After years of development, China’s radio frequency identification (RFID) market has entered a phase of remarkable size and growth, with revenues set to more than double from 2009 to 2014, according to the market research firm iSuppli, now part of IHS (News - Alert) Inc. 

China’s RFID market, consisting of tags, readers and software/middleware, is estimated to have grown to $1.4 billion in 2010, up 22 percent from $1.1 billion in 2009. By 2014, as per iSuppli estimates, this RFID market will reach $2.4 billion, more than double the total revenues from 2009.

In a statement, said Vincent Gu, senior analyst for China research at iSuppli, “The rise of China’s RFID market is the result of rising demand from applications in transportation, warehouse logistics, electronic payment, medical equipment tracking, food security systems, asset management and more. At the same time, technology integration in the RFID market has been advancing. Many enterprises have begun to study technical innovations designed to broaden the applications for RFID devices, including mobile payment.”

Despite RFID’s many advantages compared to traditional UPC barcodes, the cost of RFID remains a barrier to its acceptance in China. But thanks to the rapid development of integrated circuit (IC) manufacturing technology, RFID chip costs are continuing to decline, with the price for many Chinese high-frequency RFID cards now down to about one yuan, said the market watcher. Likewise, prices of tagged products are also low and are expected to drop further. Hence, iSuppli predicts that as the technology matures, cost of manufacturing will go down, allowing RFID devices to reach economies of scale.

Even though 2010 saw dramatic decrease of second-generation RFID shipments, Shanghai Expo and Guangzhou Asian Games have come to the rescue of RFIDs. The two major projects have managed to account for 48 percent of the entire China market for 2010.

Overall, China’s RFID industry will be driven by the Chinese government’s extensive investments in the so called Internet of Things, which forms part of the country’s Twelfth Five-Year Plan. And though the RFID ecosystem is not yet mature in areas pertaining to standards, costs and suppliers, iSuppli believes the industry will develop quickly during the next four years.