China Gears up for Transformation in 2011
a&s China2011/2/15

As the Chinese economy continues to boom, the security industry leaps forward to an exciting 2011. A&S explores what’s ahead for product development and vertical markets.

As the Chinese economy continues to boom, the security industry leaps forward to an exciting 2011. A&S explores what's ahead for product development and vertical markets.

Spurred by IP, Chinese manufacturers have embraced HD technology. HD will force key players to migrate to IP in response to increasing demand. In addition, enhanced business practices will help security providers survive a rigorous and competitive market. Several measures include corporate restructuring, product innovation and better channel management.

Chinese security tends to be fragmented, affirming the importance of a vertical-specific approach. With targeted verticals, suppliers can provide solutions suited for certain verticals. As some vertical markets are regulated by stringent government rules or international standards, a market-focused approach streamlines product development.

A company with a clear market position will stand out from its counterparts. Some international brands strive to distinguish themselves from Chinese competitors by adopting different marketing strategies.

Dallmeier electronic serves high-end markets by developing customized HD solutions, to stand out from the pack. Spanish manufacturer Fermax offers stylish product design and complete after-sale services to customers. Branding and a clear market position will be mandatory for security companies to stay healthy in China.

Comprehensive Solutions
Security suppliers are broadening their product offerings to meet various client demands in China.

International players such as Bosch Security Systems, Honeywell Security and Tyco Fire & Security have expanded their product portfolios to cover video surveillance, access control and intrusion. Sony Electronics launched IR HD cameras, completing its product line for greater customer flexibility. Samsung Techwin, on the other hand, has made strides into access control and intrusion. The experience will therefore lead to comprehensive solutions, enabling a one-stop shopping experience for end users.

However, success in China stems from more than just great product offerings. Vertical-market coverage, partner development and sound corporate management will be major concerns as well.

[NextPage]

HD
HD will be in the limelight for years to come. It provides more coverage and is suited for many vertical applications. The more advantages HD offers, the more benefits and value will be reaped by customers. HD adoption will increase for many upcoming Chinese projects.

Providers unable to bridge the HD gap may have to exit the security stage. According to Sony, the best way to perform image decoding for HD display is with strong management software. Manufacturers who used to be dedicated to analog offerings are migrating to IP HD solutions.

Experts predict high-resolution monitoring will be common in Safe City projects, as well as financial deployments in 2011. Most projects will deploy 1.3- and 2.0-megapixel cameras. High-end applications will favor 3-megapixel cameras in particular.

Korean supplier CNB Technology will support both HDcctv and IP portfolios. Despite the advantages of IP HD surveillance, network cameras require IT systems and complicated setup, discouraging some users. HDcctv saves cabling costs by maximizing existing investments. However, there are few HDcctv-compliant products and the price is still relatively high.

Extended Reach
With startling economic growth and incredible market potential in China, security players have expanded by adding more branches or subsidiaries. The inland region will be a key region for business development.

Honeywell has emphasized improved customer services by adjusting its marketing, sales and personnel management in 2011. Its long-term China plan includes expansion into Tier-3 and Tier-4 cities for more opportunities, which will also address more verticals than before.

To have better local customized service, Axis Communications and Dallmeier plan to set up several production facilities to meet domestic product demand.

Local security manufacturer Hikvision Digital Technology emphasizes its home turf experience with subsidiaries in 28 cities. As Safe City projects continue, Hikvision won a major US$8 million project for Chongqing's city surveillance.

Channel Education
More manufacturers are educating their partners about IP, as well as forming more partnerships in the IT channel. In 2009, Bosch formed an IP surveillance accreditation program for distributors and dealers, troubleshooting system installation issues.

In Bosch's experience, roughly 90 percent of project failures originated from poor network structure, inadequate bandwidth and limited storage. Education efforts for local partners will continue in 2011.

Axis takes another route for IP convergence. With a strong IT background, Axis has commissioned IT professionals for their expertise in system networking and software configuration. It also seeks installers from traditional security channels. A two-pronged approach enables Axis to maximize its industry presence.

Large government or commercial projects will require cooperation between several security giants. Some verticals require specific solutions or particular channels, which will allow manufacturers to differentiate themselves.

[NextPage]

Branding
International vendors in China have poured money into local development and channel expansion, while Chinese providers have improved product quality and increased manpower. Branding is becoming essential for differentiation in a competitive market.

Existing competitors will face pressure from outsiders as well. More telecommunications and IT providers have entered physical security, which will require current vendors to prove their worth.

User Needs
In the face of rigorous competition, understanding end user needs remains a must. Having a complete product line and experience will be the best way to go. The latter requires sound operation practices, ranging from customer consulting, after-sales services and targeting specific user needs.

Top verticals include highways, airports, educational institutions, hospitals and power plants. It is expected the Chinese security market will be prosperous in 2011 as the economy picks up.

Road Map
While IP and HD video technology has heated up, access control and intrusion alarm solutions are relatively unchanged.

However, logical access control is playing an increased role in physical security. HID Global (an Assa Abloy company) combined physical and data security, resulting in a partnership with Sony for laptops embedded with its logical access control solution. The crossover between physical and logical access control will extend to other security systems.

With healthy competition and robust market demand, Chinese security looks forward to an exciting 2011.

Messe Frankfurt New Era Business Media Ltd. All rights reserved. 2016/9/27