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Chinese ID Card Boost for Industry

Frost & Sullivan says China\'s much-debated national identification card would provide a needed boost for the smart card industry.
Jun 19, 2002June 19, 2002 -- A new report by Frost & Sullivan, a consulting services and market research company based in San Antonio, Texas, suggests that China could go ahead with a much-debated national identification card later this year.

China has been considering using smart card technology for a national ID program for several years. Given that the population of China is 1.2 billion people, the national ID card project, if it goes ahead, would be the largest smart card implementation ever undertaken.

The report suggests that the Chinese government could issue up to 15 million smart cards this year and another 60 to 65 million cards in 2003 and 2004. The remainder of the population would be issued cards in later years.

Frost's smart card analyst Anoop Ubhey, who is based in India, writes in the report that China needs to adopt a new law that will mandate the use of the smart cards when individuals carry out a wide range of transactions, from making a bank deposit to checking into a hotel."

Ubhey says he believes the Chinese will opt to use fingerprint recognition technology on the card, and that the government could pass a law this year approving the use of biometrics.

"The simple increase in demand has drawn in domestic players and is also creating vast interest from European players who have been moving into the Asia Pacific market over the last year," Ubhey writes.

In February of this year, the Hong Kong government appointed a consortium to deliver smart identity cards that will replace existing national IDs held by all Hong Kong residents. Hong Kong is a special administrative region of China and could set an example for Beijing.

If China goes ahead with such a large project, it could help bring down the price of smart cards worldwide, according to Randy Vanderhoof, president of the Smart Card Alliance, an association of smart card makers and users.

"There are a limited number of smart card manufacturers, so any significant increase in volume in any part of the world, helps in the investment in R&D and improving price points everywhere," Vanderhoof says. "It would have a positive impact on the U.S. market and other markets because it would mean more choices and lower prices."

He adds that biometrics is a key element to any national identity card program. "There needs to be a way in a large countrywide rollout to bind the card to the individual at the time card is presented," Vanderhoof says. "You have to take a live biometric read -- a fingerprint or retinal scan -- and match it to what's stored on the card. We see the combination of biometrics and smart cards as a trend in the future."
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