Foxconn Unveils Prototype Blockchain For Trade Financing

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Electronics manufacturer Foxconn has unveiled its prototype model for trade financing, in a move that could pave the way for significant improvements in non-bank financing systems.

The company, which manufactures tech hardware including the iPhone, demonstrated the prototype model across its distributed global supply chain, resulting in $6.5 million worth of trade financing.

Now, with the proof-of-concept stage ready for a wider rollout, the company is eyeing an expansion of the model across its entire supply chain, spanning several continents with minimal compliance and transactional costs.

The prototype is an exciting development for followers of blockchain technology, and one of the earliest examples of a major supply chain funding program run on the blockchain infrastructure.

It comes at a time when multinationals, governments and central banks, among others, are pushing forward with their own blockchain-based models to take advantage of the reduced costs this form of automation can deliver.

Jack Lee, CEO of Foxconn’s financial focused subsidiary, FnConn, said that by removing the need for banks and third parties in arranging trade finance agreements, the model could help reduce costs while improving efficiency across supply chains globally.

“We think all the supply chain, not just supply chain finance, can be handled by blockchain, will make the whole business transaction easier to validate and enhance the efficiency of the whole ecosystem.”

The company now intends to spin off its supply chain financing model, with the new company known as Chained Finance. Chained Finance is aiming to remove the need for banks in the supply chain, by facilitating non-bank lending between supply chain partners.

Developed in partnership with commercial lender Dianrong, the company aims to eliminate the problem of chain lending — where companies at different stages of the supply chain borrow to fund loans to others in the chain, leading to increased costs and time frames for securing essential cash flow.

Soul Htite, co-founder of Dianrong, said their blockchain solution would move beyond simplifying lending, by ensuring a more efficient flow of cash throughout supply chains.

“Many of them have tried to explain to me they are victims of this inefficiency and every year some of them shut down, and they will start again. So what we’re really trying to do here is not a loan, but a full cash-flow solution.”

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