A Number of Advantages Distinguish Eastern Chinese Manufacturers from Another
Editor / Provider: a&s International | Updated: 2/2/2009 | Article type: China Corner
Manufacturers of electronic security products in eastern China have a number of advantages that give them the edge in fierce global competition. Among these are an eye for detail, a commitment to quality, a nexus of closely related suppliers and access to solid logistics. This is not a new development, according to those interviewed. Eastern China has been long renowned for its craftsmanship. A&S China Best Buys talks to nine players in the region to get their views on the strengths of companies in the region.
The editors of A&S China Best Buys would like to emphasize that the views expressed are those of the interviewees alone. In addition, many of those interviewed also wished to emphasize that, when drawing comparisons and contrasts between companies from other parts of China, there are always exceptions to the rule. Their remarks were intended to provide a general pattern of regional characteristics.
Eastern China, said Xu Feng, Vice General Manager of Hongben, has had a good reputation for high-quality craftsmanship since well before 2000. The company, which was established in 2001, started out making speed domes on an OEM contract basis for European and U.S. companies. In 2004, it began manufacturing high-speed PTZ domes and, in 2005, Hongben came out with infrared PTZ high-speed pan tilt cameras. Sales have been doing very well and customer feedback has been excellent.
"A number of entrepreneurs in the region have long been active in manufacturing IT, electronics and telecom," said Xu. "That has delivered strong skills when it comes to mechanics, electronics and electronic security."
According to Xu, everyone — whether at home or abroad — began to notice these strengths and the qualities that made companies located in eastern China in 2003. "In East China, we may take longer to innovate, but when we do so with greater precision," emphasized Xu. "We spend more time perfecting the product. That is why our quality and services are better."
There are fewer electronic security companies in eastern China, said William Zhou, Regional Manager of Overseas Market at Dahua Technology Co. Ltd., but their products are much more meticulous than those made by companies in other parts of the country. The company, which was established in 1993, came out with its first DVR in 2001. In 2003, it started exporting and, in 2005, it came out with its second-generation DVR. Since then, the company and its products have become world-renowned.
"Eastern Chinese companies are the strongest in China when it comes to electronic security," Zhou said, while observing that this is not the case in Shanghai — the region's largest and most important business center. “There, companies can make much more money selling products from other companies. Since we do not have the same large market, we have to rely on manufacturing to make money."
R&D, Technology Powerhouse
Guoqing Wang, General Manager, TeleCCTV, agreed: "The first speed domes were produced in northern and eastern China," he said. "Eventually, other Chinese companies got into the act. Many were quick to add new functions and features, but they do not have the same depth of research as companies in the East."
Wang had been in the electronic security business for 15 years when he decided to open his own business — TeleCCTV — in 2007. He had been in charge of European customers at his previous employer and thus had extensive experience and expertise in the field. Besides CCTVs, the company also provides pan tilt zoom (PTZ) cameras that have been much acclaimed for their stable mechanisms.
"Companies in eastern China," said Karl Yu, Sales Manager, Delos International Group Ltd., "invest more in R&D and to target innovation." Currently, the company invests up to 20 percent of annual revenue in R&D. Delos' prowess at research and development is understandable. The company, which was established in 2001, originated from an IT department at a university.
From 2002, the company moved into electronic security through cooperating with a foreign company. Today, its focus is on all-in-one cards for access control and readers and, since 2007, Delos' domestic sales have been quite popular, adding functions to make them more saleable overseas with great success.
"We pay a lot of attention to design," continued Yu. "We are currently consulting with some design companies with experience in IT to help us improve our electronic security products. There are not many suitable firms at home in China so we go overseas to do so."
Hangzhou, pointed out William Zhou, is a strong DVR and technology center with more specialized techniques and capabilities. "Other areas of the country," he added, "are more production centers of consumer goods."
Take Hikvision. It was the earliest to develop and promote the H.264 compression algorithm in video surveillance in China. "We have developed well in the domestic market but international markets require a lot of research, constant contact to get feedback and coordination with overseas sales departments. It also involves a lot of working together with third parties, particularly when software is required. Overseas, this takes a lot longer to develop than in China," said Oliver Zhang, International Business Center, Europe Department Manager at Hikvision.
To further enhance the software capabilities, Hikvision is currently working with the major video management software suppliers, such as Milestone, in order to complete the whole product infrastructure. "We are working with Milestone on the integration between our IP surveillance products (IP cameras and digital video servers) and their video management software."
Xue Shenyue, Marketing Director, Dali Technology Co. Ltd., explained that, when it comes to DVR manufacture, most companies are located in eastern China, particularly Hangzhou. "All of the talent is here," he said. "That is less obviously the case in the rest of the country."
Dali manufactures DVRs and portable infrared thermal imaging cameras. Previously part of a research institute, the company began commercial operations in 2001; its first venture into electronic security was MPEG-1 DVRs — one of the earliest into this field. Over the years, it has beat out the competition to become a major force and trusted name both at home and abroad.
The skill set and level of precision present in the region ensured that, early on, Hangzhou also became the center of IP research in China. "This was taking place here as far back as 2000," said Tony Shi, General Manager, OB Telecom Electronic Technology Co. Ltd., "way before many overseas companies dared to venture into the field."
OB Telecom, which was established in 2000, specializes in digital fiber optics and uncompressed digital. "We have relied on innovation to move ahead," said Shi. "We were first in the market (2000) and nearly three years ahead of the competition, which entered mostly in 2003."
In 2001-2002, noted Shi, OB Telecom started manufacturing telecom transmission products for sale overseas. "We wanted a comprehensive product that would be able to do everything, while reducing occupancy (use) of fiber optic. In the last two years, we have come out with all-in-one fiber optic transmission products that fuse into one line and then branch out again at the other end. Sales have been spectacular."
Entrepreneurial, Management Acumen
Also, in Xue's view, eastern Chinese companies are far more entrepreneurial. "We are always on the move, looking for new business opportunities. Eastern China was one of the first areas in the country to develop. We need to source a lot of materials from other companies and all of them are located right here. Development of these industrial clusters guarantees very fast deliver and steady supply. We can get products or materials, in many cases, within a day."
Eastern Chinese companies, said Shi, have always benefited from their location in Zhejiang and Jiangsu provinces as these were relatively prosperous even when the rest of China was quite poor and undeveloped.
"Companies in the region," said Shi, "have always been known for their business and management acumen. Development was from the bottom up not top down as in Beijing, where the government tended to dominate business. People here really understand how to make things happen; they are natural-born business people."
In East China, continued Shi, companies are not engaged in fast production. "It takes us longer to get it right because we do not cut corners. That is why you will not find our products being sold on street corners. We take a long-term approach to doing business. That is part of our management culture."
According to Vido CEO Dai Zhijie, his company is also offering companies trouble-shooting in addition to OEM services. "We crack open the product to look inside to determine what if anything is causing a problem or how the electronic security device can be made better. This is characteristic of the eastern Chinese approach to total management."
In fact, Vido has been involved on OEM projects since 1996 with its own Vido brand enjoying strong popularity in Europe since 2002. Today, it exports its high-quality, reasonably priced products to more than 30 countries.
"Our R&D team," continued Dai, "develops new products every year so we can always offer the latest. We also customize products with customer logos and provide strong after-sales service like customer support and product maintenance. This is very characteristic of the approach that businesses in eastern China have adopted."
"It is easier to find businesspeople and entrepreneurs in eastern China," said Charlie Wang, General Manager, Pearmain. "We recognize that we have strong opportunities overseas. It does, however, take time and effort as well as money to develop international markets. You have to look at the long term, and that requires careful planning. We have made a lot of effort and it is paying off. Today, companies are emailing, faxing and calling us not the other way around."
Pearmain, which was established in 1996 as a manufacturer of matrices, started making speed domes in 2005. The company exports 20 percent of its products mostly to the U.S. and Europe.
Getting supply and replacement parts from eastern Chinese suppliers is also a lot more reliable. "Europeans, in particular," said Xu, "do not want to deal with new models when all they are looking for is a replacement. If it is out of stock or no longer available, they are very dissatisfied. This is why many are choosing to source from companies in East China. The companies here are less fly-by-night."
Area businesses have also learned to adopt the same careful approach when it comes to marketing. "We used to come up with products first and then do marketing," said Zhang. "We often found to our regret, however, that the market did not accept our product or functions. Today, the company gets market feedback first to incorporate new ideas into its designs from the very beginning."
According to Zhang, however, the company does not just sit back and incorporate customer feedback. "We also lead the market by anticipating what will sell well or what kinds of functions may be required in the future. This stems from our background as a research institute."