Piloting Data Asset Securitization in China’s Financial Industry

——  Charting a New Era of Trade Secret Financing

Digital Asset Financing: A Game Changer

Zongjinhao, a leading IP securitization consulting company in China, recently played a pivotal role in securing a 10 million yuan credit line for Fujian Fuchawang Technology Development Co., Ltd. (FTDC) to by leveraging data assets as collateral. This groundbreaking transaction not only marked the first data asset financing of its kind but also indicates a potential paradigm shift in trade secret securitization within China.

FTDC operates a digital platform that focuses on the tea industry. Its core business areas encompass digital empowerment, matchmaking, quality control, and logistics services for the Chinese tea sector.

Defining Data Asset Financing

In this securities issuance, FTDC utilized its extensive accumulation of entirely digital data resources, such as order data, ecological data, and user behavior data.
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FTDC said that successful data asset financing can helps enterprises fully tap into their own data resources to enhance cash flow, indicating that the industry has taken an important step in data asset financing.

Earlier this year, a Hangzhou-based issuer reached a milestone by successfully issuing an asset-backed note with collateral containing data IP assets.

These momentous events highlight the importance and great potential of digitized data assets in the financial sector.

Implications for Intellectual Property Monetization

Dr. Jili Chung, the founder of IPfinance.cn, pointed out that these data resources, such as order data and massive user data, may qualify as trade secrets under certain conditions. China’s judicial interpretations recognize trade secrets as a category of IP protected by law.

From a legal perspective, if such data meets the criteria for being classified as a trade secret, then the recent FTDC deal marks a critical step towards the securitization of trade secrets.
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Trade secrets have received limited attention in the past as an asset for IP financing because they are very difficult to define. Now through blockchain technology, financing trade secrets as collateral is becoming more feasible.  Given that trade secrets have enormous value, such blockchain application may open an unprecedented fields of trade secret financing projects.

Future Outlook

The prospect of IP securitization of data assets has injected new vitality into the digital economy, presenting novel opportunities for its robust growth and development. In China, the trend of data asset securitization appears to be pushing the intellectual property market into a new stage of development, heralding a new chapter in the financialization of intellectual property.
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At the same time, this also means that data assets will play a more important role in China’s future financial landscape, providing support for the high-quality advancement of the digital economy.  Participants in the Chinese market believe that the adoption of blockchain technology provides security and transparency for the securitization of data IP assets, which is anticipated to drive the ongoing evolution within this field.