The State Grid Corporation of China will trial the use of blockchain and smart contracts using Beijing-based Wanglu Tech’s cross-chain consortium chain, the company told TechNode.

Why it matters: The collaboration is the first concrete step taken by a Chinese state-owned enterprise (SOE) to adopt blockchain technology. 

  • The announcement follows just two weeks after blockchain was named for the first time a strategically important technology in China’s Five-Year Plan.
  • The news bodes well for Wanglu: State Grid is the world’s largest utility provider and third-largest company by revenue. 

Blockchain for privacy: The company will deploy a blockchain-based data-sharing and management platform for State Grid in a city in eastern China, Li Ni, Wanglu’s VP of operations told TechNode.

  • The company aims to seamlessly integrate massive amounts of data that is currently spread through different departments while preserving consumer privacy. 
  • “Managing and utilizing data is a priority for State Grid,” said an employee of the company who spoke to TechNode on the condition of anonymity.
  • Using blockchain, State Grid hopes to break through data silos to conduct—often using artificial intelligence—analysis without endangering consumer privacy as it works to modernize its services and capabilities. 
  • Using a privacy-focused field of cryptography called secure multi-party computation and zero knowledge proofs, Wanglu’s chain promises to allow different departments to access specific data without revealing customers’ personal information. 
  • Li explained the problem: “Say I am from the marketing department. I want to know your electricity bill because I’m doing customer analysis. But the bill data is maintained by the sales department, which says personal information like names and addresses cannot be shared with another department,” Li said. 
  • Wanglu’s blockchain will make relevant data available while concealing personal information. 
  • The company declined to publicly disclose the RMB value of its contract with State Grid.

Testbed: State Grid is positive but conservative about using new technology, the SOE employee said.

  • Li expects the blockchain to be deployed in September. After it is operational for about three months, State Grid will evaluate the blockchain and decide whether it should be deployed to other places, Li said. 
  • “The whole system costs billions or trillions of RMB, they cannot give you the whole system to implement your idea,” Li said. “We need to pick a place or scenario.” 

Connecting islands: Several SOEs such as banks and mobile network operators are preparing similar feasibility studies for blockchain, according to Li. “This will be an example for others to follow,” he said. Connecting all the blockchains such that different companies can share data is important for the technology to work.   

  • “All the different chains are considered isolated islands,” Li said. 
  • Wanglu’s interoperability solution will solve this problem, and it was key to landing the contract with State Grid, according to Li. 

Long process: The procurement process started in the second quarter last year, when State Grid invited about a dozen companies to submit proposals for data management. In July, they selected Wanglu to proceed with a full feasibility study. After submitting in August, they had to make many changes because the SOE “asked a lot of questions,” Li said. 

  • The feasibility study was submitted and accepted in October, after which Wanglu had to conduct field trips to State Grid and a technical evaluation before the final go-ahead to deploy in other locations. 

Wanglu: Founded in 2016 and based in Beijing, Wanglu Tech focuses on government and enterprise blockchain applications. It also runs a public chain called Wanchain. 

  • Wanglu was the first Chinese company to launch a cross-chain solution in 2018.
  • Unlike other blockchain companies, Wanglu is targeting SOEs because “they have the power, resources to do blockchain innovation,” according to Li. 

Context: State Grid is piloting the use of 5G, AI, big data, and internet-of-things solutions to modernize its infrastructure

  • Chinese government-affiliated entities are all-in on blockchain for data management, but progress has been lacking. The Beijing municipal government last year announced an ambitious plan to use blockchain in 12 areas of governance. 
  • Hangzhou is using Ant Group’s chain to manage company seals.
  • State Grid is involved in Chang’an Chain, a “hardware and software” blockchain. 

READ MORE:  Enterprise blockchain to integrate China’s digital yuan

Update: The headline and first paragraph of this article have been revised to add detail about the services State Grid is testing.

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.