DefyPay uses blockchain technology to combat the construction industry no pay
Hong Kong's construction industry, plagued by late or unpaid wages, is seeing a tech-driven solution emerge. The problem, dubbed "sweating without reaping," affects hundreds of thousands of workers, exacerbated by a multi-tiered subcontracting system lacking transparency and worsened by a recent downturn in the market. This complex structure, involving developers, project managers, consultants, main contractors, and numerous subcontractors, creates lengthy payment processes and leaves workers vulnerable. The situation has led to protests and roadblocks by desperate workers demanding their wages.
Enter DefyPay, a local startup leveraging blockchain technology to combat this longstanding issue. Founded by CEO and co-founder Chan Kai-kong, a veteran of over ten years in the internet industry, and partners with extensive IT and project management experience, DefyPay aims to revolutionize payment processes. Inspired by witnessing worker exploitation during the pandemic, Chan and his team developed a system designed to create a transparent, efficient, and auditable wage payment platform.
Chan highlights the severity of the problem, citing research indicating over HK$100 million in unpaid wages across four major projects within five months in 2021-2022, a trend that continues even into 2023, affecting even government projects. He emphasizes that while larger contractors generally have more financial stability, smaller subcontractors, often acting as mere intermediaries, bear the brunt of the financial strain. This impacts not only the workers but also developers, whose reputations suffer from negative publicity surrounding unpaid wages.
DefyPay's blockchain-based system utilizes immutable records to ensure clear tracking of funds and relationships between contractors. Real-time updates of timesheets reduce manual processes and costs. A tiered access control system allows developers to monitor all subcontractors, while subcontractors only see those beneath them. Smart contracts automate payments, bypassing problematic intermediaries and ensuring timely wage distribution. The system is designed to benefit approximately 10,000 construction workers, involving an annual transaction volume of approximately HK$120 billion. The company plans to charge a fee based on the number of workers.
DefyPay is actively collaborating with banks to promote its technology, and the data collected is expected to improve subcontractors' credit ratings and access to financing. Beyond solving wage payment issues, the system enhances risk management and provides tamper-proof records, protecting all stakeholders. The increased negative press surrounding unpaid wages has ironically led to a surge in companies seeking solutions, suggesting a receptive environment for DefyPay's innovative approach. Beyond the payment system, DefyPay also offers a blockchain-based building material tracking platform to combat material theft and data falsification. Chan believes DefyPay's solution offers a significant step towards positive change within the Hong Kong construction industry.
