Development Of China In The 21ST Century
Management information systems (MIS) is an area of study which is more popularly referred to as information technology (IT) management. It involves the study of information systems for commerce and business administration purposes. It integrates software engineering into its discipline, but also concentrates on the integration of computer systems with the goals and objectives of an enterprise or organization (Wikipedia, 2006).
MIS is used as the general term for computer systems which provides information about the business operations of an organization (Whatis.com, 2005). The term MIS has been expanded to include decision support systems, resource and people management applications, project management, and database retrieval applications.
MIS has been used not only for business enterprises but in providing key functional support, communication decision support system, decision support, and performance monitoring role for government organizations and government structures in general. This research paper will examine MIS has been used as a tool in assisting the development not of a business enterprise, but of an entire country. The country selected for this study is China. The paper will study the role of MIS in the development of China for the 21st century.
- Brief Background on China
China was a leading civilization for many centuries, but in the 19th and early 20th centuries, the country suffered civil unrest, major famines, military defeats and foreign occupation. After World War II, the Communists under Mao Zedong established an autocratic social system. This system was meant to ensure China’s sovereignty, and as a result thereof, the government laid down strict controls and regulations that affected the daily life of its citizens.
Tens of millions of people died as a result of such autocratic control. Mao Zedong’s successor, Deng Xiaoping, other leaders, sought to turn around the situation beginning in 1978. The government started to focus on market-oriented economic development. By 2000, output in China had quadrupled, and this has improved living standards dramatically for most of the population in the country.
Although political controls remain tight, the strict controls laid down during Mao Zedong’s reign no longer existed. Reforms which spanned from the 1980s are still being pushed in China, with the Eleventh Five-Year Plan, proposed by the Chinese Communist Party in October 2005, was given final approval in March 2006. The Eleventh Five-Year Plan calls for a 20% reduction in energy consumption per unit of GDP by 2010, and an estimated increase of 45% in China’s GDP by 2010. The plan’s basic goals are to conserve resources and protect the environment (CIA – The World Factbook, 2006).
In sum, the Eleventh Five-Year Plan for China was drawn to clarify national strategic intention, identify government work emphasis, and guide market behaviour in the country (NEWSGD.com, 2006). It is slated to affect key industries not only related to manufacturing and retail, but even agriculture, environment, and land management as well, particularly as to how the latter is affected by urbanization and industrialization (China Internet Information Center, 2004).
Included in the projects slated under the Eleventh Five-Year Plan are several MIS initiatives which were structured to assist in the reform development efforts of China for the 21st century. These MIS initiatives will be examined in this paper, focusing especially on the comprehensive RFID plan slated for the nation under the Eleventh Five-Year Plan.
- Objectives and Significance of the Study
The research paper will seek to examine the impact of management information systems (MIS) on the development of China for the 21st century. It will examine how MIS initiatives particularly under the Eleventh Five-Year Plan in place in China can assist and even hinder the social and economic development for the nation. In particular, one of the objectives of the paper is to review the comprehensive RFID plan, which is one of the six major IT initiatives set forth under the Eleventh Five-Year Plan.
The study is relevant in that the comprehensive RFID plan, and MIS in general, is expected to have significant impact in key industries in China such as manufacturing and retail. The comprehensive MIS based on RFID is expected to improve trade and commerce, and to reduce costs for enterprises, as well as improve supply chain management in the country. It is also expected to improve support and project monitoring systems in areas such as health care, education, agriculture, environment, and land management.
- The Eleventh Five-Year Plan in China
- Six Major Information Technology Projects under the Eleventh Five-Year Plan
In the National Information Technology Application Work Conference 2005, held in Chongqing, the Ministry of Information Industry (MII) of China announced their decision to promote six major information technology (IT) projects during the subsistence of the Eleventh Five-Year Plan. Pursuant to the Eleventh Five-Year Plan, these six projects are aimed at helping to improve China’s economic development for the years 2006 through.
These projects will cover sectors such as agriculture, industry, online security, household information construction, emergency service systems in cities, and comprehensive management information systems based on radio frequency distribution (RFID). An example of one of the six projects is the digital home entertainment project which involves the integration of electronic home appliances (such as television sets, computers and mobiles phones) with water, gas, and power supply agencies in order to provide pre-warning systems.
The project also includes the development of an anti-fatigue software system that will monitor young people and prevent them from spending too much time playing games online (ChinaTechNews.com, 2005; openspectrum.info, 2005).
One of the projects under the Eleventh Five-Year Plan is the development of China’s high-tech industrial structure, which involves the extension of high-tech industries from processing and assembling to independent research and development (R & D). The project aims to form leading industries with core competence, a group of industrial bases with concentration effect, and to establish a batch of transnational high-tech companies.
The R & D approach will be scientific in order to enhance innovation in high-tech features. Innovation in fact will be the central feature for Beijing’s new industrial policy under the Eleventh Five-Year Plan. In the past, China’s approach to economic development was based on exports and labor-intensive production with a low value-added. Now, the country aims to become a world leader in scientific research and high-tech production (Bordonaro, 2006).
Focusing now on strategic high technology is for the purpose of ensuring national security, among other benefits to development expected from this endeavour. Strategic high technology, which is technology with key strategic significance, would reflect China’s innovative capabilities. The medium and long term plan will ultimately use IT to boost industrialization, foster a new growth point in the areas of sustainable development including strategic energy and high-technology areas such as biotechnology, and speed up development of innovative capabilities in fields which involve national security (such as aerospace and lasers, for instance).
Prior to the Eleventh Five-Year Plan, China launched Program 863 in 1986, which was the nation’s key national high technology research and development program. As part of the Eleventh Five-Year Plan, China has begun implementing a series of policies meant to encourage the industrialization of high technology enterprises (Asia Times Online, 2006).
The six IT projects were developed in line with adjusting China’s development mode and to ultimately aid in better addressing the expanding wealth gap in the country. They are meant to help on improving social services, and economic growth. Pursuant to the Eleventh Five-Year Plan, these IT projects will contribute in providing for a more balance and high-efficiency development in China (People’s Daily Online, 2005).
- Comprehensive MIS based on RFID
Much of the growth in the RFID systems revenues for the global market is expected to come from China. Its comprehensive management information system based on RFID, part and parcel of the country’s Eleventh Five-Year Plan. By way of background, RFID systems consist of four components: 1) a transponder or tag; 2) a reader; 3) a database; and 4) a software program. Tags, which can be passive or active, are attached or embedded in an object requiring identification, such as a payment instrument used in stores.
RFID technology is known to help improve handling efficiencies, traceability, and immediacy of data capture. It helps businesses to maximize operating income through reducing capital costs. RFID tags allows for reduced order cycle times, manual inventory counts, and maximizes shipping and receiving efficiencies. Overall, the strengths of this technology is that it optimizes assets by reducing inventory and improving forecast accuracy, in addition to enhancing safety and quality control (Stakelbeck, “RFID: New markets”, 2006).
China has taken major steps in making use of this technology through its comprehensive MIS project under the Eleventh Five-Year Plan. In February 2006, Analysis International, a Beijing-based information services provider, reported that China’s RFID market grew 8.6% in the fourth quarter of the year 2005. The report indicated that most of the growth focused in the identification card and public transportation sectors (Stakelbeck, “RFID: New markets”, 2006).
The country’s RFID market is expected to grow at an annual rate of 33% with sufficient government support and promotion of RFID technology (Stakelbeck, “South Asian spying”, 2005). As it turns out, the Chinese government has not been negligent in capitalizing on the growth and benefits of RFID technology.
In 1993, prior to the Eleventh Five-Year Plan, the Chinese government launched the “Golden Card” project, which promoted the use of credit cards through individual identification cards with embedded RFID chips. Following up on this project, more than 900 million RFID-enabled identification cards are expected to be issued by the end of the year 2008 (Stakelbeck, “RFID: New markets”, 2006). Now, the Eleventh Five-Year Plan includes a comprehensive RFID project as one of China’s six major IT projects, as earlier mentioned in this paper.
In the country, RFID China has been the first conference providing comprehensive RFID technology information from leading technology suppliers, and in showcasing a comprehensive suite of RFID technologies and applications in the country (Texas Instruments, 2004).
In December 2005, during the Global RFID Summit held in Beijing, China, the China RFID Alliance was announced to an estimated of 300 global IT enterprises. This new alliance is closely connected to several government departments in China, including the Goods Management Division of the Ministry of Information Industry and the China Information Industry Business Operation. To support this announcement, China included the comprehensive RFID plan as one of its six major IT initiatives under its Eleventh Five-Year Plan (Stakelbeck, “South Asian spying”, 2005).
This year, in furtherance of its comprehensive RFID plan, much of the emphasis for development has been in the improvement of supply chain management for China’s manufacturing sector. Manhattan Associates Inc., a U.S.-based supply chain solutions provided, worked with Proview International Holdings Ltd. to deploy RFID applications at its Shenzhen, China manufacturing plant.
Manhattan Associates will embed RFID labels on products manufactured by Proview before these products are shipped to retail distribution centers. Manhattan Associates installed the software platforms called EPC Manager and Integration Manager, and were integrated with Proview’s legacy distribution applications. RFID readers would then collect the data read from the tags, with the information flowing from the readers into Manhattan Associates’ EPC Manager wherein the data is stored.
The data is then integrated back to Proview’s legacy systems to generate reports for internal use for the retailer. As such, Proview is the first RFID solution rolled out in China by Manhattan Associates, and the first of its kind under the Eleventh Five-Year Plan. Other companies such as Oracle, SAP AG, and Microsoft are still negotiation with customers in China in order to deploy RFID-based applications in the country since RFID in China is a developing market for manufacturing.
According to a recent study by Markets and Research, RFID use in China’s consumer market will be at an estimated $ 627 million (or 5.059 billion Yuan) by the year 2009. As of 2004, RFID use stood at only $ 150 million or 1.2 billion Yuan (Sullivan, “Supply Chain Solutions”, 2006). This increase in revenue is expected to help boost China’s manufacturing and retail sector.
- Benefits of RFID to China’s Economy
Currently, the ports in Hong Kong and Shenzhen in China use RFID systems to manage cargo shipments. In 2006, Beijing Capital International Airport announced its plans to use an RFID system for outbound luggage transport and security checks. The technology has also been considered used widely in China’s retail sector, with an estimate of 5 trillions tags to be used annually within the next several years, according to a study by Research and Markets, an international market research firm (Stakelbeck, “RFID: New markets”, 2006).
Another benefit on the use of RFID would be in improving supply chain management for China’s vast manufacturing sector. Costs associated with tags, equipment and services are expected to decrease, thereby making the technology more affordable for small businesses in the country (Stakelbeck, “RFID: New markets”, 2006). Thus, the significant benefit of RFID technology to China’s manufacturing industry is that moving processes to manufacturing facilities is more cost effective when tags are used in the production line, instead of shipping the products to the United States or other countries and then tagging them there.
Instead of tagging them elsewhere, the tags are then applied in the nation’s own manufacturing plants, made possibly through the reduction of prices of these tags (Sullivan, “Supply Chain Solutions”, 2006). Edward Zeng, founder of SparkiceLab, a business-to-business global commerce provider, predicts that half of all RFID tags will be sold in East Asia by 2010, and points out why this initiative is especially beneficial and apt for China since the country “is the world’s manufacturing hub. It is ‘ground zero’ for innovations and applications in the development of manufacturing infrastructure and capabilities. China is a starting point for a huge chunk of global supply-chain” (Stakelbeck, “RFID: New markets”, quoting Zeng, 2006).
The comprehensive RFID plan is expected to assist in the development of education in the country as well. Jimei University Library in Xiamen, China, plans to install RFID in its main library on campus with the help of Shanghai RFID System Technology Co. Ltd. And UPM Raflatac. The two providers will initially deliver 300,000 RFID tags which are expected to: a) reduce theft while allowing patrons to check out books and other media; and b) speed up the sorting process for library items, so that books and other items are returned to the shelves quicker, with less time spent in taking inventory by the personnel at Jimei University Library (Sullivan, “China University”, 2006).
- Issues in Implementation
Although the introduction of RFID technology in China promises positive results for many of the sectors targeted in the comprehensive RFID project, significantly for the manufacturing sectors, several obstacles are also apparent. Technical difficulties involving the placement of tags, transponder read-rate accuracy, patent-infringement lawsuits, large numbers of trial applications, and market trends caused by over-hyping of the RFID technology, all contributed to some difficulties during the early implementation stages of the RFID plan (Stakelbeck, “RFID: New markets”, 2006)
Another issue involves China’s continued effort to introduce its own RFID national standard. The government has decided to reject the widely accepted Electronic Product Code (EPC) standard, which is a tag serial-numbering system promoted by EPCGlobal for international use, in order to avoid payment of expensive royalties. This is viewed as a major hindrance to global standardization. The primary hindrance to developing a national standard has been disagreements among concerned parties within the country and the ability of China’s national standard to operate with the three other international standards, which are ISO/IEC 18000, EPCGlobal and Ubiquitous ID.
One potential problem in developing its own RFID national standard is that China’s may be in conflict with supply chain mandates of foreign companies such as Wal-Mart, Target and Tesco. This will result in serious interoperability issues for these giants in China. Wal-Mart, especially, has already endorsed the existing EPC standard, and this may cause problems if China pushes with its own RFID national standard since Wal-Mart has already purchased approximately $ 20 billion of Chinese products as of 2005 (Stakelbeck, “RFID: New markets”, 2006).
Significant issues related to RFID technology in China would be from the legal, ethical and privacy aspects. It is not clear which government agency in China will be responsible for the collection and maintenance of RFID-related data. This would make it difficult for a Chinese citizen to pursue legal action if he or she feels that their privacy has been violated (Stakelbeck, “RFID: New markets”, 2006).
According to Dr. “Rocky” Shih, a Chinese government representative in the 2005 RFID World Conference, China is expected to issue more than 1 billion active RFID identifications cards – one for each Chinese citizen. An estimated 3 million hand-held RFID readers will also be issued by the government – one for each police officer in China.
This raises issues on the possibility of government-sanctioned abuses, particularly in relation to how the government will use RFID technology to monitor the activities of political dissidents, religious figures, scientists, university professors, and military personnel. This threat continues to overshadow RFID technology development in China simply because the country continues to be Communist-controlled (Stakelbeck, “South Asian spying”, 2005).
MIS is expected to have a significant impact to the development of China in the 21st century. The Chinese government has realized the importance of this field when it included six major IT projects within its Eleventh Five-Year Plan. One of the most relevant of the six projects, in relation to management information systems, is the comprehensive MIS plan based on RFID, or the comprehensive RFID plan, under the Eleventh Five-Year Plan. The comprehensive RFID plan is expected to primarily help improve the development of China’s manufacturing and retail sector.
The RFID plan is expected to reduce costs and increase profits, as well as improve supply chain management particularly for manufacturing. It strengthens China’s participation in efficient supply-chain management, visibility and adaptability in the global market. The main issues involved in RFID technology are standardization and privacy.
Thee Chinese government’s intention of developing its own RFID national standard, which may not be consistent with standards already used by major foreign companies already doing business with China, may prove to be a hindrance to global supply chain efficiencies. Likewise, privacy concerns among Chinese citizens continue with the fear of government officials monitoring their private conversations and activities through the personal ID tracking system implemented not only on ordinary citizens but police officers in the country as well. This is an issue that China has yet to address, since RFID technology promises huge rewards for its social and economic development.
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