Analysys International in Beijing, a technology-research firm, said in a report, "Consumer Electronics - Focus Report on Chinese RFID Market Development 2005," that growth of the segment in China should hit 30 percent per year, despite the fact that low- and high-frequency applications of the technology are relatively mature.

The RFID market - including the tag, reader and software-service segments - made news recently when Wal-Mart, the world's largest retailer, announced it was requiring its top 100 suppliers to use RFID technology in their deliveries.

Wal-Mart has backed down temporarily from its initial timetable for implementation of the requirement, but the action still signifies a large potential market for RFID applications in supply-chain management in China, the report said.

In fact, RFID development has become the focal point in the field of supply-chain management.

"From the industrial RFID application point of view, the government, transportation and parts of the manufacturing industry are all recent key purchasers," said Charles Jiang, IT research manager at Analysys International.

One company already using RFID in China is Volkswagen's Audi production line in Shanghai.

"Logistics and end-to-end supply chain in the manufacturing industry will become key fields (for RFID) in two to three years," Jiang told United Press International, "while a sizable breakthrough for RFID applications for retail will not be realized within the next five years."

He cited two reasons for this prediction.

"First, weak links exist throughout the supply chain because IT usage is not widespread and, second, adding RFID tags to products will result in lower profit margins, especially for inexpensive items," Jiang said.

He noted that chip makers Philips, Texas Instruments and EUM faced competition from Chinese firms Tongfang, Zhongdian, Datang and Huahong. The tag, reader and service sectors are all dominated by Chinese companies.

"Second-generation ID cards are a key application for RFID in China, and local companies are better positioned," he said, adding that "for some applications, foreign vendors maintain a market edge based on product quality."

Edward Lanfranco covers technology and telecommunications in Asia for UPI Science News. E-mail: sciencemail@upi.com

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