As rulers of the world�s largest potential RFID market, Chinese leaders view the setting of RFID standards as critical to its economic strategy.

By: Harold Clampitt

China is the manufacturing capital of the world and the largest market for technology. Currently, the country is home to 95 million Internet users. With usage growing faster then 20 percent a year, China will have more Internet users than any other country by 2006. It already has the largest installed base of both landlines (314 million) and mobile telephones (334 million). Within this economic framework, China lays claim to being the largest potential RFID market in the world. And since the standards bearer holds an economic advantage, Chinese political officials have stated that their nation needs to be involved in the setting of RFID standards.

In late April, a group of senior Chinese government officials discussed their views at the RFID China Forum (RCF) in Beijing. The RCF was the largest and most influential RFID gathering in mainland China, attended by representatives of the Chinese, American and Korean governments. It featured more than 50 speakers from such organizations as IBM, Microsoft, Oracle, Savi Technology, Nokia, NTT Data, ISO, UID, EPCglobal, CompTIA and the Korean Association of RFID. The event also included five key Chinese government officials, including the three department heads of the Ministry of Information Industry, which is leading the formation of China�s RFID standards.

Standards and Strategy

China�s central government believes standard setting is a strategic activity to forge the following objectives: convert trading power to technology power; develop intellectual property (IP); and use RFID as an inflection point in China�s quest for high-tech differentiation and infrastructure efficacy in the global market.

The central government�s ruling elite recognizes that their nation lags behind other countries in technology development, thereby making China effectively controlled by developed countries. The government realizes that countries that own IP typically spend more on research and development�plus, they significantly influence standards to gain an economic advantage over rival countries.

To help spearhead the transition to a developer of standards and creator of IP, the Chinese government has created the Golden Card Project. This is one of the government-endorsed Golden series, whereby all state-owned properties�such as banks, driver�s license issuers and public transit�all use smart cards containing RFID tags to accept payment from their customers. The general target is to develop smart cards as a method of payment for 300 million Chinese in 400 cities within 10 years.

China is a society in which cash is the traditional method of payment and, therefore, widely circulated (this is also the common situation in most other Asian countries). At the beginning of China's smart card deployment, the concept was not well accepted by most Chinese people; however, there is a Chinese saying that "everything's hard in the beginning."

Initially, 12 cities and provinces were involved in the pilot phase. Smart cards have been distributed and are now used in the cities of Shanghai, Xiamen, Wuxi and Suzhou, and in the provinces of Guangdong, Hainan and Jiangsu. After a slow start, the smart cards are beginning to enjoy advantages in China due to the success of the pilot projects and the country's growing economic prosperity. Thus far, about 200 million cards of various types have been issued.

Promoting the engineering associated with smart cards is another key aspect of the Golden Card project. In the country's ninth Five-Year Plan, the R&D of the basic chips embedded in the cards, the creation and improvement of card operating equipment systems (denoted COS), and the development of relevant software, are the engineering topics being emphasized by the government�s agenda. Furthermore, associated network products such as routers, line concentrators, modems, network cards, display terminals, output equipment, charge machines and automatic counter machines are also undergoing intense R&D. China intends to create intellectual property and accelerate the construction of a smart card industry using the success of the "Golden Card" projects to stimulate their usage by average citizens.