The Chinese surveillance market enjoyed an unusually robust year in 2007. Booming demand led to a spike in domestic competition, as the market grew to unprecedented volumes. Our sister publication A&S China offers an on-the-ground look at Chinese security and what major trends are sweeping the market.
Chinaˇs security market has grown exponentially, thanks to a boom in government-sponsored projects such as Safe City and the 2008 Beijing Olympic Games. A&S China ˇs staff set out to find out just how big this market was, through two months of research with users including installers and integrators and major manufacturers.
Based on the A&S market survey for Chinese cameras from 2007 to 2008, an estimated 8 million cameras were sold in 2007. The last A&S camera survey took place three years ago, when camera sales were 2 million for 2004, representing 58 percent year-on-year growth.
Of the cameras sold, box cameras dominated the market with 55 percent market share, followed by half domes at 35 percent and domes at 10 percent. Revenue from these cameras in 2007 was US$1.3 billion, making the Chinese surveillance market a significant one.
The future looks bright as well. Of the installers and integrators surveyed, 76 percent said they would increase camera purchasing volumes by an average of 35 percent in 2008. Based on this buying behavior, camera volume could reach 10.8 million in 2008. With this flurry of purchasing, this year is shaping up to be the best one yet for Chinese surveillance.
As public surveillance projects require top quality products, Chinese products are no longer limited to the low-end market. Domestic players have developed high-end products to get out of cutthroat competition in the low-end market and nab prime contracts in public surveillance.
¨For Chinaˇs mainstream surveillance makers, they have decided to avoid price wars in the low-end market,〃 said HTS Marketing Manager Lin Zhong-Hai. ¨Our HTS-branded products continuously strive for high standards, with product sales growing 40 percent from 2006 to 2007.〃
Other Chinese players are also moving toward higher-end markets. ¨Sunell Electronics focuses on the mid-to-high-end markets, including the financial sector, government projects for Safe City and the Ministry of Public Security, and professional applications,〃 said President Steven Liu. ¨Our volume for this market has already increased.〃
Based on the A&S camera survey, domestically produced cameras dominate 80 percent of local sales, with foreign products taking up the other 20 percent. Users surveyed said they included domestic products in their systems, with Japanese products also being popular (see ¨Surveillance Product Origins〃). Other Asian countries also benefited from strong Chinese camera sales, with Korea at Japanˇs heels and Taiwan coming in at fourth place.
The users named Sony, Samsung, Panasonic, Pelco and JVC products among the best products available, as these companies have developed a strong presence locally. On the local side, top brands were HTS, Sunell Electronics, Tiandy Digital Technology, Minking and YAAN Technology Electronic. These companies have achieved widespread brand awareness in the Chinese camera market.
Major Chinese Verticals
The Safe City project, now in its third year, has impacted the Chinese surveillance market, especially for cameras. Vendors are now less focused on volume, instead concentrating on quality and brand awareness.
While international brands won bids in early Safe City projects, more domestic vendors nabbed bids in 2007. This is due to improved quality, lower prices and local customer service providing timely repairs, Liu said.
Chinese vendors also have first-hand knowledge of user needs and tailor their goods accordingly. Therefore, based on these factors, A&S China predicted Chinese providers will have 70 percent market share for Safe City projects in the future.
Evergreen Financial, Traffic and Government Projects
Since 1998, financial institutions have widely deployed surveillance, favoring overseas vendors such as Sony, Panasonic and Samsung.
For traffic installations, where reliability, ruggedness and intelligent video are top priorities, foreign brands were the obvious choice for their advanced functions.
As public bodies had fewer budget constraints, some provinces deployed high-end solutions from Pelco, Sony and other foreign providers. For counties with smaller budgets, they could only afford local wares or lesserknown foreign products. This has changed recently, as domestic providers became more widely recognized. Chinese manufacturers have started installing in these three high-end verticals, enjoying success.
As a result of these projects, the surveillance market grew dramatically. Volumes boomed as prices plummeted, with providers scrambling to improve their services and marketing strategies. These include offering better R&D, tougher quality control and more responsive customer service.
With a larger market, distribution channels have also increased, with projects now sourcing high-end cameras like speed domes in the hundreds. More surveillance vendors are eyeing this market, increasing competition for plum projects. As public monitoring projects are installed for more provinces, providers are going further to supply their products.
A benefit of these high-end projects is standardization of surveillance requirements nationwide. Several vendors predict this will affect the residential security market, although Chinese surveillance providers have not targeted this market segment as intensely.
Regardless of the vertical, the Chinese surveillance market continues to grow. With the wide range of opportunities, traditional and new surveillance providers can all enjoy a slice of the security pie.