The World's Biggest Market for RFID Technologies Is China

CIO — Though radio frequency identification technology has gained considerable buzz in corporate America, one has to look halfway across the globe to see the largest concentration of RFID applications in use.

The Chinese government's national identification-card program is currently the biggest RFID project in the world in terms of overall value, according to the recent IDTechEx report , "RFID in China 2008-2018." The rollout has an overall estimated worth of $6 billion, which includes all of the associated RFID tags and systems, such as card readers.

The Chinese ID card project began in 2005, and once it has been completed by the end of 2008, nearly 1 billion government ID cards embedded with an RFID chip will have been issued, states a recent ABI Research report.

"Unfortunately, all good things must end," writes ABI's Research Director Michael Liard, noting the project's upcoming conclusion. "That one program generated significant revenue for local vendors and stood out in terms of its size and scope. However, China must prepare for RFID's next wave and the applications that will keep China in the RFID spotlight."

The leading RFID vendors in China, which include Huahong Group, NXP and Texas Instruments, are anxiously awaiting more government contracts to continue developing RFID apps. According to ABI Research, a wide range of application initiatives are on tap: transportation ticketing, animal tagging, anti-counterfeiting, real-time location systems, asset tracking, e-ticketing and contactless payments. The total market revenue for all of those projects in 2008 will reach nearly $1.4 billion, states the ABI report.

Animal tagging is one area where Chinese-developed RFID applications could lead the rest of the world. "The Chinese government is anxious to use RFID tagging to enhance the safety and security management of food production," Liard states. ABI Research says that by 2012 this market will account for $94 million in revenue for RFID suppliers.

In addition, interest in anti-counterfeit e-ticketing applications is growing. The upcoming 2008 Olympic Games and the 2010 World EXPO in Shanghai are creating demand for e-tickets and other RFID-enabled services, Liard notes. "We could see more than 12 million e-tickets for the Beijing Games," he states in the report. "The World EXPO could create demand for nearly 70 million e-tickets."

ABI Research also sees big RFID potential in the public transportation area. More than 17 million RFID-based public transportation cards will be issued in 2008, according to the ABI report, and "the first 25 million of 125 million RFID-enabled single train tickets ordered over a five-year period were issued last year in the Guangshen Railway: a strong start for a market which sees 3 billion passenger journeys a year."

China's reign at the top of the RFID world may be short-lived, however. The IDTechEx report states that "as the deliveries of the national ID card saturate, China will sink below the U.S. and probably Japan in value of its RFID market, but that market will nonetheless be growing very fast."