Proving the Business Case for the Internet of Things

Blockchain helps food supply chain in Taiwan

Steve Rogerson
June 6, 2017

OwlTing, an e-commerce platform for safe food products that connects fine-quality food vendors and local farmers in Taiwan, has integrated blockchain technologies into its supply chain infrastructure. 
The company has announced OwlChain, an Ethereum-based food provenance system. Through partnership with vendors such as Nice Garden and Upwelling Ocean, OwlChain brings together transparency, immutability, integrity and deep domain expertise for various food supply chains, creating a benchmark for better food safety in the world.
Darren Wang, the founder of OwlTing, was born in a small fishing village near Badouzi in Taiwan. He was hired into Google's headquarters after obtaining a master degree in electrical engineering. He then joined and founded several tech start-ups, where he was able to gain experiences and expertise in the software industry. However, his successful career cannot make Wang less homesick, so he decided to leave Silicon Valley and come back to Taiwan to build OwlTing.
"I am doing this new business to provide fresh milk and healthy foods for my kids," said Wang.
As part of the OwlTing new vendor on-boarding process, Wang drove around Taiwan and visited each production premise to select qualified vendors.
"We are extremely meticulous when it comes to food,” he said. “Product with additives, artificial colouring or flavouring cannot be sold on OwlTing. While this business approach may seem unwise and cumbersome, our approach has identified over 1500 farmers and merchants, and that's just in Taiwan."
Average customer ticket on OwlTing exceeds US$60 per order, and more than a fifth of its users are customers with recurring milk subscription services. OwlTing's incentive programme allows users to earn rewards with social recommendations and has enabled a customer retention rate of 70%. On average, customers come back and place orders for every 15 days.
In addition to choosing fine products for consumers, OwlTing Open Market created a distribution channel for farmers in Taiwan.
"Farmers can earn more money by working with us," said Wang, "with increased income and better brand awareness, they can reinvest in their businesses, creating more jobs and better products."
One example is the Changhua-based Chu-En Farm. After working with OwlTing Market for ten months, the farm owner was able to purchase more than 30 pregnant milk cows and increased milk production capacity by 15 per cent, the first major capital investment in 30 years.
"OwlTing consumers prefer natural and organic food ingredients, and they are willing to pay for high quality at reasonable prices," said Wang. “While most e-commerce platforms charge farmers with annual fees for product listing, OwlTing farmers pay zero annual fees and are only charged a low commission for each product sold on our platform. We want to help farmers earn more, so they can invest in their future.”
Founded by a group of engineers led by Wang, OwlTing strives to reinvent consumer experiences with better technology. OwlTing Map integrates detailed dairy and fruit product profiles with geophysical information, allowing consumers to have a "god's eyes view" on high-quality producers and place orders on the map. AI chatbots were developed for handle customer inquiries on Facebook. OwlTing has also enabled various mobile payment rails, including Apple Pay, so consumers can finish checkout in just two seconds.
In 2014, the company also worked with MaiCoin, a cryptocurrency trading platform in Taiwan, to become Asia's first e-commerce platform to accept bitcoin. Through direct API data exchange with Priceline and Japanese car rental group OTS and Asoview, an online travel agency specialising in local travel experiences in Japan, OwlTing's travel platform provides exotic travel experiences such as flying light aircraft in the USA, kayaking in Okinawa, yacht BBQs in Malaysia, and hiking tours in Taiwan.
"We are firing on all cylinders," said Wang.
The company has established its reputation as an e-commerce platform for safe foods. Mounting concerns on food safety among consumers in recent years triggered a drive by both private and public sectors in Taiwan for better food supply chain traceability and quality controls.
With his experience as an investor in several blockchain start-ups, Wang came up with the idea for using Ethereum blockchain technologies to revamp food provenance systems. Leveraging the consortium blockchain infrastructure developed by AMIS, a founding member of the Enterprise Ethereum Aliance, and partnership with vendors such as Nice Garden and Upwelling Ocean, a transparent, immutable and more secure food provenance system for different production processes has become possible.
Blockchain technologies emerged in 2015 as an important area attracting significant investments from global financial institutions and manufacturers to build prototypes and related experiments in recent years. As blockchain technologies will soon exit the proof-of-concept phase, more enterprise applications are to be deployed in the real market.
OwlChain uses blockchain to create a tamper-resistant food provenance and open its API to vendors around the globe. More Taiwanese vendors from different sectors are expected to join the platform, including Taiwan Agricultural Global Marketing, Sinhong Soy Sauce, Ming-Chuan Dairy Farm and With Heart Meat Shop. In the future, OwlChain will also develop more services for other sectors, such as fine ingredients importers, exporters and logistics service providers. All participants will collaborate to build an open supply chain provenance system that can shed light on each step of the production and distribution processes, allowing more informed decisions by the public with regards to choosing better and safer products.
"Blockchain-based supply-chain network services are getting more attentions from internet and fintech investors around the world," said Thomas Hu, founder and CEO of Kyber Capital and a strategic investor of OwlTing and AMIS. "OwlTing and AMIS have combined their R&D capabilities in ecommerce and FinTech to build OwlChain, a new platform with huge business opportunities. This showcase has proved once again Taiwan's leading talent for blockchain innovations. Kyber will continue to help OwlChain commercialise and expand to global markets."
With a history of over three decades, Nice Garden Group strives for enhancement of competitiveness of Taiwan's animal husbandry, specialising in animal nutritional supplements and pig farm management software. Taiwan's livestock industry has been gradually declining in recent years. Aside from domestic issues of environmental protection and diseases, the industry also faces competitions from agricultural products imported from other countries. With both internal and external threats, a new perspective for management was in dire need.
Nice Garden is determined to overcome the adverse situation, and carrying out downward vertical integration by focusing on the pig farming industry, operating new pig farms and investing in high-end meat product processing plants, to consolidate the entire supply chain.  From the genetic resources of pigs, selection of nutritional supplements, sophisticated meat processing, to distribution channels and restaurants, the company aims to integrate production processes of meat products, imposing strict control throughout. It has also launched its own Choice Pig brand to provide safe and delicious meat products to the consumers.
From the farm to the dining table, the group strives to become the integrator of a safe, secure and healthy food chain. Kevin Wu, COO of Nice Garden Group, said: "From the beginning, Nice Garden has always asked for the highest food safety standards. For the company's developments and growths, we value process and education. People nowadays tend to only look at the results, but the source and process are equally important as the results. We look forward to seeing product traceability becoming more transparent through utilising blockchain technology, so that the devotion of quality companies and professionals can be widely recognised."
Nice Garden believes the best way to improve the situation of Taiwan's agricultural decline and resolve the crisis of series of food safety issues is to raise the level of consumers' and industry's awareness of food quality. All companies should strive to provide safe food and produce food products with a responsible and serious attitude from the sources, controlling each and every procedure, and manufacturing quality and safe products. Consumers should place more emphasis on the source and production process of food products, and also be more willing to purchase quality products at higher prices; this way, manufacturers will be more willing to raise operational costs to optimise production processes to provide products that are safer with better quality, naturally forming a positive cycle in the food industry.
As the integrator from the farm to the dining table, and bridge between producers and consumers, Nice Garden hopes OwlTing can be the point of origin for communication and education for consumers on livestock products and food safety from the perspective of manufacturer, enabling consumers to understand food safety, and thus join them to safeguarding food safety.
However, transparent and open manufacturing processes alone cannot solve the problem of food safety; the industry can only gradually reduce the risk of food safety through a constantly improving process. If the demonstration proves to be successful, Choice Pig will be accepted by more consumers, and Nice Garden Group can involve more farmers in this project and change the existing production-distribution-supply system.
Consumers can buy products with contentment, and manufacturers and producers can invest more to improve products. Nice Garden also looks forward to expand the scope in the next phase, cooperating with more restaurants and quality e-commerce companies downstream to raise food safety.
To practice the principles of sustainable fishing, Upwelling Ocean has established the responsible fisheries index (RFI). The RFI is a tracing and environmental impact assessment mechanism that includes both fished and farmed seafood, and can be regarded as a label for marine environment protections. Upwelling Ocean recognises that many international marine environment protection labels around the world are serving large international seafood traders, and are not available for the small, diverse Taiwanese seafood industry that produces and distributes locally. Furthermore, the current situation of Taiwan's marine resources requires improvements as it is behind the rest of the world.
Due to their nature, marine environment protection labels around the world are mostly launched privately rather than publicly. Therefore, Upwelling Ocean has relied on its own experiences in various aspects of Taiwanese fishery, including R&D, education, management, fishing, farming, processing, transportation and distribution, and developed a set of sustainable labels of using coastal and ocean resources that are not just suitable for Taiwan, but also for many smaller marine economic systems around the world.
This system assesses seafood sustainability, and tackles the current issue of IUU (illegal, unreported and unregulated) fishing, facilitating a positive cycle of deliciousness, safety and environmental responsibility through the economic power generated by consumption of seafood.
"According to UN statistics, 77% of global fishing resources have reached saturation or are overdeveloped," said Steven Shyu, founder of Upwelling Ocean. “In recent years, people in Taiwan become more aware of seafood safety and the production process' impacts on the resources. We hope to transform the sustainability into actions. Blockchain technology is unique as it cannot be altered, it's traceable and it will bring higher credibility to our marine environment protection label. Not only will it facilitates sustainable use of ocean resources in Taiwan, we can share this concept with fishing industries in other regions in the world that rely on local productions and distributions.
OwlTing Market is an online platform that connects consumers directly with producers. Thousands of small businesses around the world have already set up mobile shops on OwlTing Market to sell products and services to customers all over the world.  The Taiwan Milk Map and Fruit Map it created have also broken the barrier of conventional methods of regional retailing and distribution, helping farmers and manufacturers quickly transition into e-commerce businesses to sell products in various regions through the internet. 
Headquartered in Taipei, OwlTing operates globally with branch offices in Kuala Lumpur for the Asean market, and the USA. It plans to expand to Tokyo and Bangkok this year.