Assessing the Integration of Blockchain and Supply Chain Management: The Case of China

Assessing the Integration of Blockchain and Supply Chain Management: The Case of China

DOI: 10.4018/979-8-3693-0482-2.ch003
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This chapter focuses on the Chinese market and explores the use of blockchain technology in supply chain management. It explores actual Chinese case studies while explaining blockchain's basics and its promise for improving supply chain transparency, security, and efficiency. With a focus on enhanced traceability, robustness, and the function of smart contracts, this chapter examines Chinese supply chain models that make use of blockchain technology. Sustainable development goals in China are aligned with blockchain's environmental consequences, its use in carbon footprint tracking, and the promotion of circular supply chains. This chapter analyzes the obstacles to blockchain adoption in China from a legal and regulatory perspective, and suggests ways to overcome these roadblocks through policy reform. Finally, the chapter projects the future influence of blockchain technology on global supply chain management by analyzing the potential and constraints facing Chinese enterprises that deploy blockchain-based supply chain systems.
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This chapter provides a thorough examination of the ways in which blockchain technology and supply chain management are converging, with a focus on the Chinese market. The chapter guides the reader through the dynamics of blockchain technology, its possible applications, and actual use cases within China's supply chain operations, in light of China's outsized role in global manufacturing and transportation.

This chapter begins with a breakdown of blockchain technology's foundations and a focus on its unique characteristics and their game-changing effects on supply chain operations. In a supply chain environment as sophisticated and wide as China's, the chapter focuses on how blockchain technology might improve openness, security, and efficiency. This chapter looks into particular case studies that illustrate blockchain's applicability and impact on Chinese supply chains, making the previously mentioned concepts more tangible.

In addition, this chapter provides a thorough evaluation of current Chinese supply chain models that make use of blockchain technology, assessing how well they perform with respect to enhancing traceability, resilience, and security. Smart contracts are also discussed in depth to see how they can improve supply chain transactions. The environmental benefits of blockchain technology for tracking carbon footprints and promoting circular supply chains are also explored in this chapter to help China achieve its Sustainable Development Goals.

This chapter also examines the legal and regulatory hurdles that come with implementing blockchain technology inside China's legal system, and it suggests ways to overcome these obstacles through effective policy interventions. The chapter concludes with an honest assessment of the advantages and disadvantages Chinese companies face when adopting blockchain-based supply chain systems, laying the groundwork for a discussion of how the development of blockchain technology may further revolutionize supply chain management in China and around the world.

China's status as the world's largest manufacturer has ensured its continued prominence in the international supply chain. China is the “world's factory,” producing a wide variety of commodities for export around the globe (Duan et al., 2021). The country's large industrial capacity, low labor costs, and rising technological sophistication have all contributed to its manufacturing strength.

China is not only an important manufacturing hub, but also a vital link in international supply chains. The country's strategic location and state-of-the-art road, rail, and port infrastructure allow for swift and easy distribution of commodities to consumers all over the world (Danyluk, 2019). As the global supply chain demonstrated during times of economic uncertainty and disturbances like the COVID-19 pandemic, any disruptions to China's supply chains can have far-reaching ramifications (Liu, Lee, & Lee, 2020).

Because of its massive consumer base, China is also a major market for goods. Growing urban populations and a more prosperous middle class have boosted demand for goods from all over the world, as well as those made at home (Morrison, 2019). As a result, China is now an essential link in the global supply chain, not just in terms of production but also consumption.

In this setting, innovations in Chinese supply chain practices and technologies, like the use of blockchain, may have far-reaching effects on the future of supply chain management around the world. Given the size and activity of the Chinese market and the government's willingness to embrace technological progress, China is an ideal place to test and execute cutting-edge supply chain strategies. This makes it all the more important to investigate how China is applying blockchain technology to its supply chain management, as the results of this investigation may have far-reaching effects.

Supply chain management stands to benefit greatly from blockchain technology. Lack of transparency, inefficiency, and the possibility of fraud are just some of the issues that conventional supply chains struggle to address. Blockchain, with its unique properties of decentralization, openness, immutability, and security, provides a solution to these problems (Sternberg, Hofmann, & Roeck, 2021).

Key Terms in this Chapter

Cryptocurrency: A digital or virtual currency that uses cryptography for security and is typically based on blockchain technology. It is not controlled by any centralized authority, making it theoretically immune to government manipulation or interference.

Regulatory Compliance: Adherence to laws, regulations, guidelines, and specifications relevant to an organization's business processes. In blockchain usage, it often refers to meeting legal standards in data management, financial transactions, and privacy.

Middleware: Software that acts as a bridge between an operating system or database and applications, especially on a network. For blockchain, middleware can facilitate the integration of blockchain technology with existing IT systems.

Supply Chain Management (SCM): The oversight of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer. SCM involves coordinating and integrating these flows both within and among companies.

Immutable Ledger: A ledger that is unchanging over time, one where records, once written, cannot be altered. This is a fundamental feature of blockchain technology, which ensures that transaction histories are permanently recorded.

Smart Contracts: Self-executing contracts with the terms of the agreement between buyer and seller directly written into lines of code. These contracts automatically enforce and execute the terms of an agreement based on predefined rules.

Decentralization: The distribution of functions and powers away from a central location or authority. In the context of blockchain, it refers to the dispersal of data storage and decision-making across a network of computers.

Blockchain Technology: A decentralized digital ledger system where transactions are recorded chronologically and publicly across a network of computers. It is known for its security, transparency, and immutability.

Distributed Ledger Technology (DLT): A consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. Unlike traditional databases, DLT has no central data store or administration functionality.

Interoperability: The ability of different computer systems or software to exchange and make use of information. In blockchain, it refers to the capacity of different blockchain networks to communicate and transact with each other seamlessly.

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