TECHNICAL KNOWLEDGE
There is a strong need to educate the market, as the government sometimes directly specifies the tenders, as opposed to consulting an unbiased firm. The end result can be specs that mix and match products from four different brands. “When the customer uses different products from different companies, it opens the door for a lot of finger pointing,” Kulawongvanich said.
Countries such as Korea have organizations that act as a bridge between the government and the security industry, but there is no such body in Thailand. “A nonprofit organization in Thailand called the Engineering Institute of Thailand (EIT) has the potential to assume such a role,” said Somvith Leelaprapal, MD at JES CQtec. “However, security has not yet established deep roots in the EIT.”
Educating the market is necessary for new technologies. People are generally unfamiliar with transmission, as PtP has traditionally been the dominant choice, Koh said. “We are putting a great deal of energy into this space, but it is a difficult process since this is an industry where people are reluctant to adopt new technology. They tend to continue to use whatever is available to them, but as we go about this education process, people will start to see the value of this technology.”
Many end users deploy IT equipment for video surveillance; a year later, they will realize it does not work, Ngaochai said. “There's a general lack of knowledge for security systems, and educating the market is essential for future growth. It's a very technical market where things are no longer as simple as plug-and-play. Today, many people don't even understand the difference between a box and a dome camera.”
Many project specifiers and decision makers do not know why they need a wireless infrastructure, or why they need a specific type of camera. End users can be educated through road shows and seminars, but consultants need exhibitions, Chitkasemsuk added.
DISTRIBUTION
Distribution is a challenge in Thailand. “The distribution channel is difficult to set up because the market here is significantly smaller compared to markets such as the Americas, Europe and China,” Koh said. “We need to deal directly with the system integrators, and ship our products to them, especially for high-end offerings.”
GOVERNMENT PROJECTS
“Much of the spending comes from the government,” Sihsobhon said. “It comprises roughly 50 percent of the total market, and there will be significant growth in the public sector this year.”
Government security spending is a major market driver. “Even during the 2009 financial crisis, liquid cash from the government pumped into the public sector helped propel security,” said Panja Klaipothong, Country Manager at Firetide. “When times are bad, people need security. When times are good, people also need security.”
The security business has significant growth potential. “If it's commercially driven, everybody pulls back when a crisis hits,” Klaipothong said. “But the government puts money into security; large, public safety infrastructure projects were still sustained by government funding, regardless of the political situation.”
Some experts expect the market to peak before dropping again. “What we're seeing now is that most of the money put on hold is finally being released,” Beeber said. “Projects from two years ago were put on hold and are now going forward.”
CHALLENGES
Thailand's public bidding process is electronic and intended for fairness. This works well for construction, but is challenging for integrated security bids. For example, the Bangkok Metropolitan Administration (city government) has thousands of cameras installed, which cannot all be viewed on the same system. However, if the government did not have an open-bid process, it would be accused of corruption.
The lowest bid or “survival of the cheapest” has other effects. A mass-transit subway project four years ago received three or four proposals, with all bids differing only by 3 to 4 percent. One company — which had never worked on security before — proposed using equipment that was more expensive than its competitors and pitched its bid 18 percent below the top bid. Earlier this year, the company announced it could not finish the subway security project.
The unpredictable political climate means government projects may be put on hold for a variety of reasons, Kuan said.
“But the private sector is also strong in Thailand, and we have a strong presence in that space,” Junpuan said. “We prefer to focus on the private sector, and our records show that only 30 percent of our sales went to government projects.”
Thailand's market is difficult for foreign companies to compete in, since it involves politics, said Kazutoshi Takakura, GM of Thailand, CBC. “When I entered Thailand two years ago, we heard good news about the expanding market. Many projects have been postponed for a year or two due to politics, but security in the public sector is huge right now.”
SECURITY ALWAYS NECESSARY
“Just five years ago, people were more concerned with security in terms of projects. Now, we also see growth from residential end users. This can be observed in public development projects such as apartments, condos, car parks and more,” said Phrot Srisumran, Manager at LG Electronics.
Despite the political unrest, the market outlook in Thailand shows great potential as more people become aware of personal security. “We're very positive on the outlook. Although we experienced a minor setback due to the political situation, these are the very events that increase awareness and drive growth in the security industry,” Koh said. “When everyone is concerned about airport bombings in Thailand, they will want to invest in better security, which is a good thing for us. As long as security is good, Thailand will be fine — that is why the public sector will always be funded.”
The general consensus is that political conditions of Thailand should be stable this year. Business will boom for the security industry in Thailand from 2011 to 2012