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Asian RFID Outlook Predicts Pockets of Opportunity

Emerging application and vertical market opportunities, changing frequency preferences, and current challenging economic conditions highlighted a briefing on the Asian RFID market presented by industry research firm Frost & Sullivan.
Mar 16, 2009This article was originally published by RFID Update.

March 16, 2009—RFID vendors who serve the Asian market were advised to tightly narrow their focus to survive the economic downturn during an open webinar given by international industry research and consulting firm Frost & Sullivan last week. The presentation by research analyst Richard Sebastian provided a glimpse into the current state and future direction of RFID in Asia, including a few highly specific vertical market opportunities and a prediction that a new favorite frequency will emerge.

The presentation, What are the Opportunities within the Asia Pacific RFID Industry?, provided five recommendations for vendors to follow for 2009, which Sebastian called "a very challenging year for companies in the RFID industry to navigate," because formerly booming Asian economies are being hurt by weak export markets and decreasing domestic spending. Manufacturing, shipment tagging and logistics applications that have typically sustained the Asian market won't match recent growth levels, so Sebastian advised looking elsewhere for opportunities. He provided five specific recommendations:
  1. Focus on applications that are simple, unique and innovative. In other words, not on applications that rely on implementations by multiple supply chain partners. Sebastian cited a DVD-tracking program in Malaysia as an example of a non-traditional application with strong growth potential. Between 15 and 20 million CDs have received passive UHF tags that denote the content has been certified as acceptable by government censorship authorities.
  2. Concentrate on high-demand markets. Current conditions mean even large RFID vendors cannot afford to invest time and capital to try to develop new or low-growth markets, according to Sebastian. Instead, he recommends focusing on areas where demand is proven and ROI periods are relatively short, such as document tracking and asset management.
  3. Consolidate resources and focus on key verticals. "RFID companies tend to get involved in too many areas at the same time," Sebastian said. "Doing that means not being able to focus on real opportunities current in the market." For example, Sebastian said Frost & Sullivan has identified many strong RFID opportunities in the Halal food industry, which requires documentation that foods were prepared and transported in accordance with Islamic law. Without tight focus, vendors could miss this opportunity. There are several other specific opportunities throughout the food supply chain, according to Sebastian.
  4. Explore new areas. "In these economic times, RFID stakeholders should seriously consider entering new markets and making them their own 'blue oceans,'" Sebastian said. This appears to be a contradiction to the first three recommendations, which are variations on the same theme of narrowing focus. However, Sebastian feels there are markets that are under-penetrated by RFID vendors and offer good growth prospects. "The oil & gas industry holds great potential for RFID as a platform to support many applications," -- including environmental health & safety, asset tracking, personnel management and more, said Sebastian. "There are opportunities for RFID vendors to become thought leaders in a particular field."

    RFID Update's own research corroborates Frost & Sullivan's assertion that there are opportunities in Asia for vendors to become thought leaders. Few firms hold high brand recognition ratings in Asia, and no Asian-headquartered firms are perceived to be brand leaders in the region, according to the 2009 RFID Brand Report.
  5. Prepare for needs. Frost & Sullivan predicts new product segments and frequency bands will make strong gains in Asia in the next few years, which could leave vendors with product portfolios that don't suit market preferences. Sebastian notes that UHF revenues trail those of HF and LF frequency products in Asia, but adoption is increasing. "By 2014 [UHF] is expected to supercede the market share of HF and will hold a market share of over 46 percent," he said. Strong RTLS sales growth is also expected.
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