The most widely quoted maxim of the information age must be Moore’s Law. Almost 40 years since the co-founder of Intel predicted the exponential increase of semiconductor complexity, his observation is echoed by anyone looking to illustrate the relentless progression of computing power. And surely enough, the improvements in the transistor density of integrated circuits is the major reason why microprocessors have become part of everyday life.

However there is a lesser known law that will prove to be far more essential to the way in which information technology benefits mankind. Metcalfe’s law states that the usefulness of a network grows in proportion to the square of the number of users. As the inventor of Ethernet, Robert Metcalfe has had an arguably greater impact on the way in which we use computers and share information. And his law is more fundamental to the way in which science and economics combine to extract value from technology investments. There is a limit to how much real-world value there is in increasing the processing power beyond the PC or notebook we use today. The utility of a network, on the other hand, has an ongoing logical relationship with the number of users. So as more users join, the value of the network keeps getting better and better.

So how is this relevant to the discussion of technology standards in RFID? Well, the principle of Metcalfe’s law relies on interoperability. If the users are not able to readily share information in a compatible way then the unity and utility of the network breaks down. For interoperability you first need standards. So this is why vendors and operators spend millions of dollars and dedicate thousands of highly qualified people to ensure that they are a key player in the formulation of standards. Nobody likes being left out in the cold with an incompatible product, or forced to license somebody else’s technology.

Ethernet itself is probably the most successful example of standards development. A vast community of users, vendors and network operators has built a network protocol that can carry data to a single desktop in the same basic way that it operates an entire city network. However, there is no guarantee that a standard will always follow such a virtuous path. After all, the key developers of technology are profit-making companies and their actions are necessarily self-serving. Governments are also highly instrumental to the adoption of standards, but they too act in the interest of protecting their own developers and users.

So, when China emerges as both a massive market of technology users and a powerful source of technology providers, many vendors fear that the government might wish to pursue a protectionist strategy and cut itself off from the rest of the world. Hence, when China announces that it is developing its own 3G mobile communications standard, a massive corporate lobby is mobilized to warn of pending disaster. When the authorities require that Wi-Fi equipment (ironically, wireless Ethernet) sold in China needs to come with security technology developed by Chinese companies, the vendors complain that their intellectual property is not being fairly treated. Many observers are beginning to argue that the Chinese Government is behaving like a spoilt child, stamping its feet and spoiling the game for everyone else just because it can.

These fears are understandable from the view of vendors wishing to maximize their market. However, it is totally reasonable for China to want to adopt standards that Chinese companies have helped to develop. In most cases European and North American vendors and users have had a head start in developing the technology. It makes sense to build on this work and not try and reinvent the wheel. However 3G technology continues to be plagued with technical problems and operators are struggling to make to business work. And Wi-Fi technology providers were very slow to plug the gaping holes that allowed anyone with a laptop and adapter card to access corporate wireless networks from the street.

So, China’s government is right when it says it wishes to ensure that these technologies come to the market with a proven performance. From their point of view, if this gives Chinese vendors the chance to catch up, so much the better.

When it comes to the supply-chain, there is more at stake than just domestic vendors’ market opportunity. The economic growth of the country, and right now the world, depends heavily on the continued growth of China’s manufacturing exports. So this is no time to sit on the sidelines. Chinese suppliers must work to anticipate the requirements of their largest customers. If RFID is going to be a major technology in the global supply-chain, and if domestic manufacturers are to extend their competitive advantage across the world’s trade channels, then China should be a very active participant in the emerging RFID standards debate.

Heeding this call, the National Standardization Committee has formed a RFID Tag Standards Working Group. Furthermore, it has declared that the RFID standards formulation process will be conducted as an open-door policy with private industry welcome to participate and make their voice heard. The executives chosen to lead the various groups and committees are highly skilled at liaising with the international business community and engaging with the standards discussions. Beneath the EPC Global organization, the China Auto-ID labs has a Special Interest Group–specifically designed to give vendors a voice in issues relating to RFID adoption in China.

RFID in the supply-chain is in its early development phase and there is clearly a lot of work to be done before we will see pallets and cartons carrying radio tags coming out of China’s factories and warehouses. This is an opportunity for China’s users, government and vendors to have full participation in the way in which RFID is adopted in China. The next era of export growth will be based on leading Chinese manufacturers building value across the global supply-chain. If RFID is going to be at the centre of next generation logistics and trade, then China should be at the centre of RFID standards discussions.