With the economic turmoil impacting the industry greatly, the only way to survive is to make changes. From the second half of 2008, Dahua has reallocated the company's resources and focused on product quality to get through this difficult time. Meanwhile, with in-house R&D capabilities, the company not only provides highly stable DVR products but also offer more front-end devices, becoming a total solution provider. In this issue, A&S China Best Buys talked to Fu, Liquang, President of Dahua Technology, about the company's direction this year.
"While the economic slowdown has impacted every industry greatly, to us, we do not really see it as a challenge," said Fu, Liquang, President of Dahua Technology. "We see it is a perfect time for some changes to keep our company ahead of the security industry in China, as well as overseas."
Dahua has taken critical measures in the second half of 2008. As a listed security company, the organization knows that maintaining investor benefits is just as important as offering good product quality.
Therefore, we carried out some changes. From a managerial standpoint, Dahua adopted several approaches to improve the company's work flow, reallocate resources and grow steadily, Fu said. Dahua has professional management systems in place, such as Integrated Product Development (IPD), Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and standardization management systems.
All these investments show the company's dedication to security. Most companies would expand their product line to be more diverse and acquire market share in different industries. "For Dahua, we do things the exact opposite way," Fu explained. "We sold our Dahua Digital unit to Motorola in 2008. We believe that security is not a so-called 'sunset industry,' but is on a steady growth pace instead. Therefore, we want to put all our effort into the security industry, as we believe we have the capability to offer top-notch products."
Quality plays a crucial role for products. Through years of cooperation with overseas players, Dahua learned from their experience and demands. "For the high-end market, Dahua is still an OEM partner to major players," said Fu. "But when it comes to mid-end and low-end markets, we can provide our customers with the same quality and design of high-end products. This makes our brand popular in regions such as Southeast Asia, the Middle East and Eastern Europe. Our customers are highly satisfied with it."
Fu pointed out quality is the foundation of long-term development for an enterprise. Dahua has new quality management, inviting experts from major IT companies to advise on how to enhance management planning.
Great Investment in R&D and Production
When it comes to making quality products, 60 percent comes from solid R&D effort, while the rest is from quality control procedures. "We have almost 900 employees and among which, about 400 employees are R&D staff," Fu said. "Large investment in R&D calls for scientific management and innovation to strengthen our core competitiveness."
While the strong Chinese yuan-to-U.S. dollar exchange helps many Chinese manufacturers purchase more affordable components, it does not make Dahua's products cheaper. Dahua invests more in R&D efforts, setting aside nearly 10 percent of its annual revenue. Fu pointed out that R&D is one of the key factors for the company's long-term development. Dahua has a nationally rated R&D work shop, being responsible for several Chinese projects.
Moreover, Dahua opened a new manufacturing base in 2008. Improved manufacturing plays a critical role in product stability. Fu said Dahua purchased surface mount technology (SMT) machines to enhance products and advance its manufacturing capabilities. The advanced Siemens SMTs require experienced professionals to operate them. With more than hundred of experienced personnel, Dahua conducts serious manufacturing procedures and standards.
In the international market, Korean and Taiwanese companies are strong competitors. Taiwanese players enter markets and respond quickly to market requirements. Korean providers are strong in developing new applications and functions.
As more Chinese manufacturers invest in IC and DSP design, Koreans are losing their edge in component development. Fu pointed out that with Dahua's in-house R&D capabilities, it offers the best products by performance and price ratio. "Years ago, most people thought that products from China only represented cheap prices with bad quality," he said. "But this is not the case for Dahua's products."
"As we invest greatly in R&D and manufacturing, we believe that price is only an initial strategy to enter the market, but the price-performance ratio is most important, from along-term perspective," Fu said. "Besides, a better understanding of local markets helps Dahua compete with Taiwanese and Korean manufacturers. Our R&D and manufacturing strengths let us offer more options for customization."
Ultimately, as demand in China grows, this will give Chinese companies an edge to improve their economies of scale. The domestic market provides great support for Dahua to launch their new products. As the Chinese market requires the most state-of-the-art products, this situation keeps Dahua's products ahead. Dahua's innovations, Fu said, would be sold in the domestic market before they are introduced overseas. Coupled with attractive price competitiveness, Chinese firms will become even more competitive in international markets.
Dahua will focus on networking (wireless included), high definition, hybrid DVRs and intelligent functions. For mid- to high-end applications, Dahua provides full D-1 resolution with H.264 compression, real-time surveillance, intelligent functions and support of multiple network protocols.
A cost-effective standalone DVR — the LE-A Series — is recently introduced to the market. This new DVR offers a modest price but sports great performance, featuring H.264, mobile phone surveillance support, D-1 resolution and real-time video monitoring.
Dahua's LE-A Series offers different options for video inputs, from 4-ch, 8-ch to 16-ch. Its real-time live display supports up to 16 cameras with 720 high definition, 400/480 frames per second (fps) recording for CIF and special channel 4CIF real-time recording. The DVR features dual encoding streaming and flexibility for network transmission with powerful network software, including built-in Web server, multi-DVR client and control management software (CMS) and networking access.
Total Solutions from High-End to Consumer Markets
Today, more companies provide total solutions to the market. "It is an inevitable for players to move ahead," Fu said. "Providing total solutions to our partners not only serves them with our in-house R&D capabilities and service, but also leverages our partners' profits."
Dahua's wide ranging portfolio includes infrared cameras, speed domes, network cameras, mobile DVRs, LCD monitors, speeding cameras and stylish residential cameras. All these products boost Dahua's reach into specific applications, such banking, transportation, residential, consumer uses and others.
Meanwhile, Dahua has introduced its new cost-effective DVR to the market, focusing on consumer applications. Fu pointed out that more households or individuals welcome electronic security products into their daily lives. As 3-G has been approved in China, Dahua sees a great demand for video surveillance on the go. Therefore, their new DVR supports online monitoring, 3-G mobile phone and a user-friendly interface.
"With 3-G, we expect more applications," Fu explained. "For example, caring for the elderly is easy and quick for end users through mobile phones. Through mobile monitoring, it could be a new security concept, replacing the old hardware — windows, locks and doors. This allows people to check your property or family even when you are thousands of miles away, 24-7."
For middle- and high-end markets, Dahua continues its strength in applications such as banking, transportation and Safe City projects, China's nationwide push for urban surveillance. Dahua is also keen on the Japanese market, which is considered the most difficult market to penetrate for nonlocal companies. "This shows that we are confident with our product quality and we believe that even in mature markets like Japan, our products can succeed," Fu said.
Through great efforts in R&D, manufacturing, facility and management, Fu believes Dahua can provide more value to its customers. "To partners, we can deliver the right products to satisfy their requirements, leveraging their profits," he said. "To end users, they can truly experience our product stability and great performance with competitive prices."