Chinese e-tailing giant Alibaba has enlisted the help of Australia Post and vitamin company Blackmores for a pilot program to prevent food fraud using blockchain technology.

The internet business has also called in PricewaterhouseCoopers to help improve integrity and traceability on its supply chains as part of the scheme.

Alibaba ANZ managing director Maggie Zhou signed a memorandum of understanding with Australia Post and Blackmores in Canberra today during Chinese premier Li Keqiang’s visit to the country. The two Australian companies will offer in-market testing across their supply chains for the pilot.

Zhou said that if the Australian scheme is successful, it will form the basis of a global supply chain model for all of Alibaba Group’s e-commerce markets.

“Food fraud is a serious global issue that not only costs the food industry billions every year, but puts consumers’ health at risk. The signing of today’s agreement is the first step in creating a globally respected framework that protects the reputation of food merchants and gives consumers further confidence to purchase food online,” she said.

Alibaba wants to introduce new technologies to mitigate the risk of counterfeit and fraudulent food products, including a pilot blockchain solution model for vendors.

Blackmores CEO Christine Holgate said the Alibaba plan will make her company’s supply chain more visible and transparent to consumers in China.

“This initiative with Alibaba Group, PwC and Australia Post will provide even greater confidence for consumers purchasing our products through e-commerce channels,” she said.

Counterfeit products have been a continued problem in China, with companies such as wine giant Penfolds having to deal with fake bottles of their famous reds.

PwC research found that 39% of food companies said it was easy to fake their products and 42% believed there is no method for detecting fraud, beyond standard food checks.

Fraud costs the global food industry is an estimated $US40 billion annually.

PwC Australia CEO Luke Sayers, said trust was rapidly becoming the defining issue of modern business.

“Building trust in our food supply chain is important at a time when public confidence in food producers, processes, vendors and even government regulators has been rocked by a number of scandals,” he said.

“Global consumers expect instant gratification and when it comes to food, that means any time, any place. As a result, food supply chains have gone global which creates added complexity and opacity.”

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