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 findings of a recently conducted market research report by RNCOS – a leading market research report company, on the RFID market in China, discloses that the RFID market is growing at a phenomenal speed having already crossed the 1.6Bn RMB mark last year.

According to the report by RNCOS “RFID: Outlook China", 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.

The report recommends Venture Capitalists to keep a close watch on the RFID market due to the following reasons: there is enough space for new investors in the booming RFID market; RFID technology can easily be transferred into new products providing immense business opportunities.

The report published by RNCOS further states that though RFID technology has gained recognition globally, companies in South China are ignorant to the advantages of the technology and are reluctant to adopt RFID technology in the Pearl River delta area.

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