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Chinese RFID Standard Increasingly Unlikely

ABI Research last week announced findings from a newly released study on the Chinese RFID market. The findings indicate strong momentum for Gen2 is afoot that would be hard to curb if the Chinese government went forward with a separate, national standard.
Aug 23, 2006This article was originally published by RFID Update.

August 23, 2006—ABI Research last week announced findings from a newly released study on the Chinese RFID market. The findings indicate that, in contrast to the historical posture of asserting its independence from EPCglobal standards, the Chinese government has more recently fallen silent. This, along with the proactive efforts by EPCglobal to further its influence on the mainland, have resulted in a momentum for Gen2 that would be hard to curb even if the government went forward with a separate, national standard. RFID Update spoke about these findings with Hong Kong-based ABI Research analyst Junmei He.

"It is not an easy job to set up a standard and much more challenging to turn a standard into real products in the marketplace," said He. "Every standard must be backed by a group of committed industry supporters who are financially and also technically capable of developing low-cost and high-quality products, so the standard can survive after its birth when it enters into the marketplace and faces competition." China probably does not have many such supporters for a national RFID standard. Chinese manufacturers will be heavily incented to use Gen2 since their domestic supply chain partners and, perhaps more importantly, their customers abroad will most likely have adopted it. Even if there are supporters of a Chinese standard, "Are they capable to take the responsibility?" asked He rhetorically. They would not only need the technological and financial resources to develop the standard, they would then have to swim upstream against the wave of Gen2 adoption.

This wave will surely be helped along by EPCglobal, which is working to grow Gen2 adoption in and around China. In April, the standards body's Hong Kong branch launched its EPCglobal Industry Support Program (EISP) which, according to the announcement, will provide financial, technological, and implementation support for EPC adoption to enterprises operating across Hong Kong and Southern China. Key among this support, the EISP will offer subsidies of at least 45 percent the standard cost of EPC implementation. The aggregate total of these subsidies could top $3 million. Separately, in April of last year the Hong Kong government started a $1.8 million, EPCglobal-proposed project to establish an end-to-end cargo-tracking infrastructure network for the manufacturing industry in the high-activity Zhujiang Triangle zone.

But perhaps the biggest boon to EPCglobal and the wider adoption of EPC RFID in China is the recent incorporation of Gen2 into the ISO standard for UHF RFID, called ISO/IEC 18000-6 Type C (see ISO Incorporates Gen2 into RFID Standard). This development truly universalizes Gen2, which some had historically considered North America- and Europe-centric. Being part of an ISO standard brings substantial credibility at the global level.

The Chinese government may well be aware of the staggering challenges to creating a successful Chinese UHF RFID standard, and perhaps that is why it has become quieter on the issue than it was in past years. As an example, standards went unmentioned in a recent white paper on Chinese RFID policy. According to ABI's He, "As the RFID standard issue enters a new stage aimed at speeding up the adoption of RFID tags globally, the Chinese government remains silent about where the national RFID standard is heading."

He argues that at this point the government is correct to back off its own standards effort, which would likely prove futile. "The reality is that for the Chinese government, it is no longer important when the national standard will be released. It is late already," he said. Instead, the government should focus on how best to collaborate with EPCglobal, protect and foster the domestic RFID industry, and secure benefits of the technology for the greater Chinese economy.

Why is the industry so preoccupied with RFID standards development in China? Because it could have serious long-term consequences for those adhering to EPC Gen2. First, those suppliers that import from Chinese manufacturers would have to comply by the Chinese standard if they wanted to track their goods from the point of origin, so-called "source tagging". While still years away, this would eventually complicate these suppliers' RFID implementations, requiring the purchase and deployment of hardware and software that could handle the Chinese standard. Second, while Chinese RFID production is modest at present, there is no reason to think that tags and readers won't eventually be produced there, as has happened in many other cases of hardware manufacturing (it starts in the US or Europe but is ultimately offshored to less expensive Asian producers). Clearly, if a significant portion of the world's RFID reader and tag supply were coming from China, a Chinese standard would be very relevant, reinforcing international companies' need to accommodate it.

Read the release from ABI Research
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