Mobile Phone Retailer Joins China’s Blockchain Land Grab With US Startup Investment
(Source: coindesk.com)

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(Original link: coindesk.com)

Please consider using a different web browser for better experience. Please enable JavaScript in your browser for a better site experience. Mobile Phone Retailer Joins China’s Blockchain Land Grab With US Startup Investment Jan 13, 2020 at 16:55 UTC Updated Jan 13, 2020 at 16:59 UTC Phone store image via Shutterstock David Pan Mobile Phone Retailer Joins China’s Blockchain Land Grab With US Startup Investment Dixintong Technology Group, whose parent company, D.Phone, is one of the largest smartphone retailers in China, has entered the blockchain space by acquiring a minority stake in a U.S. startup called Monsoon Blockchain. The two companies confirmed to CoinDesk that the purchasing agreement was signed on Jan. 7, but declined to disclose any financial terms on the deal. However, people familiar with the matter said the deal values the blockchain startup at over $100 million. The partnership between the two companies comes at a time when China is encouraging enterprise blockchain adoption as well as the development of emerging technologies . Dixintong’s chairman and founder Donghai Liu said the deal will allow his firm to explore potential use cases that require both blockchain and other emerging technologies like 5G and the Internet of Things (IoT). Started as a mobile phone retailer in 1993, D.Phone went public in Hong Kong in 2014 with four anchor investors including Lenovo Group, Qihoo 360, China Telecom and TCL Corporation. Alibaba’s major e-commerce rival, JD.com, has also acquired 9 percent of Dixintong worth $30 million in July. The firm’s total market capitalization is around $200 million. According to its 2018 annual report , the company sold nearly 9 million cell phones in its more than 1,500 physical stores across the country, generating over $2 billion in revenue and $46 million in net profit for the year. The parent company has made efforts to expand its businesses to other related industries. It partnered with China’s Tianjin city government in December to build an industrial park focusing on 5G and IoT with a total investment estimated to be over $3 billion. Political boost A slew of tech companies have explored blockchain technologies since Chinese President Jinping Xi called on the country to “ seize opportunities ” in the space. Stock prices skyrocketed for companies whose businesses are related to the new technology. “When you have that level of endorsement from the government, everything moves much faster,” Donald Basile, the startup’s CEO, said. The country’s two largest telecommunications services providers, China Mobile and China Telecom, are members of a consortium that runs Blockchain-Based Service Network (BSN), a state-backed blockchain infrastructure project. The Chinese government is also rolling out 5G services in 2019 across the nation. The emerging technology would require new mobile devices. Most major carriers in China have started to offer 5G data plans and cloud services. The Shanghai government plans to spend millions of dollars on supporting a public blockchain project and open an incubation center for startups that want to build decentralized applications (dapps) on the blockchain. Meanwhile, the Guangdong province has launched a blockchain-based project to help small and medium-sized businesses borrow money from commercial banks. Top Chinese tech giants such as Alibaba and Baidu have also launched their own projects to integrate blockchain with cloud services. “There will be great potential for blockchain adoption given the support from the Chinese government,” Liu said. “That is one of the biggest reasons why we want to form a partnership with Monsoon Blockchain.” Blockchain-based marketplace Monsoon Blockchain touts an ethereum-based protocol that aims to use smart contracts to provide a more efficient marketplace for cloud service providers and potential clients, according to Basile. He said prices for cloud computing and storage services could vary over time between data centers, depending on locations and capacity. And Basile believes that’s where blockchain can play a role. The firm aggregates prices and collects information about the conditions of data centers across the world. It then submits the data to the blockchain network, he said. On the other hand, companies that want to buy computing and storage services can submit their specific requirements. The peer-to-peer blockchain-based protocol will use smart contracts to match those companies with the most suitable cloud services provider for them, according to Basile. Users now need to buy the network’s native token with fiat currency to use the smart contracts on the blockchain. While the token is only circulated within the network, the firm may consider launching a private token sale or issue a public offering in the future when regulators have a clear guidance on the processes, Basile said. Monsoon Blockchain worked with a spate of IT giants including IBM, Oracle and Alibaba as a data services distributo...