The global security market has seen many changes over the past few years. Among these, one significant development has been the emergence of Chinese players in the international market. Positioning themselves as low-cost alternatives to more expensive foreign brands, companies such as Hikvision Digital Technology and Dahua Technology were able to quickly gain an international foothold.
The global security market has seen many changes over the past few years. Among these, one significant development has been the emergence of Chinese players in the international market. Positioning themselves as low-cost alternatives to more expensive foreign brands, companies such as
Hikvision Digital Technology and
Dahua Technology were able to quickly gain an international foothold. Consequently, many other Chinese manufacturers have followed suit, causing a massive influx of "made-in-China" products and services into various overseas markets.
Undoubtedly, this trend has made a huge impact on the industry as a whole. Although the video surveillance industry is experiencing a volume growth, average selling prices are being driven down as companies are forced to adjust their prices accordingly to remain competitive.
Product Homogeneity
At the same time, products on the market are also becoming less differentiated, or becoming increasingly similar in terms of quality or features. This trend is, in part, heightened by the fact that certain companies are mainly focused on improving their bottom line and not on innovation. According to Joe Qiu, Overseas Sales Director at
TVT Digital Technology, there are generally two types of companies in the local manufacturing industry. The first type consists of companies that are hugely invested in research and development so as to come up with quality solutions, software, and hardware.
The second type are manufacturers with little to no knowledge or education and are only focused on mass producing products then earning a profit by selling them at substantially low prices. "These companies currently pose the biggest challenge for good companies like Hikvision, Dahua, and TVT, because it is impossible to explain to our customers why their prices are so low. They are using price to cause trouble in the market and this can hinder growth," noted Qiu.
In light of this, customers are correspondingly becoming more price sensitive. Rather than making purchasing decisions based on qualities and features offered by a specific product, they base it on the best price they can get. If left unchecked, this could lead to an all-out price competition in the near future.
"Product homogeneity is a serious issue that can result in a substantial price war," said Johnson Jiang, Overseas Sales Manager of
Hanbang Technology. "It is important to highlight product differentiation and usability. Companies should guarantee product quality, quantity, and function as well as reduce installation costs for foreign customers."
This so-called race to the bottom is harmful to all those involved as it erodes profit margins, making some companies cut corners with resulting incremental degradation of quality control.