Issue #214 | Nov. 12, 2009 | by Andy Kowl

Next week Beijing will host the Global RFID Standards Forum, a group known as GRIFS.

Wish I was going. My week in Beijing exactly two years ago was fun and, for a first-time visitor, filled with cultural revelations. As an American I was warmly received, even stopped and welcomed by strangers on the street.

I met government officials from the Chinese Ministry of Information Industry, who welcomed cooperation with the U.S. Discussions between industry members from both sides of the Pacific were friendly and open.

Talking to a mainland Chinese official at RFID Taiwan last month, that warm feeling of RFID cooperation was chilled to the bone.

Hearing a "60 Minutes" report on CBS this Sunday adds to my unease. Steve Kroft reported on what is, today, an unrelated issue, "One top U.S. intelligence official is on record as saying the Chinese have already aggressively infiltrated the computer networks of some U.S. banks, and are operating inside U.S. electrical grids, mapping out our networks and presumably leaving behind malicious software."

Respecting standards starts with respect
Just as 60 Minutes pointed out it is the belief and trust of any banking system which makes it work, the same could be said of RFID standards. Or any standards. Respect of intellectual property rights (IPR) is more basic than standards, which typically come into being after IPR have been established.

In 2007-08, the most counterfeited category of goods entering the U.S. was footwear, according Customs, a full 97% of which was from China.

Would it matter if 97% -- or 9.7%, for that matter -- of Chinese-manufactured RFID technology was not licensed, nor IPR paid for?

Overall, in 2008 China accounted for 81% of all "IPR infringing products" according to Customs, up 40% from 2007. Their $222 million value made runner-up India look downright saintly, with only $16.2 million of fakes intercepted.

Nobody believes any of these figures is more than a spit in the ocean. In New York City alone, according to The International Anticounterfeting Coalition, "people buy $23 billion annually in counterfeit goods . . . a $600 billion a year problem" worldwide. This reporter is skeptical of such hyperbole; but you get the idea.

RFID standards vs. $600 Billion
As GRIFS prepares for next week's meeting in a country where it has been reported 60% of all available goods are counterfeit, how can respect for RFID standards hold a candle to the rewards of ignoring worldwide agreement on IPR ownership of all types?

In the past 12 months, China has moved up from 7th to 3rd worldwide in the largest number of RFID projects, according to IDTechEx. Ordering $6 billion (US) in government HF identity cards was a big part of this rise. Two speakers in Taiwan pointed out that while the RFID industry had been disappointed by enforcement of RFID mandates by Walmart and the U.S. Dept. of Defense, Chinese mandates are different. They get 100% compliance.

As for that Chinese official, President of the National RFID Data Center, Xu-zheng Chen announced that on the mainland they had "established 25 (RFID) standards, nine standards are in the process." I scratched my head as to what 34 standards the rest of the world had been missing.

I wondered if China was creating standards that essentially duplicated international standards, does that mean they are ignoring the standards and IPR that we all recognize?

I had no problem with Mr. Chen lapsing into Chinese at this English-language event. After all, I was one of the only people present who did not understand him. Reading the English slides behind Chen, with only his tone of voice and body language to follow, was fascinating. Perhaps I was mistaken about his dismissive attitude toward international standards, which seemed loud and clear despite the language barrier.

Chen was none too happy when I tried to interview him. To be fair, he does not come from a culture where journalists ask unscripted questions. Clearly angered, he referred me to read about these standards on "the website," but neither he, nor later anyone at EPC Global, could tell me what website.

Cyber Warfare
On 60 Minutes, talking about international cyber warfare, Sean Henry, Assistant Director in charge of the FBI's cyber division revealed, "There are thousands of attempted attacks every day, tens of thousands of attacks," on United States military, government and corporations by foreign government-backed cyber mayhem makers.

"So far this year, more than $100 million has been stolen from U.S. banks," Henry added. "I've seen attacks where there is ten million lost within one 24-hour period. If a bunch of robbers walked in and stole that amount with guns blazing, it would have been headline news all over the world."

Of interest, the thieves obtained card and pin numbers and manufactured "white plastic," bogus cards that would have been potentially un-makeable if they were RFID smart cards instead of magnetic strips. The FBI's Henry said this attack was sponsored by a government he would not name.

Admiral Mike McConnell, former Director of National Intelligence, pointed out on the show, "The real issue is not when an attacker wants to steal the money, but when he wants to destroy the process that accounts for money."

He said everything depends on "accountability of the wealth and the movement of that money through the system. If you impact or contaminate or destroy the data, where you could not have instant reconciliation, you could have a cascading impact."

Hidden applications have been found in silicon manufactured by certain unnamed countries, according to this report. Because of that, chips used in the U.S. military's atomic programs now must be manufactured by the program, itself.

As RFID becomes more and more pervasive, must these concerns be considered? Ironically they are the mirror image of those paranoid-fringe, RFID doomsayers who think there is some tight government control of all of this, rather than the deep, uncharted waters that really swirl around these topics.

GRIFS member Henri Barthel, GS1 Director System Integrity and Global Partnerships, has agreed to report on China's compliance with RFID standards after the meeting.- Editor