Report: China RFID Market Development 2005

Analysys Findings

RFID Market in China

Although RFID has become a hotspot on the market over the last two years, RFID is not really a "New" technology. In the Chinese market, the applications of low frequency and high frequency RFID are relatively mature.
The size of the RFID market exceeded 1.2 billion Yuan in 2004, among which 933 million went to the tag market, 185 million to reader market and 85 million for the software and service market.
The study results of Analysys International shows that the 2004 RFID applications in China were mostly in closed applications and proprietary application fields. RFID software and services only accounted for 7.1% of the total market.
The RFID market size in China will have grown to 5.059 billion Yuan by the year 2009, with a compounded annual growth rate of 33.2%. This will result in 3.807 billion Yuan for RFID tag products, 684 million Yuan for readers, and 567 million for software and services.

Key Success Factors (KSF) for RFID Application in China

Analysys International views that government support and promotion are the prime factors for rapid development of the RFID market in China. However, other factors could also become important driving forces for facilitating its development, e.g. formation of standards, lowering of prices, further maturing of technology, and further reinforcement of privacy protection.
There were several programs that drove the market to its current state. The Chinese government initiated a program for generating a new ID card that implemented RFID technology. It was also slated for further development under the "863" program (A.K.A. National high Technology Research and Development Program of China). This program was designed to research and implement ultra-high frequency chip readers. Also, the State Development and Reform Commission founded a program for the RFID control of livestock production. Together, these were all important forces promoting the development of RFID applications.
The development of the Chinese RFID market has also been restricted by a couple of factors. The high price of the technology has lessened the warm welcome of the industries that could most benefit from its development. Also having inconsistent standards has created issues of interoperability between venders leaving the implementing industries locked into a single proprietary version of the technology. These problems will have to be overcome before RFID is considered a mature technology good for use by the masses.