More than 35,000 blockchain companies are operating in mainland China — but it’s believed that many of them do not even use blockchain technology.
In the first quarter of 2020, as COVID-19 shut down factories, offices and cities across the world, 2,383 brand-new “blockchain” companies sprung up in China.
This brings the total to 35,010 companies as of April 1 — over 20,000 in Guangdong province alone — according to Tianyancha, a business data company.
But in mid-February data firm LongHash estimated that approximately 70% of the total number of blockchain firms registered in the Asian country at that time had lost their legal status or had their licenses revoked.
‘Blockchain’ companies in name only
Blockchain is hot property in China, especially after President Xi Jinping announced in October last year the country will become a global blockchain power leader. This may help explain why larger businesses label themselves as “blockchain” companies when in fact they have little if anything to do with the core technology.
This push, combined with how complicated it is to bring a legitimate blockchain company up to government standards, might go a long way to explaining the phenomenon.
Many smaller Chinese “blockchain” companies and startups have been found to be shell corporations. A marketing tactic in and of itself, these “blockchain” companies can then be sold or absorbed by a larger, perhaps more legitimate firms.
At a December 2019 Annual Meeting on Blockchain and Digital Assets in Beijing, Bai Liang, Vice Director of Chinese Institute of Digital Asset, admitted the number of these companies was astonishingly high:
“The reality is that… 96% of the more than 30,000 blockchain companies in China are not actually operating [using blockchain as their core technology].”
China’s Office of Central Cyberspace Affairs Commission (CAC) has reported only 506 companies out of the 35,000+ even have a blockchain service filing number.