Vietnam Ready for New Spring in Security

Challenges
Products and Infrastructure
Adoption of IP-based products is not yet widespread in Vietnam, resulting in the majority of cameras being analog. Some providers offer installer training classes on a monthly basis, as interest in total solutions increases.

Traditional devices such as keypads, magnetic-stripe cards and proximity cards are commonly used for electronic access control systems, although biometrics and smart card credentialing are picking up. Intrusion detection systems are in the medium growth range, and are more sought after in response to rising crime rates.

Interoperability remains an issue for security products. This affects countries that already have legacy security systems. Many users forego upgrades until there is an issue with their existing systems.

Limited bandwidth has a direct influence on the adoption of newer technologies that require IP infrastructure. In Vietnam, Internet access is available only in certain areas, but the user count is on the rise. According to Vietnam's General Statistics Office, broadband Internet subscribers have reached 4.1 million by August 2011, up 17.5 percent. In total, the number of Internet users stands at 31.3 million, an increase of 22.9 percent from the previous year. The latest statistical figures reflect both an Internet usage expansion as well as maturing nationwide Internet infrastructure. Common Internet usage will provide IP-based products great opportunities in this market.

Government Support
Government policies should provide legislation to make the security market better, said Do Duc Hau, President and CEO of Techpro.

Tightened credit to slow inflation is interfering with ongoing security projects. “Since the onset of inflation and bank loan restrictions, many budgets have been reduced and in many cases, video surveillance is cut out from procurement to save TCO on projects,” Nguyen of An Nhien said. “In the coming year, we hope to cooperate with partners and investors who are not dependent on bank loans but have their own capital to move business.”

Vietnamese buyers are not in the habit of stocking up on products, and only do so when projects are lined up, Tat said. This is especially true in Hanoi. “It is our goal in the upcoming year to focus on regular monthly sales activities instead of projects in order to drive fluid transactions,” said Jacky Cheng, VP of Sales of Brickcom.

Cost Concerns and Standards
To drive sales activities in Vietnam, attractive pricing is crucial as end users are cost-conscious and prefer low-cost offerings. “For us, cost concerns from end users are a challenge as our products are manufactured in the U.K.” said Mark Tibbenham, MD of GJD Manufacturing. “We hope to overcome this challenge by working with big installers on large-scale and high-end residential projects.”

In such a fast developing market, more new competitors have entered it, especially companies from China, He said. “For many Vietnamese customers, price always comes first, followed by quality. Therefore, Chinese products have a clear advantage.” Even sizable Chinese makers like Dahua Technology are affected by fierce competition from low-cost suppliers. “Many makers pirate our products and sell them at even lower prices,” Dinh said. “The products are identical in appearance, but quality is obviously compromised. At this point there is nothing we can do but hold more seminars to strengthen brand awareness and educate our customers.” To sidestep competition at this level of offering, many solution providers also prefer trading mid-level products.

To further complicate the price issue, the lack of a unified set of standards makes judging product quality and price/performance harder. “The current codes and standards are loosely based on US standards, although no unified and official codes and standards specific to Vietnam have been mandated by the local government,” Sinar said. As the market matures, national standards would regulate industry offerings and provide clearer procurement choices for end users.

Shaping Up
Despite economic complications and project delays, industry experts and market analysts are confident about business opportunities in this vibrant country. All markets experience boom-bust cycles and the nation's plentiful resources and business-friendly policies continue to make it an attractive destination. Vietnam's security market is gearing up to take flight.