VeChain and Direct Imported Goods – Partnership Analysis

Shanghai Waigaoqiao Direct Imported Goods sales centre Ltd. (DIG) is a wholly owned subsidiary of Shanghai Waigaoqiao Free Trade Zone Development Co., Ltd. Which aspires to build the largest distribution centre for imported goods in China. As it stands, 30% of all Wine imported into China comes through DIG.

According to Mordor Intelligence, the global Wine market is valued at $304bn and is expected to reach $380bn by 2022. China is expected to overtake the UK as the second most valuable wine market by 2020, with the category forecast to increase by over 40% between 2016 and 2020.

In 2016 China was the fourth biggest import market behind Germany (129.23 million 9-litre cases) the UK and the USA. In five years, it is expected to reach 94.46 million cases of imported wines, and with this, China will overtake the USA (85.76 million) and become the third biggest import market.

If DIG maintain their share of 30% of all imports into China, that represents a potential for up to 1.2 billion 70cl bottles of wine to pass through DIG in 2021 ((94,460,000 * 9) / 0.7), and if each of those is authenticated with a VeChain NFC chip, thats brings huge potential for the project.

How does VeChain work with Wine Distributors?

VeChain built the liquor tracing platform for DIG. From the overseas winery, the data of the products were written into the smart chip attached to the bottles, and recorded on the VeChain blockchain. Information such as logistics, sales will also be stored on the blockchain so the customers can simply scan the NFC smartchip to view the whole lifecycle of the product to verify the authenticity.

The chips are designed into labels/tags, which will be broken when the bottle is opened, preventing their reuse.

One of the bigger problems in China, and around the world, is the abundance of counterfeit Wine.

It is estimated that up to 30,000 bottles of counterfeit wine are sold per hour in China alone, and examples such as the sale of a supposed bottle of 1787 Chateau Lafite being sold for $157,000 at auction, that later turned out to be fake, could become a thing of the past with widespread adoption of the VeChain ecosystem.

Jeremy Oliver, an Australian wine critic was quoted by The Weekly Times saying he was told stories that the average bottle of Champagne in China is filled seven times. He estimates that 50% of wines retailing for $35 or more in China are bogus.

What does this mean for VeChain token holders?

We already know that corporate partners do not have access to tokens outside of the current exchange markets – there is no special token pool, and therefore it’s reasonable to expect that partners will be accumulating and stockpiling VEN tokens for future use already. With future demand and further partners, this additional constraint in supply will likely lead to an increased token price.

We also know that VEN tokens are fundamental to the usage of the platform – VEN will be spent pushing changes to the blockchain, and we know that around 25% of ‘spent’ tokens will be returning directly to VeChain, with 75% distributed to node-holders. Again, another constraint point in the supply.

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Copyright © James Coleman-Powell, 2016