Chinese Government Pushing RFID Market To Bring Down Logistic Cost

RNCOS: The Ministry of Commerce declared that the external logistics in China had jumped by 30% annually to reach a high of 38.4 trillion RMB in 2004. The conclusion, that the growth of the national economy is progressively reliant on logistics is evident from the logistics demand coefficient (the ratio between the GDP and the logistic amount), which has touched 2.8. In order to be at par with other developed countries, the Chinese logistics manufacturing has to go a long way.

Chinese manufacturers are of the opinion that the retailers should bear the cost of the RFID tags as it benefits them. They firmly believe that they should be exempted from paying for these tags, as these tags help the retailers and suppliers to keep a track of their products. These wireless tags also help the retailers to manage their inventories more competently.

China is the largest supplier of source products to manufacturers worldwide. Out of the $ 200billion worth of goods imported by the US annually, nearly 70% are from China. The United States imported goods valued at over $ 120 billion from China in the first half of 2004, which constitutes a 23% rise from the previous year.

There are two important factors instrumental in the implementation of RFID in China. To begin with, the Chinese government is laying special stress on the country’s underdeveloped logistics infrastructure, which is lagging behind, unable to keep pace with the development in the field of manufacturing over the decade. Secondly, the abundance of cheap labor has attracted manufacturers from all over the world.

The RFID market is growing at a phenomenal speed having already crossed the 1.6Bn RMB mark last year.

, 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. RFID: Outlook China Publ 20060201