Mainland authorities are stepping up efforts to draft national standards for radio frequency identity (RFID) tags as Chinese manufacturers and distributors scramble to meet new product data requirements from large western customers. The Beijing-based Standardisation Administration of China, an agency formed by the State Council in 2001 to prepare standards laws, recently formed the National RFID Tag Standards Working Group. The group will investigate global research on RFID tags and their practical applications, and adopt relevant technologies to ensure the proposed national RFID tag standards are compatible with international standards. United States retail giant Wal-Mart and other large organisations are driving the adoption of RFID tags, requiring many suppliers worldwide to comply by early next year. The technology carries descriptive information of a product in a tag embedded with a chip. Devices such as handheld computers or sensors located in a warehouse can read this data and help businesses to streamline processes such as inventory management. There is tremendous interest in the mainland in RFID tag standards because of the technology's application in key industries, including the manufacturing, retail and defence sectors. It is estimated that US companies imported US$70 billion worth of Chinese-made goods and components in 2002. Wal-Mart planned to buy about US$15 billion worth of merchandise last year from its mainland suppliers. RFID has been around for decades, but the cost of the technology and a lack of standards had hampered its widespread adoption. This recently changed, thanks to the efforts of the former Auto-ID Centre at the Massachusetts Institute of Technology, which helped establish the Electronic Product Code Family standards and formed EPCGlobal Inc, an organisation leading the development of industry standards using RFID. Standards that have to be developed to make the widespread implementation of RFID tags a reality in China include electronic appliance standards, uniform communications frequencies, uniform data formats and raw product data configurations. Practical advantages include data encryption and product certification and validation. At present, the most popular automatic identification technologies used in China are the one-dimensional, two-dimensional and composite bar-code systems. Daniel Lai, head of information technology at the Mass Transit Railway Corp, said the proposed national RFID standards 'must be published early enough so that RFID application developers in the mainland and Hong Kong could get a head start' against international technology vendors. He noted that the establishment and adoption of national RFID standards would pave the way to developing a specialist RFID industry in the mainland and in Hong Kong. The MTR's first-hand experience with RFID technology came from an initiative to embed RFID chips in samples of construction materials used by the company. Mr Lai said use of RFID technology was expected to expand to deter piling scams and other schemes in which unscrupulous construction firms deploy substandard materials. The Wireless Data Research Group, a California-based consulting firm, estimates the global market for RFID hardware, software and services will increase at about 23 per cent annually to US$3 billion in 2007 from more than US$1 billion last year. The Americas would continue to be the leading geographical market for RFID sales, making up more than 40 per cent of the world market, the research group said. Western technology firms such as Intermec, Texas Instruments, Tagsys and EM Micro have already shipped tens of millions of RFID tags. But Philips Semiconductors president and chief executive Scott McGregor said China's position as a large international manufacturing base and distribution point presented a huge opportunity to pursue RFID projects across the mainland. 'We will work with partners,' he said. These partners would include mainland systems integrators, software applications developers and makers of RFID tag readers. Industry analysts estimate that the top 100 suppliers of Wal-Mart alone will have to collectively invest as much as US$300 million to comply with the retail firm's RFID mandate. Much of that cost will involve the integration of RFID data-encoding and data-capture systems into the information networks that support suppliers' manufacturing and distribution operations.