Taipei, Taiwan -- China intends to issue a draft radio frequency ID specification this fall, with the hope of hammering out a final version that can be implemented in 2007, according to industry sources. Early indications are that the spec will be voluntary, adhere closely to international standards and possibly be cheaper to use than the EPCglobal system.
More than a quarter of world trade passes through Asia, with China as the hub, making it a key target for RFID. Once fragmented with standards, RFID is now seeing companies and countries gather around an international spec under ISO/IEC that will ease deployment throughout the supply chain. Spurring things on are mandates by Wal-Mart, Metro AG, Tesco and others to have suppliers adopt RFID to improve efficiency.
Earlier this month, ISO gave the thumbs-up to the EPC Gen 2 Class 1 UHF standard, making it an amendment to its 18000-6 RFID air interface for devices using the 860-MHz to 960-MHz ISM band. China is usually a proponent of ISO standards, but the move hasn't halted work on its own effort.
Yet China may still be willing to play ball, with a few Chinese characteristics. For instance, the air interface will use the ISO frequency of 13.56 MHz for near-field communications applications, and China will probably clean up some part of the 860-MHz to 960-MHz band for logistics applications, said Jason Zhang, who tracks RFID issues for Philips Semiconductors.
However, China is still pursuing its own numbering system, called the National Product Code, which will compete against EPCglobal's Electronic Product Code (EPC). China will also build and maintain its own database with information on products, manufacturers and transport methods, rather than subscribe to EPC's, which will be maintained by Verisign in the United States.
"The concern in China is that if they adopt EPCglobal standards," EPCglobal will collect significant administrative fees, Zhang said. "And with China as a supplier to the world, then a lot of companies will have to pay these fees. Added up, it is a huge amount of money per year," he said. In-Stat estimates China would collectively pay tens of billions in fees and royalties.
EPCglobal did not respond to questions for this story before deadline, but the company is active in China, in the hopes of avoiding a splintered approach.
When it comes to logistics, China has no Silk Road. More often than not, it's full of potholes and unpredictable jam-ups. At any point, goods may end up severely delayed or disappear entirely. RFID should play a role in solving this problem.
In-Stat estimates that China consumed more than 180 million RFID tags in 2005 and believes that more than 2.9 billion tags will be shipped by 2009. The major application will be smart cards, especially those used for China's national ID card program.
China's determination to establish its own RFID standard may slow market adoption, however. In a worst-case scenario, some Chinese companies would have to sign on to both systems, especially if they ship to customers at home and abroad.
That situation resembles the conundrum DVD players faced when China introduced its optical-disk standard, known as EVD. Because manufacturers catered largely to the export market, any EVD players they made also needed to be backward-compatible with DVD. That meant two sets of intellectual property--and two sets of royalties.
Due to the lack of a draft spec, IC companies in China, including Shanghai Huahong IC and Fudan Microelectronics, are pursuing the ISO standard. Xu Li, director of the marketing department at Fudan, said it has been easier to implement the smart-card applications at 13.56 MHz, but UHF is still a challenge for some local firms.
Xu figures that the price of tags is still approximately 2 yuan (25 cents), and won't come down soon unless vendors can drive significant volume or change their method of encapsulation.
Yu Ou-yang, of the China Information Industry Trade Association's E-Label Applications Branch, agreed. "We can't use foreign standards only because it's cheaper," Yu said. "China is encouraging the use of its own IP to protect national industry."
Yu believes Chinese companies will be able to attain 5 cents per tag within two years.