RFID cut a dash in the World Cup staged in Germany. People would wonder what a role will RFID play in Beijing’s Olympic 2008 and Shanghai World Expo 2010? How about the future of RFID in China?

　　“China Radio Frequency Identification (RFID) Technology Policy White Paper” compiled by fifteen ministries and committees, including Ministry of Science and Technology and Ministry of Information Industry and promulgated on 9th Jun. 2006 pointed out that, “China is a populous country and its economic scale is expanding; China is becoming a global manufacturing center and RFID technology has an extensive application market. Nowadays, RFID technology and its application develop rapidly, but not mature yet. China shall grasp this opportunity and focus on R&D of RFID core technology, work out the technical specification that conforms to the actual situation in China, push forward the establishment of an autonomous public service system and facilitate the formation of a competitive industrial chain so that China will grab a market share in this field.

　　Indeed, it is a precious opportunity for China’s independent innovation. As reported, China’s UHF RFID frequency plan will be unveiled soon. The Ministry of Science and Technology declared that the government would standardize RFID products’ technical specification, establish a RFID R&D base in Shanghai and work out Chinese standard within two years. Although Chinese government has pushed hard and made remarkable achievements in RFID’s closed-ring application, it lags far behind compared with other countries in technology and establishment of the industrial chain, especially open-ring application in logistics supply chain. It is in fact a competition of speed and strength since overseas RFID development doesn’t rest its steps. According to IDC’s statistics, the market capacity for RFID in China was only RMB470 million in 2005, quite shabby compared with the global market capacity of USD2.43 billion during the same period.

　　RFID has made great strides globally and its technology, cost, standard and other issues have been roughly solved.

　　In middle of Jul. 2006, Gen2 Electronic Tag Aerial Interface Specification established by EPCglobal in Dec. 2004 has been approved as C-Category UHF Electronic Tag Standard after review by ISO and listed into ISO/IEC18000-6 Revised Standard 1. Hearing this, the Chairman of EPCglobal pointed out excitedly that, “it is an important landmark”, which means that EPC’s UHF Electronic Tag’s core standard has been recognized as the official international standard and will exert great influence on global development and manufacturing of UHF electronic tags and readers. We could say that EPCglobal has taken an advantageous position and actually dominated RFID’s global standard. Hence, we could say that the application channel for international supply chain/logistics RFID is smooth and RFID’s supply chain’s application is on the way.

　　Gen. 2 EPC Electronic Tag has such features that it supports 256bit long EPC(electronic product code), “dense reader mode” and a number of protocols. After years’ R&D and industrialization, they are developing into a complete range of products of a complete range of standards. It is justified to claim that RFID’s technical problems have been solved. Through traditional international trade and logistics channels, EPC Gen2 electronic tags are playing stronger influence. Besides extensive application in traditional logistics and retailing sectors, it also starts to appear in production management and object tracing. After four year’s practice, Gen2 EPC tag’s cost has been greatly reduced. The unit price is USD0.10 in 2006 and that of some products is only USD0.08. It is predicted that it will drop to USD0.05 in 2007, which has created conditions for extensive application of Gen.2 EPC tags. Extensive application of electronic tags has been started in the global context. Japan used 20 million electronic tags in 2005, i.e. 30% in logistics industry, 10% in retailing and circulation and 36% in manufacturing industry and that doesn’t even include 20 million electronic tags for tickets to Japan Aichi World Expo.

　　Moreover, Japan’s Universal Electronic Tag adopted the strategy of cooperating with EPC and this tag is based on Japan’s Ubiquitous ID standard and also conforms to EPC standard. After having obtained the approval of global EPC organization led by USA, Japan Ministry of International Trade and Industry could include this electronic tag into the international standard system so to gain business opportunities and right to say regarding electronic tags for Japan.

　　At this moment, technical, cost and standard issues that hinder RFID’s extensive application have been solved. The issue left is the same common issue faced by extensive application of other information technologies (such as ERP), for example, management challenges, process reengineering, and supply chain’s information sharing and etc.

　　EPC finds its way into China and establishes an international logistics supply chain

　　What are factors that influence extensive application of RFID in China? The answers are no more than high cost, inconsistent standards and incomplete ecological chain.

　　Cost is a relevant issue and is resoluble. An incomplete biological chain refers to an autonomous ecological chain, which could be improved and expected. Its autonomy is also relevant and depends on our good use of global resource. RFID Application Senior Workshop (www.ichina2008.org) sponsored by the Ministry of Information Industry Packaging Office and China Electronic Appliance Company has been pushing forward local RFID application and reducing its cost in a practical way by means of ecological chain’s synergy based on thorough investigation into the actual situation of IT application in China and China’s IT industry capacity. The 5th Workshop to be held in Shanghai on 24th Nov. will take the theme of “reducing RFID’s comprehensive implementation cost from the entire architecture, including hardware, software and system integration.

　　As for RFID’s application in China, inconsistent standard is a big issue. Its domestic application is limited to closed ring. With more experiences accumulated, moving to an open ring will be just a matter of time. However, it will not be a natural process. Open-ring application faces the problem of inconsistent standards, which has been solved in other countries. If China can’t solve standard inconsistency rapidly, China would develop with doors shut, hence, no future. Moreover, international logistics/supply chain is in fact finding its way into China by avoiding Chinese standards.

　　As early as in 2004, EPC has set up its agent in China: EPC China. Anyhow, promotion of EPC in China has caused many problems, and particularly, been held back by the action of pushing forward autonomous standards, hence, no good effect. Domestic RFID standards also fall into a deadlock under EPC’s attack. The competition between major standards has been backed up by interest groups, or even disaccords between different departments.

　　However, EPC apparently has its eyes on global layout. EPCglobal kicked off its layout of EPC electronic tag industrial chain in Pearl River Delta by way of H.K. China in 2006. By the end of Apr. 2006, H.K Innovation and Technology Commissiion has allocated about 2 billion HK dollars to establish five R&D centers in H.K. in order to develop high and new technologies. H.K Commerce, Industry and Technology Bureau declared that these R&D centers will participate in inland hi-tech and key project researches under the name of “State Key Laboratories” and be involved in developing state standards. Development of electronic tag technologies has been incorporated as a key project. EPCglobal viewed this as a great opportunity and invested HKD 2.4 million and established four trial supply chains by using EPC’s electronic tag technology in Guangdong province by means of HK Article Numbering Association and preferential conditions provided by CEPA.

　　International tycoons also divert their intentions to the potential of RFID’s application in the supply chain. To break away bottlenecks in open-ring application, Microsoft is dedicated to develop RFID service platform products to realize plug-and-play function of hardware and reduce greatly thresholds for development of RFID technologies at all levels by means of revolutionary five-layer logic development structure and cooperation with hardware manufacturers and meanwhile to enable thousands of developers who are familiar with .NET (VB.NET or C#NET) languages to start RFID’s application development after basic training. In Apr. 2006, Microsoft advocated greatly the space for mutual benefits and win-win cooperation on 4th RFID Application Senior Seminar (www.ichina2008.org). In early Aug., Microsoft RFID Partner Summit further emphasized the industrial ecological system centered on partners, which is an internationalized development environment and accommodates application in greater scales.

　　Intel also shows up as a designer of ecological system. “As the largest chip manufacturer in the world, Intel has been dedicated to digital application of platform-oriented strategies. Intel is establishing a digital supply chain by means of RFID+Internet+SOA. Intel is joining with Microsoft and other partners to help logistics operators, global retailers and manufacturers based in Pan-Pearl River Delta to speed their informatization process for their Chinese enterprises and integrate rapidly into economic globalization. They are cooperating with GSI Hongkong and other organizations and trying to build a global supply chain by virtue of logistics environment in Guangzhou and H.K.

　　Hence, we saw such a picture: Colored TVs of the famous EMS HK Vtech are attached with EPC RFID labels in the production base in Guangdong and reach retailer shops of Wal-Mart across the world by way of HK’s logistics base.

　　RFID’s international development allows no much time for China to develop its standards unhurriedly.

　　China is already a major exporter and export-oriented economy has become an integral part of its national economy. As a major manufacturing base in the world, China is an important link in the international supply chain. Take China’s electronic manufacturing industry as an example, the export of electronic products has exceeded the domestic need (export exceeded the total domestic sales volume by 60% in 2005). Recently, Deputy Division Director Wang Bingke of Ministry of Information Industry talked about the export of electronic manufacturing industry and higher export ratio in first half of 2006 on China Electronic Fair’s news conference.

　　Made in China and global supply are major features of China’s manufacturing industry nowadays, which decides that RFID will focus on supply chain/logistics and manufacturing in its application in China. It will become inevitably the focus that attracts the attention of international standards including EPC. If China fails to develop its standards as soon as possible, China will lose this good opportunity. Once RFID is applied in export, EPC will become the de facto standard and then dominate RFID’s application in domestic market.

　　In view of current situation, no much time is left for China to develop its standards. Due to lack of a uniform standard, different enterprises use RFID products that are different in frequency, coding, storage rules and data content. Since readers and tags can’t be universally used, data exchange and synergy are impossible among enterprises, hence restricting the application scope of RFID in China. Moreover, extended delay in developing domestic standards has affected the development of entire electronic tag industrial chain in China. For example, the development of readers is immediately affected and it is impossible to decide its technical specification. The price of a reader in the market nowadays is about USD1000 and is one major reason that hinders the development of electronic tag industry.

　　However, besides developing frequency standards, China’s RFID standard still lingers at the concept level, without the support of independent technology and patents, not to mention competing for global standard. According the analysis of Ministry of Information Industry Software and Integrated Circuit Facilitation Center on amount of applications filed for RFID antenna technologies on which Chinese enterprises have some advantages, Chinese patents amount only for 4% and there are no core patents, which is different from TD-SCDMA and AVS.

　　From the technical view, RFID middleware/software is basically irrelevant with frequency. No matter what Chinese standards will be, foreign manufacturers have become de facto strong players. As far as chip and tags are concerned, tags are not sensitive to frequency at UHF band. EPC Gen2 chips of Philips, ST and other manufacturers are globally compatible to 860~960MHz, which solved effectively the issue that different regions distribute different UHF bands to RFID.

　　Readers are sensitive to frequency, which is the field where Chinese enterprises may make breakthrough. Uncertain standards affect negatively Chinese enterprises. Not long ago, Omron presented new V750 reader platform, which supports global bands oriented to USA (915MHz), Europe (867MHz) and Japan (953MHz). It is obvious that major manufacturers in the world are fully prepared in terms of technical progress and have diversified their product range. China’s standard, even developed, will not impose threat to them. Contrarily, as for domestic manufacturers with immature or incomplete technologies, they can’t provide any product when standards are not developed and will lose their competitive edge against international manufacturers.

　　Regarding information safety, it could not be solved by pure independent coding. Background information management right shall be fought for in a game under the international backdrop. It is a more sophisticated political and economic issue and can’t be purely explained by the technical standard system. On the other hand, EPC is actually a relatively open standard and has provided possibilities for code transformation, which makes it more compatible. Even Japan that has already established a mature coding system (UID) has reoriented to EPC and got the leading role for the latter in the international logistics/supply chain.

　　Facing the rapid development of RFID in the world and increasingly important position of China’s economy in international trade, the current situation requires us to further speed up our process in RFID development. Developed countries have stepped onto the stage of extensive application of RFID and are configuring the dominant role in international standards and industry. We can’t just have idle talks and must decide Chinese standards as soon as possible so that local enterprises could gain more right of say in technical strength and develop our own electronic tag industry.

　　There is no boundary for technical progress. EPC Gen2 standard is by no ways perfect. More patents are expected in application. Similarly, RuBee and HP’s Memory Spots and other technologies keep coming up and growing rapidly. Only by continuous follow-up on frontline technologies, by innovation and application and by continuous creation of our own intellectual property, Chinese enterprises could seek more right to say. After all, standards are based on technical strength.