Anti-counterfeit tech introduced in China for milk powder

A start-up firm is combining blockchain with radio-frequency identification in a bid to fight fakes and improve trust in the supply chain of milk powder products in China.

 Walimai, which is based in China, has developed its own specialised RFID anti-counterfeiting label that can be scanned with a smartphone app and is linked to blockchain technology, Business Insider reported.

“Our answer to the problem [of counterfeits] is to apply technology that gives the consumer a tool to tell apart counterfeits from authentic products at every step in the supply chain,” Alexander Busarov, co-founder and chief executive of Walimai, told the publication.

News of the technology development comes almost a decade after China’s infamous powder milk scandal where 300,000 children were poisoned by adulterated milk products containing the industrial chemical melamine, leading to 52,000 being hospitalised and at least six deaths. The melamine had been deliberately added to boost the amount of nitrogen in the milk, which is a marker of protein content. Two people were executed for their role in the scandal.

According to a recent Quartz report citing a survey by consultancy firm McKinsey & Co, consumers in China are still anxious about buying milk powder, with 53 per cent saying they prefer well-known and established foreign brands of milk powder rather than domestic brands.

The aim of the Walimai technology is to alleviate these fears by bringing transparency to the product’s supply chain to prove authenticity.

“Whenever there is a change of custody, a product with the Walimai anti-counterfeiting label is scanned. Each scan updates the secret codes on RFID chips (and at the back-end), as well as capturing and updating geographical information in the system,” Busarov said.

When purchasing, the consumer can scan the label with the corresponding Walimai smartphone app to view the supply chain history log to ensure the milk powder is genuine. The scan also gives the consumer information on the product, such as where it was produced, what it looks like, how to consume it, and the ingredients in it.

The RFID labels, which are unique to each product, are dynamic as a result of the updates and changing codes along the supply chain, which makes them impossible to clone or counterfeit themselves, while opening of the product or removal of the label from the product destroys the functionality of the label so it can’t be re-used for illicit purposes.

There are also further plans for growth, with the technology due to be linked to a crypto-token blockchain-based loyalty programme under the Singapore WaBi Project, with the intention of encouraging and incentivising consumers to scan the labels.

Busarov told Business Insider that counterfeiting was rife in China – noting that he and co-founder Yaroslav Belinskiy were both poisoned by fake whiskey they drank during Walimai’s opening celebration party. It had been bought from a big-name chain store in Hangzhou.

There was a lack of solutions to prevent counterfeits reaching the consumer, Busarov said. “Hence, none of the manufacturers or retailers have secure end-to-end control of the supply chain.”

He believed Walimai addressed this issue.

In April last year, nine people were arrested in China for selling fake baby formula under the brands Similac and Beingmate, and about 1,000 cans of milk powder, 20,000 empty cans and 65,000 fake Similac trademarks were seized. More than 17,000 cans had reached retailers’ shelves.

The Chinese Food and Drug Administration said earlier this year that better regulation of milk powder is one of its top priorities.

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