For the 200th issue of a&s International, we are featuring a series of stories reflecting on the past decade of the global security industry. Here’s a sneak peek at what to expect!
The global economy has remained in dire straits since 2007 despite major attempts to recover. The security industry, along with other several other sectors, have also taken a hit in growth since then. But unlike a lot of other industries, the slowdown has seen new phenomenon in the security market – a strong global market penetration of Chinese manufacturers.
“The evolution of Asian companies, mainly from China, has been really benefited from the economic context,” said Alberto Bernabe, CEO of the Spain-based CCTV Center. “The market has appreciated low cost solutions rather than quality, service or added value. I think most of the major Chinese companies have managed to take advantage of this rapid growth to position themselves in a more professional segment, creating and adapting their products to fit the real needs of the market in different countries.”
But while such a shift in the market direction has helped manufacturers of low-cost products, the same cannot be said about the distributors. Bob Mesnik, President the New York-based Kintronics indicated that while low-cost manufacturers have boosted sales, it has not been that helpful to the channel business.
“Lower camera prices from the Chinese manufacturers have increased the acceptance and quantity of IP cameras being sold,” Mesnik said. “On the other hand, as the cameras have become more of a commodity, the profit margins have fallen.”
Most distributors, for their part, have responded to this change and come up with strategies to hedge the risks. Bernabe said his company has responded to this change in market by dividing their sales strategy into two lines, one for projects and the other for low-cost sales with no value-added offers.
Speaking along similar lines, Mesnik added that Kintronics has recognized that they can't just sell cameras and have to diversify and add other IP products to create new and more effective security systems.
But unlike Bernabe, Mesnik attributes the decreased prices and increased commoditization of security equipment mainly to the natural cycle of business. According to him, products go through the phases of introduction, growth, maturity and decline and the security industry is currently in the maturity phase, where lower prices can be expected.
Whatever the reasons, the security industry has, over the past decade or so, seen an unprecedented increase in the acceptance of low-cost products from China. Concerns on their quality continue to persist, and it remains to be seen how the industry readjusts itself to the situation in the future.
Special Announcement of the a&s International 200th Issue
a&s International's 200th issue is coming up next month, yet another milestone in our relentless coverage of the global security industry over last 16 years. To celebrate the occasion, the a&s team has planned a series of feature articles to recap the most significant security events, technologies, and industry changes, from 2007 to 2015. Don't miss it!