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RFID has been adopted by many leading US companies like Wal-Mart, Metro, Tesco, etc. A lot of these companies have China as their main supplier and if they have to implement RFID throughout the supply chain, then China has to become a part of the RFID implementation process that is being carried out in the US. China too is keen to implement RFID so that its goods continue to get shipped to Europe and the US according to the RFID Gazette. On the other hand the RFID weblog has another opinion.
According to the RFID Gazette, a bigger driver of RFID implementation in China is the fact that logistics in China have not been able to keep pace with the growth in manufacturing. This is hurting the efficiencies of the supply chains in China. This can be gauged from the fact that 20% of China’s GDP is accounted for by logistics, the comparative figure for US is only 8%. The trend of outsourcing logistics is still to catch on in China, in the US; around 45% of the corporates outsource their logistics requirements. The rail and road traffic in China is far greater than what the infrastructure can handle. Moreover, with the growth of technology and all-round development in skill sets, China may not be able to sustain its low cost advantage for long. As the Yuan appreciates, buyers will begin to explore other low-cost manufacturing options.
In order to cut costs and keep its overseas markets, China is looking toward RFID to improve logistics. Unlike Europe and the US, where retailers and manufacturers with well-established supply chains are driving RFID implementation, it is the government that is the main force pushing for RFID adoption and improve the framework of the supply chain. China is collaborating with logistics experts from around the world to improve their infrastructures, remove supply-chain bottlenecks, and improve security.
On the other hand the RFID weblog do not see a fast adoption path in China for RFID in the supply chain. They note the countervailing circumstances against rapid RFID adoption in China:
1) China’s RFID standard is still unclear. Will China follow the EPCglobal standard, or the Japanese version, or its own national standard (yet to be determined)? The lack of a clear standard will slow down market adoption.
2) The relatively high cost of hardware and RFID implementation projects is still an impediment. No matter how you look at it, and no matter where you are in the world, the typical supply chain/inventory tracking implementation costs a certain amount of money to implement.
3) China still has a cheaper alternative: human labor. Despite the potential for rising labor costs, it is still less expensive in China to hire more people to handle the same stuff RFID does.
Nevertheless, in eLOGISTICS trendwatcH’s opinion, the truth will be somewhat in the middle of both opinions.
Source: RFID weblog
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