Market in Korea: Waiting for a Boost

Contrary to the flourishing export business, the Korean domestic market has languished since the economic recession in late 1998. In year 2000, it has not seen any recovery in the market. Based on the official statistics, the local security industry for 2000 is estimated for 234 billion won, a 5% drop from 1999. For 2001, suppliers still do not have high hope on prospect. It is expected that the domestic security market will grow a mere 5% for this year. The market overall is waiting for another boost.

Korean Security Market Annual Turnover (in million Korean won)
Item	1999	2000	2001	% Annual Growth
				00/99	01/00
Korean Domestic Security Market	246,350	233,510	244,915	-5%	5%
CCTV	107,500	100,000	102,460	-7%	2%
Home Automation	89,400	83,200	102,460	-7%	9%
Access Control	49,450	50,310	51,819	2%	3%

Construction Companies are the Major Sales Channel

According to suppliers, the construction company is currently the major sales channel of security products in Korean domestic market.The Korean security market is closely tied to the construction field. If investments in construction show no signs of growth, the security systems business can hardly look promising. In 2000, with the dearth in construction projects and economic condition still unfavorable, the security industry has largely been stagnant,Ki-Chul Choi, Siemens's General Manager of Security Team in Korea.  
Ki-Chul Choi, Siemens's General Manager of Security Team in Korea.

IMT-2000 Expected to Facilitate Market Growth
Although Korea is considered one of the world's key suppliers in CCTV technologies, the CCTV sector accounted for only 15% of the whole domestic market in 2000. Suppliers reflected that Korean users do not have the security concept as western users do. Among the different CCTV products, cameras and monitors rank top in sales. Yet, under the trend for "total solutions" and the ongoing government policy of IMT (International Mobile Telecommunications)-2000, system or Internet products as well as service are also the hot in the local market. Many suppliers believe IMT-2000 will facilitate the development toward security network-oriented products, and the local market is therefore expected to enjoy a remarkable growth in five years.  
Byun Gyun Choi(right) is the lately appointed Leader of Honeywell's security division- Central of Excellence in Korea.
Suppliers especially leading DVR or CCTV equipment makers like Commax, Honeywell, Hyundai, Wooju, 3R, FIT Asia, NEO Telecom, etc have planned to launch new products riding on Internet communication.

 

On total solutions, several local CCTV and access control suppliers like Hyundai, Commax, Ziemax and KEICO Hightec are focusing on system design. "How we differ from other suppliers lies in our system designing capability. After understanding fully our customers' needs, we design the system and recommend on the suitable products. Though Korea is a market dominated by local makes, and even as a local distributor, Ziemax offers better services and reliable products from leading US brands," said John Kim, Assistant Manager of Ziemax Technologies, Inc, the Pelco's exclusive distributor in Korea. Far from lagging behind local suppliers, leading international total technology solution providers like Honeywell, Siemens and the like are striving to expand market-shares with the digital-based and network solutions. According to Byun Gyun Choi, COE leader of Honeywell in Korea, the company has divided its security business into three parts, Home Solution, Total Solutions and Product Business. With Honeywell's global affiliation and vast experience custom-tailoring systems, the company is poised to become the best total solution provider in Korea.

Home Automation to Provide Consumer Solution Platform in Future
Among digital and network solutions, the home automation (HA) system ranks as suppliers' top priority. A home automation solution is mainly composed of several controlling and communication systems like the video doorphone, access control, emergency calling, fire prevention, light and gas controls, etc. For example, previously a leading video door-phone manufacturer in Korea, Hyundai lately launched a brand new home automation system, HAC-160H, consisting of alarm, video door-phone, emergency call and a host of control systems. "HAC-160H is the first hands-free system in Korea. It is designed for high-end networked apartments. We are not only promoting this product in the domestic market, but also planning to introduce it to the international marketplace," said Kim, Deputy General Manger of Hyundai's Marketing Dept. Commax also plans to go after the HA market in 2001. Duk Hun Kim, Chief Manager of International Sales revealed that the company is trying to combine its three special divisions, i.e. CCTV, Communication and Video Doorphone, into an integrated unit focusing on home automation product development.

"General end users in Korea do not consider security products as necessity. Major applications of security products are thus confined to commercial or public areas not to mention that the domestic market size has shrunk in past two years. In order to expand business, security suppliers are trying to collocate their products with automated systems like fire prevention, light & gas control, communication, etc," remarked Choi, general manager of Siemens's Security Team in Korea. For Siemens's growth in Korea in 2001, Choi revealed that it would come from providing total solutions and integrated systems. Higher profit margin will further be realized through outsourcing new or price competitive products in the local market.