Key Points
- Chinese companies are converting valuable physical goods such as rare trees, tea, and liquor into tradable digital assets.
- This “tokenization” uses blockchain technology to create a new way to raise money.
- The goal is to unlock capital for industries with long production cycles, such as forestry and fine tea.
- Authorities in mainland China, which have banned cryptocurrency, are concerned about the new trend and have warned some companies to pause operations.
From rare rosewood trees to expensive liquor, a wide range of valuable Chinese goods is now being converted into tradable digital assets. Companies are using blockchain technology to “tokenize” these real-world items, a move they hope will unlock new sources of funding and revolutionize industries.
On the tropical island of Hainan, a company affiliated with the Chinese automaker Geely is photographing rare Huanghuali trees to convert them into digital tokens. The wood from these trees is highly prized, but they take decades to mature, creating cash flow problems for farmers.
By tokenizing the trees, the company hopes to raise capital and “turn green mountains and clear waters into gold and silver.”
This trend is spreading across China. Startups are tokenizing everything from fine pu’er tea, which gains value as it ages, to high-end baijui liquor. The technology also promises to combat counterfeiting, a major problem in industries such as fine tea.
This new wave of fundraising is happening in Hong Kong, which has a more open financial system than mainland China. However, authorities in Beijing, which have banned cryptocurrencies, are already expressing concern.
Chinese regulators have informally warned some companies to pause their tokenization businesses in Hong Kong, fearing that criminals are exploiting the new trend.
Despite these concerns, the market for these “real-world assets” is expanding rapidly. For now, it seems the promise of turning tangible goods into easily tradable digital tokens is too big for many Chinese companies to ignore.
