Chinas RFID spending is driven by retail mandates and government edicts

After suffering from an economic slowdown in 2003, China's economy has improved. China has grown strongly and with good numbers in year 2005 it is expected that China will be one of the fastest growing economy. With more foreign investments coming in and exports booming up China has become a global power. China is the leader in global manufacturing and it is poised to grow rapidly in coming years. China is also the third largest trading country. That means that China is also a key consumer market.

The two most frequently heard – and hyped -- words in logistics circles these days are “China” and “RFID.” It was inevitable, then, that somebody would set out to study the RFID market in China, and according to analyst firm Research and Markets, China’s economy spent $200 million (1.6 billion RMB Yuan) in 2005 on RFID.

Presently the RFID market is driven by the mandates issued by Wal-Mart and other European retailers. China is expected to eventually use more than 5 trillion tags annually in supplies to Wal-Mart. But in coming years China will be a large consumer market for RFID products as well. RFID technology will also be used in the Beijing 2008 Summer Olympics.

The Chinese RFID market is divided into two technologies: low frequency products and high frequency products. The use of UHF frequency is not yet in full flow because of the problem of standards. The Chinese government wants to have its own standards to avoid paying royalties, but it also working on developing a standard that will be compatible with current standards.

The current applications of RFID in China are mainly in the field of identification, logistics, and ticketing, with second-generation ID cards being the most prevalent application of the technology. In coming years, it is expected that RFID in China will be prevalent in government, transportation and manufacturing industries. However, the use of RFID in retail will come later.

The Chinese government is actively participating in the adoption and implementation of RFID throughout the country. The government has introduced several projects to push up the development of technology, and has set up a working committee in Shenzhen to promote RFID applications. Last year, RFID development and applications were considered a major project of the China Golden Card Project.