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Newcomer Brings New RFID Cost Model to North America

This is the first installment of a new periodic feature in RFID Update that profiles companies and people who are making news in the RFID industry. This article spotlights Invengo, a large Chinese RFID manufacturer and solution provider that recently entered the North American market.
Mar 11, 2009This article was originally published by RFID Update.

March 11, 2009—Invengo Information Technology is probably the largest RFID company that you've never heard of. The company manufactures more than 60 UHF and HF products, is a member of EPCglobal, integrated one of the largest RFID projects in the world and has more than 300 employees. So why haven't you heard of them? Probably because only three of the 300 employees work in North America.

Invengo is a 16-year-old Chinese company that launched North American operations in January with an office outside Washington, DC in Herndon, Virginia. It is listed on the Shenzhen Stock Exchange (Stock Code 002161) and was the first Chinese RFID company to go public. It currently has a market capitalization of 128.4 million yuan ($18.8 million), according to the exchange.

The company got its start by developing a freight car identification system for China Railway, which evolved into a large and lucrative RFID tracking system used across 70,000 kilometers of rail lines throughout China. In the 16 years since Invengo first began working with China Rail it has diversified its product line to include HF and Gen2-standard UHF readers, tags and inlays.

To date, hardly any of Invengo's revenues come from North America, but the company is changing that 5.8¢ at a time -- that's the price it announced for inlays when it entered the North American market earlier this year (see Invengo Drops Gen2 Inlay Price to 5.8 Cents).

"We've had a very good reaction," Invengo vice president of sales and marketing Phil Calderbank told RFID Update. "The announcement was designed to create as much immediate awareness of Invengo as we possibly could. Although we are not well known in North America, we are very well known outside North America and are one of the largest RFID companies in the world. I don't know if any other company has 300 employees dedicated to RFID."

Calderbank is one of Invengo's three US-based employees, along with CEO Heather Wang and Oliver Picheng Liu, director of technical operations. Invengo is initially focusing its US efforts on getting converters (who produce smart labels and other tags) to use its inlays, which conform to the EPCglobal Gen2 standard and are based on chips from NXP. Invengo also plans to support chips from Impinj. Both NXP and Impinj chips are also widely used by other inlay manufacturers.

Soon Invengo will introduce its reader products to North America and will sell them exclusively through resellers, rather than direct to customers. Focusing on the converter market and indirect channel enables Invengo to be as efficient as possible with its staff -- which it plans to keep small.

"We intend to continue as a very small operation, because that is our strength," said Calderbank. "We want to bring the Chinese cost structure to North America. Doing our development work in China and having hundreds of engineers and technical people there provides a real advantage." Invengo is planning to add tech support staff in the US as its sales and distribution channels grow.

Calderbank should know what he is in for. He was with Avery Dennison when that company executed a bold inlay pricing strategy in 2005, and was most recently with Impinj as it rose to one of the most recognized firms in the industry. He sees two obstacles to Invengo growing in North America, and the current economy is not one of them.

"We have two barriers to overcome," he said. "First, we are not well known. When you are not well known, you have to invest in building your brand name, and we are doing that this year. Second, not all product coming in from Asia is high-quality product. People may have had a bad experience. Invengo is a high-quality product. We can be inexpensive because of our cost structure. We intend to stay at the 5.8¢ inlay price -- it isn't a short-term offer."
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