Behind the startup: Interview with Alexander Busarov on Fighting Counterfeiting in China
Technology Lawyer working on code and everything law.
Founder : Blockchain Research
In this interview we speak with Alex Busarov the co-founder of Taelpay about Taelpay ecosystem a blockchain application developed by the team while operating in China. Tael consists of over
50,000 users in 500 cities, hundreds of products protected with NFC chips and
blockchain, all in cooperation with a long list of participating companies like Rakuten,
Nestlé, New Zealand Cherry Corp,and many more. The Tael ecosystem is anchored by
the Tael token which acts as a reward, loyalty, and marketing incentive for
participants in the ecosystem. Now lets delve straight into the interview!
1. Could you tell us about your background and your journey into the
Sure. I studied Philosophy and Economics at the London School of Economics, together with my co-founder Yaz Belinsky. After I graduated, I
worked at McKinsey and Co. as a management consultant. I spent 4 years with
McKinsey, after which I spent some time in the FMCG (Fast-moving consumer
goods) industry working as a sales director at a major infant formula producer.
My journey into the blockchain industry started with a problem to solve:
counterfeit products. Blockchain is a great tool and is a vital part of our
solution to this problem.
2. Tell us about the story behind Tael & TechRock – How did you start the
company and what is your vision?
Whilst living in China, Yaz and I had a bad experience with fake
whiskey. After only a few sips, we became very ill and subsequently realized
that the alcohol we had purchased was fake. It was a quality brand, it was
bought from a reputable store, but it was very clearly fake.
When we began to look into this problem, we discovered a few things:
Firstly, there existed no effective anti-counterfeit solution: holograms are close
to useless and QR code ‘solutions’ is not secure. On top of that, attempts to
solve the counterfeiting problem tend to be inconvenient for consumers and this
leads to low adoption rates. Even if QR codes are put onto a blockchain they’re
not secure, as it’s trivial to clone or reuse QR codes. I’m constantly surprised
that quite a few blockchain companies are still trying to use QR codes as part of
their anti-counterfeiting technology.
Secondly, we realized that the extent of the problem goes well beyond the loss of
revenue for brands – the problem is really about the safety of consumers. Our
personal experience with fake whiskey was terrible and what is worse is that
even baby-related products were being counterfeited.
To solve the problem, we first built the authentication tech to securely connect
physical objects (FMCG products) with their digital representations on the
blockchain, using NFC (near-field communication) chips. We then tried selling
the tech to large corporations, in the same way, many of our competitors are
We quickly realized that we needed to build the ecosystem around the
consumers instead to help those most affected by the problem. That’s why it is
now the Tael Ecosystem and everything is built around our users: securely
protected products on the Techrock platform, with the right partners, the Tael
loyalty program and much more. We work with brands to protect their products
so that we can protect consumers from harm.
Our vision is to build a safe-product ecosystem with authentic products and authentic interactions between participants. Blockchain is of great help in enabling this trust.
3. What is according to you the best thing about building a company in
China’s economy is incredibly fast-moving and consumers here are
quick to adopt new technology. This makes it much easier to grow: 90% of our
users are women for whom we’ve made it seamless to engage with blockchain
technology. Thanks to high user interest and low adoption barriers we’ve been
able to grow by hundreds and sometimes thousands of new consumers every
This ‘hyper-growth' environment does come with its own costs: whatever we
build has to be tested on very high volumes: e.g. we had to make sure our
WeChat mini-app could handle thousands of orders placed in parallel. However,
we have a great team that are proactive in thinking about how to deal with our
growth and the future of the ecosystem. These tests are already coming in
handy and we’re continuing to build, test and expand.
4. How does the use of blockchain technology help or accelerate in
identifying counterfeited products? (Can you explain in layman language
to our readers)
To clarify: we are focused on protecting real products and stopping
tampering with these products, not identifying counterfeit products. If our label
is on a product, the consumer will know that it has come directly from the
supplier and they can scan the label to check that it hasn’t been opened during
its journey through the supply chain. Our tech enables consumers to check if
their product has been opened or altered in some way, and see the supply chain
Blockchain technology allows us to create an indisputable, immutable ledger of
all products with Tael labels on them and record all the information about their
supply chain journey through to consumers. The labels are encoded at the
factory or warehouse by the supplier and then, at each stage of their journey, more data is added to the record by further scans. Ultimately, blockchain
helps us to build trust here, as even we cannot alter the product’s supply
5. What business and revenue model is TechRock implementing for the Tael Ecosystem to be profitable and sustainable at the same time?
We currently focus on 3 revenue streams: sales of products protected
with our tech, sales of technology services and marketing services. Each plays
its own important role.
Sales of products protected with our tech, such as food and cosmetics, allows
us not only to have a steady stream of revenue but to also build an initial
user-base which is now getting close to 50,000 mainstream users (can check
adoption.taelpay.com for up-to-date stats). It’s been growing very well through
targeted marketing activity and our referral system so that users can share with
their friends and family. While it’s a business in and of itself, it serves mainly as
a foundation for other revenue streams.
Sale of technology services covers selling our protective labels and related
services to corporate clients. Margins on such services are normally not high
but this gets compensated by high volumes and, more importantly, the ability
to quickly grow the Tael Ecosystem. Consumers using our corporate partners’
products become members of Tael Ecosystem (and Tael points holders),
meaning we are effectively able to leverage the size of our partners to add tens
of thousands, to millions, of users almost overnight. We’ve been working on
these relationships for some time and we are looking forward to them launching
Marketing services surround the services we offer our partners when they
spend Tael tokens to market products to consumers. Because we know our
users quite well, we can help brands make their trade marketing (e.g. sales or
rebates) much more effective compared to traditional retail. Rebate value is
passed to consumers in Tael points and consumers become “hodlers” until their
next purchase when they again receive some Tael points. So they naturally
become lifetime holders.
In addition to these, we plan to develop services around payments that will
turn into their own revenue streams, later on, helping us to grow the Tael
ecosystem further. But we’re focused on getting to a million users first!
6. As we know that you partnered with Rakuten, how has that relationship
developed over the past years and can you highlight any important
Rakuten is the biggest e-commerce company in Japan and one of the biggest
globally, and we are very excited to have them as a partner. It was a great sign
of approval for us when Rakuten chose Techrock (the e-commerce part of the
Tael Ecosystem) as one of only three platforms to sell products in China; the
other two being giants JD.com and Kaola. Since launching in the first half of
2019, we’ve grown our Rakuten partnership to over 150 products (which is
+250% vs. when we started) and have further developments (in multiple
directions) on the near horizon.
7. Does Tael have any plans to expand outside of China?
While our main consumer base is in China, we are already doing a lot
of work in Japan, Australia, New Zealand, and Europe. It’s not just planning
We discussed a good example of this in our recent blog posts:
talk about expanding into some of the largest Department stores in Asia.
Department stores in and around Asia (and the world) get a lot of foot traffic from
Chinese tourists. One of the coolest things about this expansion is that through
the Tael ‘safe channel’ we extend the department store’s sales beyond just their
physical locations, making products available to the more than 500 cities in
China where our consumers are. Moreover, we are working on making Tael
loyalty tokens accepted as a form of payment in the department stores themselves.
There are also multiple brand partnerships like the one with New Zealand
Cherry Corp., where we help to protect the finest New Zealand cherries on their
journey to customers and our labels will protect them in both on- and offline
8. What legal difficulties and complexities did you face while guiding your
way through the complex legal structure around cryptocurrencies in
We’ve managed to navigate the legal environment in China by
establishing a dual token structure. We actually run two blockchains with two
different tokens which are linked 1:1. There is an ERC-20 token (Tael/Wabi)
which is tradable outside of China, while within China there is the Tael loyalty
point (called Shijifen in Chinese) based on Hyperledger blockchain. The Shijifen
can not be traded on exchanges by consumers and has some additional
restrictions similar to many loyalty programs: it cannot be sent between users
and cannot be exchanged for fiat by users. Our users don’t buy the Shijifen,,
they get rewarded with them for actions they take in the ecosystem, (e.g.
purchasing safe products, referring friends/family, etc.). Users then spend
these Shijifen on purchases of safe products. So, Shijifen is not a
cryptocurrency but rather a loyalty point token.
This system also underpins a very important part of our tokenomics. The 1:1
link I mentioned means that for each Shijifen loyalty point awarded to a
consumer, an equal amount of Tael/Wabi supply is taken out of ERC-20
circulation and locked (stats on this are available at taelpay.com). As more
consumers join, more supply is naturally locked up. By way of example, 38,000
consumers with registered accounts in China hold an average of 45 tokens per
user. This means that 38,000*45 = 1,710,000 tokens are already locked out of
supply – over 1.7% of the total Tael token supply.
9. Does Tael have any announcements or partnerships that are in pipeline
which the company would like to disclose for your readers?
There’s lots coming up and we like to keep our community up to
date with everything that’s going on in the Tael Ecosystem. This means that
as soon as we can announce developments, we do; so the best place to keep up
to date with what’s going is at our blog or via Twitter.
10. What trends do you see in the blockchain industry for the year 2020?
As the hype tide recedes, we begin to see who has been swimming naked. As
many people expected, projects have already begun failing to deliver a product
that actually works. This is normal in every industry. The next trend will be for
projects that "have a working product" to try to build a user base for that
product. This is precisely where most startups fail in general and blockchain
startups will not be an exception.
But those who fail will clear space for those who have growing usage of their
products. The winners will likely be those who spend less time ‘conference
hopping’ and more time listening to users.
I think one of the key things that has already started to happen and will
accelerate in 2020, is improving transparency in the industry to reduce
problems like wash trading and zero growth projects who spend all their money
I think we’re also at a point where we are seeing some very compelling
blockchain use cases being developed aimed at mainstream adoption. We at
Tael will do our best to contribute.
11. Looking back on 2019, what has been your company's biggest
For me, it has to be our user adoption. Since March 1
st 2019, we’ve
grown our users’ numbers by over 2,500%. This fantastic growth is a testament
to the appetite that Chinese consumers have for verifiable authentic products.
This is already much further than “having a working product”. It’s “having
actual users” which, as I mentioned before, all startups should strive for;
whether in blockchain or other industries.
The other important achievement is that we’ve built a strong infrastructure
to scale up in 2020. And this is on all fronts: technically we’ve been testing
our system for throughput of thousands of orders, we’ve engaged suppliers who
can handle millions of users and, most importantly, we’ve built strong
relationships with corporate partners like Rakuten, New Zealand Cherry Corp.,
KOLs (key opinion leaders) and others who will help us drive user growth and
adoption much further.
Interviewer: Ishan Pandey
Contributor - Hacker Noon, Research - Blockchain.news
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