How important is this for business exporting to China? By way of introduction to this topic at a conference, I started my presentation with two observations.
First, I observed that among all the bottles of water consumed during the day there was one bottle filled with substituted water. It was, I assured the audience, clean river water taken from a nearby creek. The bottle had been resealed.
That caused a ripple of unease and much inspection of the open water bottles.
Then I mentioned the lunch that had featured good Australian beef. I noted that one of the frozen beef packs had accidentally been left out to thaw all day and then refrozen overnight before being sliced and served at the conference meal. I told them it should be OK because beef was not as sensitive to temperature changes as pork or chicken.
That observation caused a great deal of consternation, and judging by some expressions, significant discomfort.
Welcome, I said, to the world of the Chinese and Asian consumer. When the Chinese speak of food safety, they mean food that is safe to eat and food that has not been substituted with an inferior product.
When I am eating beef in Singapore or Malaysia or China, I want to have confidence that the cold chain storage logistic links have not exposed a shipment to unsuitable temperatures.
These are not problems faced by Australian consumers. We have a high level of confidence in the quality of the food and products that we use and consume.
Not so in Asia and China.
It takes more than a fancy box and a pretty label saying “clean and green” to give the consumer confidence that the claims are true. Post-covid, these concerns in Asia have taken on a new urgency and significance.
We are not talking about the choices made by the working poor or even the lower middle class. They have no choice but to unwillingly accept that their food and other products may be compromised because they cannot afford to pay for a quality guarantee that comes with higher priced food and premium priced products.
It’s the emerging middle class – the target audience for virtually every Australian exported product – who are more cautious. They have more money so they do not need to run the gauntlet of reused cooking oil, of products that may be excellent fakes, and food trays filled with inferior substitutes.
They believe and hope that by paying a higher price they will reduce the risk of food contamination and product substitution. They hope money will buy them genuine Australian beef, genuine vitamins and genuine medicines, but until block chain came along, there was no easy way to really confirm this.
It’s estimated that up to 40 percent of beef sold in China and labelled as Australian is, in fact, lower-quality substituted beef from other sources. We know that low-quality mangoes are mixed inside the boxes of high-quality Australian mangoes, and then sold at the premium price.
This undermines the credibility of the Australian and the Northern Territory product. Product credibility is restored by applying block chain solutions.
The thawed and refrozen beef? A simple temperature monitor strip provides scannable data that allows the chef to know if the product has been thawed and refrozen. It’s a development made possible by the Internet of Things – dumb devices that generate data.
Imagine you could keep an unbreakable record of the temperature changes – a chain of temperature changes – so you could reject meat that went above or below set temperature boundaries.
Block chain beef certification provides this solution and this credibility because it is constructed with security in mind from the very beginning.
Unlike a QR code, scanning the block chain code does not access a database that could have been hacked. It gives you direct access to all the data stream and verifies that it is uncorrupted. Technically it’s a distributed ledger that assembles multiple verification of each block in the chain.
An Australian company, BeefLedger, provides this service for Chilean beef producers and that puts their beef shipments at the front of the quarantine clearance queue in China. Australian beef producers are yet to be fully convinced.
The water bottle that has been refilled and resealed, or the used wine bottle, label intact, that has been refilled with low-quality wine, can be scanned with a smartphone to determine if the product container has been tampered with. It’s another application of block chain.
Another Australian company, Laava, provides this functionality for strawberry producers in Tasmania and wine producers in South Australia.
But here’s the rub. When you travel to Indonesia, you need a different power plug to those used in Australia or Singapore. The block chain protocols used in our region are driven by China simply because China is the most advanced down this path and also the largest market. Australia is yet to recognise the important role block chain will play in the post-covid consumer world, and many in Australia are reluctant to fully engage with Chinese block chain protocols.
By the way, I did reassure the audience that no water bottles had been tampered with and that no beef had been thawed and refrozen. However, they gained a much better understanding of just how the end consumer feels when they consume Australian products.
We may claim the product is “clean and green and safe”, but in the post-covid market, we have to prove it.