This article was originally published by RFID Update.
February 29, 2008—RFID inlay and tag manufacturer UPM Raflatac this week announced its plans to open a tag factory in China later this year, providing evidence to support recent bullishness on the Chinese RFID market by a handful of industry analysts. RFID Update interviewed Raflatac’s senior vice president of RFID Christer Härkönen by email for his perspective on the Chinese market and his company’s plans there.
“The future looks good for RFID in China,” Härkönen told RFID Update, adding that he expects half of the production from the new facility to be consumed domestically within China. Initial capacity for the facility will be 100 million pieces (tags or inlays), but that can be scaled to hundreds of millions as the market expands. Ticketing, libraries, and item-level tagging in the apparel and electronics supply chains are the strongest near term sources of demand, according to Härkönen, who expects other, different opportunities will present themselves in the medium and longer terms.
While generally bullish on RFID in China, Härkönen did caution that he doesn’t see growth ramping as aggressively as some of the market forecasts have indicated. Recall that IDTechEx, VDC, and Analysys have all recently released reports on the Chinese RFID market (see Highlights from IDTechEx’s Review of RFID in 2007, China: A Catalyst for the RFID Industry, and Research: RFID in China Growing 23% Quarterly, respectively, for more on each).
Aside from just its growth trajectory, Härkönen shared a few insights on the Chinese RFID market. He noted that for identification applications, China is the world leader (probably due to its national ID card program). He also indicated that tag and inlay demand will shift from its current concentration in North America and Europe toward China, as source tagging gains traction. (Recall that source tagging is the application of the tag on a manufactured good at the very factory where it is produced — often in China — so that it is RFID enabled across 100 percent of the supply chain.) Lastly, he noted that Chinese RFID end users are even more price conscious than their North American and European counterparts.
Raflatac’s decision to open the new facility in China was not driven by the Chinese market alone; proximity to the whole of Asia was important. Härkönen expects that about a quarter of the new facility’s tags will be consumed in Asian countries other than China.
Upon opening the Chinese facility, which is based in the city of Guangzhou, Raflatac will have tag factories in each of the three major regional markets: Asia, North America, and Europe. The North American facility is based in Fletcher, North Carolina, while the European one is in Jyväskylä, Finland. Raflatac is increasing capacity in those two facilities, and Härkönen reports that existing total capacity across both is in the several hundreds of millions.