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Chinese RFID Direction Unclear

Business technology magazine Red Herring has an excellent article this week on the state of RFID in China.
Aug 08, 2005This article was originally published by RFID Update.

August 8, 2005—Business technology magazine Red Herring has an excellent article this week on the state of RFID in China. It opens and closes with a look at Edward Zeng, founder and CEO of Sparkice, who is hoping to convince Beijing to reject internationally-developed RFID standards (read: EPCglobal) and use those from his R1 Alliance. Zeng formed Sparkice twelve years ago in Toronto but has since reinvented the company five times around various technology business models. A "big talker" with all-important connections to the upper echelons of the Chinese bureaucracy, Zeng has now pinned the company's hopes on RFID. The article quotes him as saying, "The Internet of Things will be ten times the size of the Internet in China. And Sparkice will be at the center of this." His goal is for China to decide on its own standard, one that employs intellectual property belonging to Sparkice.

Aside from the Zeng story, the article covers a number of other facets of RFID adoption in China. It notes, for example, that a discussion of meaningful Chinese RFID adoption is still quite premature. After all, if the technology's ROI is elusive for suppliers in the U.S. and Europe, it is painfully more so for their Chinese counterparts. But more importantly, there is a fundamental difference between North American and European economies and that of the Chinese: the cost of labor. Using RFID to automate supply chain processes will allow Western companies to reallocate precious labor resources; in China, with its relatively cheap and seemingly bottomless labor pool, "Twenty guys with clipboards can manage inventory control more cheaply than an RFID system." On the other hand, some Chinese visionaries are interested in RFID precisely because it is an emerging technology that can break the tendency to simply throw more workers at a task. Craig Harmon, CEO of standards consultancy QED Systems, is quoted as saying, "We need to appreciate that China cannot build itself into a world economic power on the backs of its labor. It has to do it with technology." This is a perspective that resonates with Chinese leadership, according to Harmon.

As to which direction China is leaning -- toward devising its own standard or toward adopting an international one -- there are conflicting signs. "Like the blind men and the elephant," says the article of the RFID standards situation, "none of the principals in China's RFID world has a handle on the whole beast, or a clear sense of the direction in which it is lumbering."

Read the full article from Red Herring
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