China Update (Part II): Ensuring Product Quality and Marketability through Stringent Control

China Update (Part II): Ensuring Product Quality and Marketability through Stringent Control

Users' buying behavior is not the only thing that has been changed by the economic downturn. Chinese manufacturers continue to lower their production cost with state-of-the-art manufacturing facilities while improving product quality and marketability through stringent control, increased R&D investments and value-added features. Branding becomes more important as vendors want customers to recognize that made-in-China products are not only affordable but are also of good quality.

More companies are developing IP-based technologies, including wireless alarm systems, 3-G surveillance, hybrid DVRs, NVRs and CCD megapixel cameras. Advances in components and transmission, such as intelligent pan/tilt mechanism in domes, lenses, dome cover optical designs and fiber optics, can also be seen.
The following eight Chinese companies are presented in alphabetical order.

Chuango Electronic
Chuango Electronic's current overseas sales account for roughly 60 percent of the overall revenue. Founded in 2001, the company's main products include wireless alarm monitoring systems and DIY alarm modules for residential installations.
Aside from its OEM sales, 90 percent of its revenue last year was generated from its own brand. Asia, Australia and the U.S. are its major overseas markets, with sales channels ranging from security system distributors and integrators to consumer electronics retailers.

Strategy and Core Competence
Chuango is ISO9001-certified and uses computer-aided surface-mount technology for mass production. High radio frequency is its core technology. “With more than 8 percent of our resources dedicated to R&D, we develop our own software and hardware,” said Ken Li, GM. The company is now focusing on developing 3-G network surveillance accessible via cellular phones. Reliability and ease of use make its products competitive in the residential segment. “Our four-channel wireless intelligent alarm system is SMS/GSM-enabled and complies with the requirements set by the International Mobile Equipment Identity,” Li said. “It can adapt to different countries' different network operations.”

Future Outlook
Smooth integration between video surveillance and intrusion alarm is critical in providing a reliable home solution. “We want to increase our product value and strengthen our brand name,” Li said. Chuango's resources will be allocated to R&D efforts in developing integrated video and alarm systems and market expansion plans.

Dahua Technology
Founded in 2001, Dahua Technology's overseas sales had a 50-percent growth rate in 2009. Currently, the company's overseas sales make up about a quarter of the overall revenue. NVRs, hybrid DVRs and megapixel network cameras are its latest offerings.

About 40 percent of the revenue is generated from its own brand, Dahua. Southeast Asia and Eastern Europe are its fastest growing markets, and public safety, finance, transportation, power plants and communications are its major verticals.

Strategy and Core Competence
R&D is highly valued. “Apart from partnering with reputable software companies, 10 percent of the company's revenue is earmarked for R&D every year,” said Michael Chen, GM for Overseas Business. Video/audio encoding and decoding, image processing, network transmission and control are the company's core competence. “We design our own chipsets and offer value-added products,” Chen said. “Our HDMI DVRs allow users to switch back and forth between regular TV channels and surveillance footage on a regular HDTV display. Remote smart-phone surveillance is also supported.”

Future Outlook
Dahua will continue to strengthen its place in the domestic market and expand its overseas market shares. “We will push forward our technology advancements and add more network capabilities to our portfolio,” Chen said. In China, Dahua's products have been deployed at the Three Gorges Dam, some Olympic venues and the Shanghai Cooperation Organization Summit.

Eversafe Electronics
Eversafe Electronics was founded in 2002 and has been exporting surveillance-grade lenses to more than 20 countries. In 2009, 90 percent of Eversafe's revenue was generated overseas. The U.S. and Europe are its major markets, constituting about 50 percent of its overall sales. EverSafe, the company's own brand, made its debut this year, targeting small domestic residential installations.

Strategy and Core Competence
Megapixel varifocal lenses and IR day/night varifocal board-mount lenses are the company's key offerings in 2010. Every year, at least 30 percent of the revenue is dedicated to R&D. The company also actively collaborates with local universities and research facilities. “Our reputation was earned through our high-quality products and good customer services,” said Allan Cai, GM. “With capable R&D personnel and well-trained employees, our manufacturing process is efficient and yields less defective products.”

Future Outlook
In addition to furthering market penetration in the developed countries, Eversafe will explore more new markets. Increased collaboration with international R&D teams will also take place to increase product competitiveness.

“We want to extend our reach and create brand awareness, especially in the various
domestic markets and developing countries. South America, the Middle East, Southeast Asia and Africa will be our key regions to watch in 2010,” Cai said.

Fran M&E Technology Development
Fran M&E Technology Development has been manufacturing high-quality dome covers since 1998, one of the earliest Chinese manufacturers of camera housings and optical covers.

The company experienced growth in 2009, through increased exports. Partnerships with well-known international brands have also increased since 2008. “We aim to increase our OEM sales and strengthen our market share in the domestic market,” said Min-Zhong Pan, GM.

Strategy and Core Competence
Quality, product innovation and fast market response are the company's key strengths. With growing numbers of megapixel cameras and speed domes, 36x zoom optical dome covers are in demand. “Our dome covers ensure the best refraction angle for cameras,” Pan said. Covers can be tailor-made to be explosive-proof, pressurized for submarines or rugged for mobile applications such as high-speed trains. “In a fast-changing market, understanding customer needs helps us serve better,” Pan said.

Future Outlook
To keep its technology up-to-date, the company is partnering with a local university in Fuzhou. Improved internal management processes will further help the company expand its global market. Target regions include Japan, Korea, Europe and North America, with increased OEM sales. “We want

Hikvision Digital Technology
Established in 2001, Hikvision Digital Technology has moved from manufacturing mainly back-end devices such as DVRs and compression cards to developing network cameras. With R&D personnel taking up more than 43 percent of employee resources, the company's R&D investment over the next three years will exceed US$100 million. Hikvision is part of a 2010 Shanghai World Expo project, opening in May. “It's one of the single largest HD video surveillance installations, where more than 10,000 HD cameras are installed to secure the venues and the streets all around,” said Tony Yang, International Marketing Director. The company's major products help with the migration to IP, and its latest releases include 2-megapixel real-time CCD network cameras and embedded NVRs.

Strategy and Core Competence
Solutions with high system flexibility are often expensive, but Hikvision makes its products cost-effective. To allow for better image quality and accelerated product rollout, the company engineers its own image-processing algorithms and works with major suppliers of DSP chipsets. Global branding and local marketing strategies also make market penetration easier for Hikvision. “It's vital to meet user requirements and create confidence among our customers about our services,” Yang said.

Future Outlook
Banking on its R&D capabilities and advanced technologies, Hikvision is anticipating a higher growth rate in 2010, with the annual revenue expected to reach $400 million.

JEC Electronics Technology
Founded in 1995, JEC Electronics Technology's current overseas sales take up about 50 percent of its overall revenue. OEM and ODM sales are the company's main focus.

The U.S., Canada, Europe, Australia, New Zealand, Hong Kong and Taiwan are JEC's major overseas markets, and city surveillance, traffic monitoring, airports and military installations are its key verticals.

Strategy and Core Competence
“We have 38 patented technologies that are crucial to product development, and each year we make more R&D investments,” said Jun Gao, Overseas Sales Manager. “With our own lab that generates all kinds of application scenarios, we are able to test and ensure product quality and reliability.”

JEC also teams up with a number of technology universities, research facilities and organizations to keep its offerings ahead of its competition. The all-in-one intelligent pan/tilt mechanism is JEC's core. “Our intelligent pan/tilt mechanism can operate under weight as heavy as 50 kilograms and as light as 3 kilograms,” Gao said.

Future Outlook
JEC will continue to advance its product developments and lower its production cost. Tracking with wireless technology for military installations is on the R&D road map. The company will also focus on increasing product compatibitliy between network cameras and 3-G networks.

OB Telecom Electronic Technology
Founded in 2000, OB Telecom Electronic Technology provides large-scale transmission solutions to the security market.Transportation and city surveillance are its major verticals overseas.

Its project references include the 2008 Beijing Olympic Games and 2010 Shanghai Expo, and its customer base is growing fast in regions like Southeast Asia, the Middle East, Africa, Europe and the Americas.

Strategy and Core Competence
Transformed from the Fiber Optic Communication Technology Research Laboratory of Zhejiang Province, OB Telecom has the experience and R&D capabilities to stay competitive.

“To ensure product quality, all the components we use are carefully selected from quality suppliers. Close cooperation with universities and institutions allows us to keep our R&D team up-to-date with the latest technology,” said Jack Xu, Marketing and Sales Director of Overseas Business.

OB Telecom solutions cater to a wide range of user requirements. The company's customized solutions can transfer data signals through fiber optic cables over 120 kilometers. All products are designed to support point-to-point, drop-and-insert and fiber-ring topologies for harsh environments.

Future Outlook
The fiber-optic transmission platform and compressed and uncompressed transmission solutions for HD video are its major products in 2010. The company will continue its overseas market expansion with different approaches in different regions. “By strategically increasing our production quantities and diversifying R&D know-how, we could further satisfy a wider range of users around the world,” Xu said.

Sunell Technology
Founded in 2002, Sunell Technology exports to more than 87 countries. The company's major markets include the U.S. and Europe, and banks, airports and city surveillance as its major verticals. “We work with Sony's sensor division and use CCDs in our megapixel network cameras,” said Ann Wu, VP. The company's main products include box cameras, vandalproof domes, IR domes, noiseless portable reflex cameras and megapixel PTZ cameras. The company mainly sells through its own brand, Sunell.

Strategy and Core Competence
“With a good handle on 3A algorithms, we supply the market with the latest technologies such as low-lux, long-range IR, ultrahigh-resolution and sense-up cameras,” Wu said. With more than 90 professionals on the R&D team, the company practices the rational unified process developed by IBM to ensure product quality. All products are designed and manufactured in-house with carefully chosen CCD and DSP components. “All of our products undergo ISO9001 and ISO14001 quality control, and are compliant with RoHS, CMA, FCC and CE requirements,” Wu said.

Future Outlook
Sunell products are now ONVIF-compliant. “We also want to work with the PSIA so that our network cameras can be integrated with more solutions, Wu said.” The company will allocate more of its resources to software development as well.

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