Education –Key to Unlocking Thailand's Potential
Editor / Provider: The Editorial Team | Updated: 9/7/2011 | Article type: Hot Topics
The overall market in Thailand is strong. 2010 saw steady growth, the pace of which is expected to be maintained in 2011. While the majority of the market continues to be video surveillancedriven, demand for pedestrian barriers and more integrated security systems is increasing. Although integration has been around in other regional markets for a long time, it is only beginning to grow in Thailand, as people are beginning to understand the benefits of an integrated system.
Thailand has relatively low security awareness, as the risk is not perceived to be high. Indeed, the national crime rate is lower than that of many other countries.
For example, banks in the U.S. are secured with man-trap doors, armed guards and an abundance of surveillance cameras. In Hong Kong, cash in transit is delivered by armored cars and two men with shot guns, said Henny Beeber, CEO and CTO of AES Group. “But you walk into a bank here in Thailand, and you find unarmed guards and no counter-to-ceiling bulletproof glass — yet they have tens of millions of baht behind the counter.”
Research reports provide valuable insight on the overall market, but industry experts recommend doing your own homework. “Market research firms estimate 10- to 12-percent growth. From my own dealings, it is closer to 30 percent, so I generally take market research with a grain of salt,” said Sumrith Ngaochai, GM of Guts Securitech.
However, recovery from the financial crisis was slow for some security players. After five years in the business, last year was the worst one ever, said Somchai Junpuan, Country Manager, AVerMedia Information. “However, we have a positive outlook for 2011. The market and political front will stabilize this year, and we expect a big jump to happen in 2012, as the economy continues to recover.”
The economy and the market were rather slow compared to previous years, but there are good signs for a bright future this year, said Jason Kwan, MD at CommExpress.
With the growing number of companies entering security, the market is becoming competitive. Ultimately, the way to stay ahead in the race is to provide good service, said Kittichai Samittiwuttikul, President of Smart Computer International.
“With branded products, we have been very successful in the past year,” said Dej Churdsuwanrak, MD at Bangkok OA Coms. “People come to us, and we have a competitive edge when it comes to major projects.”
The products selected must perform well and satisfy customers' needs, said Suwich Chitkasemsuk, MD at Digitalcom. “What we try to do now is communicate with the customers for their specs, requirements and budgets before coming up with the solution.”
The market in Thailand is dynamic, and this year new technologies will fight hard to gain a foothold in a sweetand- sour country. “I believe technology is facing an uphill battle, and it is important to not only be able to offer new products, but also understand how the market works in Thailand,” Ngaochai said.
IP VERSUS ANALOG
Many organizations are switching from analog to IP, including airports and international schools, Chitkasemsuk said. “The people writing the specs must consider the life span of the system, and IP is the most future-proof way today.”
Those who are new to video surveillance tend to choose analog systems, especially if they have slim budgets, said Narathip Patcharothai, GM at I Security Center. “Small mom-and-pop shops prefer a US$500 analog system.”
“The market is limited if you aim to offer premium-grade products, which are niche. Government projects tend to adopt IP for new projects, since tech specifiers believe analog systems are not advanced enough,” Ngaochai said. “The general market, however, is very sensitive to price. Sure, you can upgrade systems with IP, but analog use is far higher, at more than 70 percent. Research claims analog has 70 to 80 percent of the market share, but in reality, it's much more.” Customers are very price-sensitive. “Everyone definitely wants the best system they can get, but if you go over their budget, they will want to find a new contractor,” said Arnon Kulawongvanich, GM of Sales and Marketing at Chubb (a UTC Fire & Security company).
While analog still dominates, IP is expected to overtake analog in the next five to 10 years. “It may not be this year or the next, but we have come from pure analog to hybrid and will eventually move to IP,” said Pichai Sihsobhon, MD at Semple Cochrane (Asia).
From a commercial point of view, analog systems are more popular in Thailand and easier to control, Patcharothai said. “Many people don't know about IP solutions. When we propose IP and educate them on the benefits, they are almost always wowed. However, they will still prefer analog because of the price. We need to prepare for IP solutions, but analog will still dominate the market for the next two or three years.”
Three advantages of wireless infrastructure are mobility, cost and cable elimination, Kwan said. “Customers today are dealing with larger-scale projects, where previous data-driven implementations such as point-topoint (PtP) and point-to-multipoint are no longer sufficient. However, customers are often confused by marketing, so there is still a strong need to educate the market.”
A wireless infrastructure is about three times cheaper than running fiber optics in Thailand, said Jeremy Koh, Regional Sales Manager of APAC for Firetide. “For the traffic-packed streets of Thailand, cabling is probably not even an option. Since video is the most demanding kind of traffic on a network, a reliable network with high throughput is crucial. So, critical wireless infrastructure has huge potential in Thailand.” [NextPage]
There is a strong need to educate the market, as the government sometimes directly specifies the tenders, as opposed to consulting an unbiased firm. The end result can be specs that mix and match products from four different brands. “When the customer uses different products from different companies, it opens the door for a lot of finger pointing,” Kulawongvanich said.
Countries such as Korea have organizations that act as a bridge between the government and the security industry, but there is no such body in Thailand. “A nonprofit organization in Thailand called the Engineering Institute of Thailand (EIT) has the potential to assume such a role,” said Somvith Leelaprapal, MD at JES CQtec. “However, security has not yet established deep roots in the EIT.”
Educating the market is necessary for new technologies. People are generally unfamiliar with transmission, as PtP has traditionally been the dominant choice, Koh said. “We are putting a great deal of energy into this space, but it is a difficult process since this is an industry where people are reluctant to adopt new technology. They tend to continue to use whatever is available to them, but as we go about this education process, people will start to see the value of this technology.”
Many end users deploy IT equipment for video surveillance; a year later, they will realize it does not work, Ngaochai said. “There's a general lack of knowledge for security systems, and educating the market is essential for future growth. It's a very technical market where things are no longer as simple as plug-and-play. Today, many people don't even understand the difference between a box and a dome camera.”
Many project specifiers and decision makers do not know why they need a wireless infrastructure, or why they need a specific type of camera. End users can be educated through road shows and seminars, but consultants need exhibitions, Chitkasemsuk added.
Distribution is a challenge in Thailand. “The distribution channel is difficult to set up because the market here is significantly smaller compared to markets such as the Americas, Europe and China,” Koh said. “We need to deal directly with the system integrators, and ship our products to them, especially for high-end offerings.”
“Much of the spending comes from the government,” Sihsobhon said. “It comprises roughly 50 percent of the total market, and there will be significant growth in the public sector this year.”
Government security spending is a major market driver. “Even during the 2009 financial crisis, liquid cash from the government pumped into the public sector helped propel security,” said Panja Klaipothong, Country Manager at Firetide. “When times are bad, people need security. When times are good, people also need security.”
The security business has significant growth potential. “If it's commercially driven, everybody pulls back when a crisis hits,” Klaipothong said. “But the government puts money into security; large, public safety infrastructure projects were still sustained by government funding, regardless of the political situation.”
Some experts expect the market to peak before dropping again. “What we're seeing now is that most of the money put on hold is finally being released,” Beeber said. “Projects from two years ago were put on hold and are now going forward.”
Thailand's public bidding process is electronic and intended for fairness. This works well for construction, but is challenging for integrated security bids. For example, the Bangkok Metropolitan Administration (city government) has thousands of cameras installed, which cannot all be viewed on the same system. However, if the government did not have an open-bid process, it would be accused of corruption.
The lowest bid or “survival of the cheapest” has other effects. A mass-transit subway project four years ago received three or four proposals, with all bids differing only by 3 to 4 percent. One company — which had never worked on security before — proposed using equipment that was more expensive than its competitors and pitched its bid 18 percent below the top bid. Earlier this year, the company announced it could not finish the subway security project.
The unpredictable political climate means government projects may be put on hold for a variety of reasons, Kuan said.
“But the private sector is also strong in Thailand, and we have a strong presence in that space,” Junpuan said. “We prefer to focus on the private sector, and our records show that only 30 percent of our sales went to government projects.”
Thailand's market is difficult for foreign companies to compete in, since it involves politics, said Kazutoshi Takakura, GM of Thailand, CBC. “When I entered Thailand two years ago, we heard good news about the expanding market. Many projects have been postponed for a year or two due to politics, but security in the public sector is huge right now.”
SECURITY ALWAYS NECESSARY
“Just five years ago, people were more concerned with security in terms of projects. Now, we also see growth from residential end users. This can be observed in public development projects such as apartments, condos, car parks and more,” said Phrot Srisumran, Manager at LG Electronics.
Despite the political unrest, the market outlook in Thailand shows great potential as more people become aware of personal security. “We're very positive on the outlook. Although we experienced a minor setback due to the political situation, these are the very events that increase awareness and drive growth in the security industry,” Koh said. “When everyone is concerned about airport bombings in Thailand, they will want to invest in better security, which is a good thing for us. As long as security is good, Thailand will be fine — that is why the public sector will always be funded.”
The general consensus is that political conditions of Thailand should be stable this year. Business will boom for the security industry in Thailand from 2011 to 2012