ChemLinked Food Portal are proud to announce our official partnership with Authenticateit traceability systems. The strategic partnership allows Chemlinked to expand on our promise to help the global food industry to remove Chinese regulatory barriers and expedite market access while simultaneously ensuring the integrity, quality, safety and authenticity of foods sold to consumers in China. We can now offer our food industry clients exporting to China an unprecedented opportunity to harness China's massive demand for safe foods and a traceable food supply chain. To outline how this new traceability service works I took the opportunity to interview Authenticateit founder Gennady Volchek to share how Authenticateit and Chemlinked Food can really empower Chinese consumers and protect our clients brands.
China's New Product Recall Legal Provisions
Q. China's pending new food safety law (October 1st 2015) establishes the nation's first food recall system (article 63, 94, 105), in addition to offering detailed guidance on practical implementation of AQSIQ's importer credit system (the blacklist). Can you suggest how Authenticateit's traceability system can help brand owners, retailers or manufacturers recall products or identify root causes? (Recall system implementation date September 1st 2015)
A. Authenticateit tracks the raw material suppliers from its sources to the manufacturing and from the manufacturing to the point of sale. So in the case of product recall of a raw material supplier, the brand owner has visibility of products that used the recalled components and are able to recall only the affected products.
Q. If recall is required or blacklisting occurs can traceability help apportion individual accountability for errors in handling or deliberate adulteration through the chain of custody ? For instance if improper cold chain transportation resulted in products becoming rancid or promoting bacterial growth, could your system track where these faults have occurred and why?
A. Use of traceability and serialisation addresses a number of risks associated with production and distribution where the brand owner is vulnerable and exposed when it comes to product recall. Authenticateit's system allows users to integrate with temperature loggers which would help to identify the issue before products get to the point of sale, however there are a number of other areas where traceability and serialisation become invaluable for the brand owner.
Being able to alert only those consumers who have scanned the recalled products rather than associate product recall with all products of a brand helps minimize damage to the brand, but at the same time ensures that consumers who are in touch with recalled products are well informed.
After a product recall event, consumers may have concerns and questions. Enabling a brand owner to address those concerns via a Live chat helps to restore confidence in the brand and minimize effect on sales.There may be a time gap from the time product recall announced till retailers have managed to remove affected product from the shelves. Authenticateit enables a brand to alert any consumer around the world who scans a recalled product with real time effect that dramatically reduces risk of casualties related to the recall.
Integrating Product Testing Data and Certification into China Marketing Strategies
Q. Exporting food to China through traditional sales channels requires compliance with Chinese regulations and compilation of extensive health and safety documentation including testing data to ensure safety and compliance with national standards as well as certification documenting the product complies with national standards in the country of origin. Is it possible to integrate this certification documentation into the Authenticateit system in a way that allows Chinese consumers and retailers to see the documents and ensure that product is compliant.
A. We understand the importance for the consumer as well as retailers and authorities to access trusted data in relation to the product in question, that's why Authenticateit has developed a number of API's that facilitate integration with product recall portals, certification labs and other relevant trusted sources of data to enable instant access to the important information. As an example when consumers in China or anywhere around the world scan products of some Australian dairy companies, it enables consumers to access certificate of origin and health certificates issued to the particular batch that the scanned product belongs to.
China Success Stories
Q. Can you give any examples of Authenticateit case studies that have been successful in China or other parts of Asia, and how this has helped companies enter Asian markets?
A. Authenticateit has been successfully deployed by a number of companies worldwide in different sectors including clothing, footwear, meat, dairy and other food companies including Norco Food and A2 Milk.The key objectives for Australian exporters are to protect their brand from counterfeiting, but at the same time reduce regulatory barriers to enter China.
How it Works
Q. In the most succinct way you can, explain how Authenticateit would work for food companies, particularly SME’s looking to enter the Chinese market?
1. Authenticateit generates unique product identifiers in line with GS1 Global Traceability Standard, called GS1 Datamatrix code
2. During production, those codes are printed on the packaging as per example below:
Download the free Authenticateit App from 360 Zhou or iTunes.
Scan this barcode for product authenticity, safety advice, rewards and more.
3. As product moves through the supply chain, each change in the chain of custody is recorded and stored in the cloud.
4. When a consumer scans the product barcode with the Authenticateit App, the system compares geolocation of the consumer (via mobile phone GPS) with the registered address of that particular product. If the product’s barcode has been copied and offered to a consumer in a different location, the system will immediately alert the consumer and the brand of this occurrence.
Exploiting Loopholes in the System
Q. Are there any weaknesses in the Authenticateit system that leave it open to exploitation by counterfeiters and food criminals and can you explain how these are mitigated against?.
A. Authenticateit is based on the GS1 Global Traceability Standard, which is extremely effective. It can be said that the weak link is diligence and compliance of supply chain members. Authenticateit has structural dependencies whereby supply chain members are unable to skip steps required for the Authenticateit system to operate. We have also developed an API that integrates with stock control systems of the brand owners and their distributors, that makes operation seamless with less risk of human error.
Other weaknesses of the system now are that consumers in China are using our cloud’s clusters, which are based outside of China. Due to the firewall, some consumers are unable to use the service or response time could be very slow. We have identified this issue and are now setting up a local cluster in China which should be up and running from October this year. This will dramatically improve consumer experience and should increase take-up of the service.
Implementing Traceability in China: A Regulatory Rationale
Q. As you are probably aware the Chinese government is increasing traceability requirements particularly for the dairy industry and for China’s rapidly growing ecommerce sector. Was this a factor in deciding to target the Chinese market?
A. The main drive behind Authenticateit is to enable consumers to shop with confidence, minimise the threats posed by counterfeited products, and at the same time help brands to protect their Intellectual Property. The goals of Authenticateit happened to coincide with the regulatory changes and the increased consumer demand for safe products happening in China.
Cost Benefit
Q. What is the average per label cost for a product using Authenticateit system here in China?
A. Authenticateit charges brands only once for the registration of an individual product in the system. This fee includes access to all system modules by the brand owners and their supply chain members. Fee per product varies based on the production volume of a particular company, for example if production volume of a brand is:
1mln items per year then cost per item would be US$0.0147
10mln items per year then cost per item would be US$0.0036
Implications for eCommerce in China
Q. When you visited our offices here in Hangzhou you mentioned that Authenticateit’s system can be integrated into e-commerce sales channels here in China. Could you explain more about how this works? Have you been in discussion with any e-commerce service providers here in China?
A. The system enables the brand owner to register all members of their supply chain, where a member could be a distributor, retailer and an operator of an online store. Once an online store has been configured, the system would generate individual product images, uniquely serialized for that particular store, so that the e-commerce site could use those images. Consumers are able to scan the barcode on those images to confirm if that online store is linked to an authorized distributor, and check if that authorized distributor has any genuine products in stock. Essentially, the system would confirm if that store is capable of supplying the consumer with a legitimate product. The consumer is then encouraged to scan the product once they have received it, to confirm its authenticity.
Feedback
Q. According to your website, you’ve been working with a variety of enterprise including the dairy sector. What feedback have you got from companies already using your system?
A. The system has proven to be extremely effective. Here are some statistics from published case studies: “In the first month of operation, brands have identified instances of grey imports, overruns in the factory, tempering with printed due dates on food products. Our scan-to-purchase ratio varies from 7% to almost 90% depending on the industry sector and enablement of loyalty programs by the brand.
Building on the Success of the Past
Q. What improvements can be made to the Authenticateit system and what is next for Authenticateit?
A. Authenticateit plans to continuously enhance it offering to all stakeholders, which involves more interconnections with trusted data sources for the consumer, API’s for seamless implementation in different production environments and other tools and modules to empower brands to gain better control of their product distribution and protection of its IP.
In Closing
Q. Can you outline some of the less obvious advantages to the Authenticateit system?
A. Grey/parallel imports can be a difficult problem to deal with, as in many countries it’s not an illegal activity. Authenticateit creates a value add for a consumer – an ability to confirm authenticity of a product which would only be available if that product has followed the controlled environment of an authorized supply chain. This approach enables brands to offer peace of mind on the products which are properly imported, compared to those that have been parallel imported. Authenticateit helps brands to control and monitor stock levels of their retailers, which helps with production planning and sales support.
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