Given that China owns the largest number of kilometers of toll express ways in the world, the commercial opportunities that arise from increasing traffic system intelligence are also correspondingly large. Case in point is the proliferation of electronic toll collection (ETC), well established in developed countries but only now going through rapid growth in China. According to recent data released by the Department of Transportation in Zhejiang province, the number of ETC users has increased dramatically to reach over 137,000 in 2012. The province has installed 339 ETC lanes in 164 expressway toll collection stations, with a coverage rate of over 52%. The average number of the times ETC enabled vehicles pass the toll gates exceeds 48,000 a day.
As China moves away from a labor-driven economy to technology-enabled growth, increasing the deployment of intelligent systems for the betterment of the population is a key focus. Toll collection is a major problem, with manual toll collection significantly slowing down the traffic, a problem that will only proliferate as the number of cars in China continues to grow. Given this, ETC systems are strongly promoted by the Ministry of Transport as a smart traffic system that increases the efficiency of toll collection. In some cities, the government subsidizes 50% of the cost of the ETC tags for new users when they purchase ETC tags. In many cities, vehicle owners that pay via ETC systems can also get a 3% discount on the toll fees.
An ETC system normally consists of a RFID tag which contains the vehicle identification information. In 2011, it was estimated that over 1.88 million ETC tags were shipped in China, mainly to the aftermarket, at an average selling price of RMB 350 per unit. On this basis, the Chinese ETC tag market exceeded $100 million in 2011. Considering the large-vehicle installed base in China, now in excess of 100 million civilian vehicles in 2011 and the low ETC installation rate at present, the Chinese ETC tag market is expected to grow rapidly in the next few years. Opportunities to supply high-quality RFID chips to major Chinese ETC tag manufacturers such as Genvict represent a quick path to a strongly growing market for suppliers with an appropriate cost position.