process of creating new digital currencies.
Despite such reservations, the local governments of Shanghai, Shanxi, Henan, Guangzhou, Guiyang and Hangzhou have all issued policies to encourage blockchain development, according to the China Internet Report co-authored by the Post, its tech news site Abacus and the San Francisco-based venture capital firm 500 Startups.
Hangzhou, the capital of Zhejiang province in eastern China, announced a plan to invest in a 10 billion yuan blockchain fund, which government officials claimed as the world’s biggest fund investing in blockchain projects.
About 41 per cent of start-ups that received funding in China in the first quarter of last year were blockchain-related enterprises, according to the China Internet Report.
Blockchain enables the creation of an online database network where all participants create, share and store records of transactions in a secure and efficient manner, according to a white paper commissioned by the Hong Kong Monetary Authority.
The initial applications of this distributed ledger technology outside cryptocurrencies have included post-trade settlements, record checking and management, and cross-border fund transfers, the paper said.
China helped raise the profile of blockchain when it became one of the first countries in the world to include the technology as part of a state-level policy. In 2016, Premier Li Keqiang announced that blockchain was written into the 13th Five-Year Plan, a road map for the country’s development in the five years to 2020.
China filed 225 blockchain-related patent applications last year, more than half of the world’s total, according to a Reuters report that cited data from the World Intellectual Patent Organisation.
Showing some of the diverse applications for blockchain, some of the blockchain-related companies registered in China so far this year include Hangzhou Today Marriage Blockchain Technology, Guangzhou Chinese Medicine Homeopathy Blockchain Technology and Jiangsu Dragon Liquor Blockchain Trade, according to the Qixin.com data.
Major Chinese organisations have also recently set up blockchain-related firms. In January last year, Chinese multinational automotive components firm Wanxiang Group Corp established new subsidiary Shanghai Wanxiang Blockchain to focus on the technology. In September that same year, CCID (Qingdao) Blockchain Research Institute, which is affiliated to China’s Ministry of Industry and Information Technology, was registered in the northeastern province of Shandong.
Logistics, government and medical services are areas that may have the most potential in the application of blockchain technology, according to a joint survey published in May by PwC and VeChain.
Amid the current enthusiasm by businesses for blockchain, a top Chinese regulator recently warned against “mythologising” the technology behind cryptocurrencies.
“Blockchain is a useful innovation but that doesn’t mean cryptocurrencies, which blockchain has given rise to, are necessarily useful,” said Fan Wenzhong, head of the international department of the China Banking and Insurance Regulatory Commission, during a financial technology summit in Shanghai last week.