New analysis from Frost & Sullivan, North Asia RFID Tags Market, reveals that the market earned revenues of US$200.5 million in 2005 and estimates this to reach $469 million in 2012.

RFID technology in China, South Korea and Japan is growing rapidly and is being increasingly deployed. Although the RFID tags market is in the growth stage of the market cycle, the application of RFID tags in different verticals and the market shares contribution across the countries are varied. With government support and greater initiatives by the industry participants to promote the usage of RFID, growth of this market expects to be phenomenal in the coming years.

“The Chinese, South Korean and Japanese governments are aggressively promoting the RFID tags through the formation of RFID information centers, hosting conferences and summits for the companies to better understand the technology and its applications,” says Frost & Sullivan Senior Research Analyst Parul Oswal. “The campaign for RFID tags promotion includes the RFID China Alliance, the South Korean ubiquitous sensor networks (USN) and ‘Hibiki’ to make cheaper RFID tags in Japan.”

The RFID China Alliance allows participants to share RFID-related technical skills, industry policy and measurement. In South Korea, authorities are encouraging RFID development and commercialization with the goal of capturing five percent of the global market by 2007. In Japan, the Ministry of Economy, Trade, and Industry (METI) and Ministry of Internal Affairs and Communication (MIC) are two organizations working toward RFID development and have jointly compiled guidelines for privacy protection on RFID tags.

However, end users of RFID tags such as manufacturers, media and industry associations are over-hyping the technology and often misrepresenting the benefits of RFID tags. A direct result of this frenzy fueled by the media, there is confusion regarding the product. Some of the information that has been released has negatively impacted user expectations in terms of price, return on investment (ROI) and product availability time frames.

“In addition, there are only a few integrators and resellers that are fully capable of effectively marketing, selling, integrating and supporting RFID systems,” says Parul Oswal. “Although several North Asian governments have made a sincere effort to educate end users and promote the product, end users and system integrators are still not familiar with the technical skills and sophisticated integration process of RFID tags which could negatively impact consistent adoption.”

In a move to counter competition from low cost providers from China, it is important for producers of RFID tags to introduce a cheaper version of RFID tags through acquisition of low-cost manufacturers or through original equipment manufacturers (OEMs). In terms of low level of end-user awareness, manufacturers can improve their perception through focusing on the multiple benefits of the RFID tags and by scheduling seminars and workshops.