China on way to becoming IC card king(12/19/01)

2004-06-12 15:16

China is striving to develop a sophisticated network system using Integrated Circuit (IC) cards through the promotion of related applications and services, all with a mind to become the world's largest IC card consumer within the next 10 years.
It is expected that the cards will be used to help set up a national credit rating system which will store consumers' identities and other personal information.

During the 10th Five-Year Plan period (2001-05), China will offer preferential policies to develop the IC card industry and will map out detailed regulations and technical standards to promote the use of IC cards, Zhang Qi, director of the electronic products administration department under the Ministry of Information Industry (MII), said at a working conference held in Beijing last week.

"The government now is strengthening its efforts to co-ordinate various departments to share the useful experience we have achieved in our experimental phases," she said. "We will focus on setting up unified standards and regulations for wide application of IC cards in various sectors."

By the end of October, China had issued about 800 million IC cards, 200 million more than those issued last year, including 460 million fixed-line phone cards, 140 million mobile phone cards and another 200 million cards used in various industry sectors.

By 2003, there will be 450 million IC cards issued on a yearly basis, according to a report from the MII. During the 10th Five-Year Plan period, China will issue a total of 1.8 to 2 billion IC cards.

Beijing's public transportation department will install an IC card system in 4,000 buses in the first quarter of 2002, officials said.

By 2003, all buses will use the IC card system. In the first half of next year, about 50,000 taxis are expected to be equipped with an IC card system.

However, Zhang complained that some local governments have been carrying out irrational policies in supervising and guiding the development of the IC card industry.

"Reckless investment in the industry, unsupervised issuance of cards and irrational fee-charges for users have caused many complaints and deterred the development of the industry," she warned.

She also criticized some local governments for failing to provide convenient services for IC cards users.

The government has approved 52 registered agencies to engage in the IC industry, including 27 IC card manufacturers, 10 IC card providers, seven card issuance organizations, and another eight IC card application services providers.

The term "IC card" refers to any plastic card with one or more embedded integrated circuit chips that allow data storage, encryption and processing.

The core part of an IC card is an integrated circuit chip, so it is also called a "chip card." In terms of shape, use and methods of information exchange, IC cards can be classified as contact cards and contactless cards.

The total output value of China's IC card industry by the end of 2000 reached 7.6 billion yuan (US$915 million) and total sales reached 6 billion yuan (US$720 million). About 48,000 people are engaged in IC card production in about 200 enterprises.

Domestic production mainly focuses on producing and packaging modules, hardware units designed for use with other components.

There are more than 30 card packaging production lines. Over 150 million IC cards and 60 million modules can be produced each year.

The rapid growth of worldwide use of IC cards is driving the development of China's IC card industry. The industry has grown at a fantastic speed since the launch of the Golden Card Project in 1993, which was aimed at promoting electronic payment through the use of IC cards.

In the next few years, IC cards used in telecommunications will still hold the leading position and IC cards used in the financial and transportation sectors will increase by a hefty number.

Golden Card Project

The electronic currency project was started in 1993. It has an important role in the realization of computerized finances and the modernization of commodity circulation. The project is made up of the following essential parts:

Establishment of a national standard system for issuing financial transaction cards and the construction of two national information service centres for credit cards and cash cards.

Establishment of a national standard network especially for Golden Cards and the promotion of two kinds of standard financial transaction cards, credit cards and cash cards, with the cash card taking the dominant position as a result of specific conditions in China.

In counterfeit prevention and technological development, the IC card took the lead, while the magnetic card served a provisional role. The operation of the Golden Card system, also known as the National Credit Card System, is based on a sound network communication environment using one of three networks: the Financial Network, the Golden Bridge Network or the Posts and Telecommunications Network.

The project was divided into three phases: experiment, promotion and popularization.

During the experimental phase (1994-96), the project was piloted in over 10 provinces and municipalities with a total population of 30 million and total issuance of 30 million cards.

During the promotion phase (1997-2000), 60 million cards were issued to 60 million people in 30-35 important cities across China.

During the popularizing phase (2000-03) 200 million cards are to be issued among 300 million people in 400 cities. After three to five years of popular use in experimental cities, a credit card network is to be established for settling accounts in all shopping centres with annual sales revenue of 40 million yuan (US$4.8 million) or above, and credit purchases will account for 15 per cent of the retail sales volume of each city, and each city will have 40,000 POS (point-of-sales) terminals, the country will have 10,000 on-line POS terminals for tourism, restaurants, civil aviation and railway transportation as well.
(www.chinadaily.com.cn)