RFID in China: Market Development Promising but Uneven  ABI

Research report finds uncertainty around proposed standards holding up progress; Wal-mart mandate a factor for change

Research report finds uncertainty around proposed standards holding up progress; Wal-mart mandate a factor for change

Oyster Bay, NY — December 16, 2005 — While media attention focuses on mandate-driven radio frequency identification (RFID) deployments in the West, China's ambitions to be "manufacturer to the world" would seem to make it ripe for RFID, but a new study from ABI Research portrays a diverse RFID market developing unevenly according to technology type and subject to uncertainly around proposed standards.

According to ABI analyst Junmei He, the Chinese LF RFID market is mature both in terms of industry chain and market applications. LF RFID has been widely applied in low-end markets such as campuses, Internet cafes and access control applications. The ISO14443 HF standard serves the largest market in China, including identification, transportation, campus and highway toll collection cards, and Internet cafes. The HF market based on ISO15693 is relatively small, but should experience strong future growth.

The UHF market is in its startup phase, notes He. "People look to the government's UHF timetable, but they neglect the fact that high costs, technological immaturity and unclear return on investment (ROI) inhibit the large scale application of RFID." Although open-loop projects can't be realized because of pending frequency-related issues, manufacturers can still use closed-loop systems to improve production or logistics/supply chain management.

ABI Research does not expect to see a national UHF RFID standard published in 2006. Whether ISO 18000-6 part-C will converge with EPC Gen2 will significantly influence the timing and shape of a Chinese standard.

Wal-Mart's mandate should be the major incentive for small and midsize Chinese manufacturers to use RFID, but its effect will be largely limited to export markets, according to ABI. The unanswered question is, when will Wal-Mart's direct suppliers be technically and logistically ready to integrate their Chinese suppliers in their RFID supply chain?

The ABI report "The RFID Market in China" introduces major projects and discusses the applications of different RFID frequencies. A company profile section introduces the major Chinese RFID vendors, including IC vendors, hardware vendors, packaging and tag vendors, and integrators.

Additional Articles of Interest

— RFID technology has the potential to change the way supply chains are managed, but in order to be effective businesses need to take a holistic look at the deployment. Read more in the SDCExec.com article "Time for RFID: Applying RFID in the Supply Chain."

— For a contrary view of the future of the RFID market, see the article "The O'RFID Factor: A 'No Spin' Look at Where Radio Frequency Identification Is Headed," in the October/November 2004 issue of Supply & Demand Chain Executive.

— For more information on trends relating to radio frequency identification (RFID), follow this link for an extensive listing of SDCExec.com articles, featuring the latest research findings on the RFID, including adoption, return on investment and barriers to implementation.