The rise of Chinese manufacturing

The rise of Chinese manufacturing
The rise of China is undoubtedly one of the biggest changes that has occurred in the security industry over the past few years. China’s extraordinary economic growth and active diplomacy are already transforming East Asia, and future decades will see even greater increases in Chinese manufacturing. Taking a look back at the Security 50 rankings over the years, it’s interesting to note that the top two Chinese firms, Hikvision Digital Technology and Dahua Technology jumped to the top 10 list in 2014.

William Goh, Executive Director, Legal, Business and Regulatory Compliance, ADP Secure Group (Singapore): "In recent years, it is no doubt that Made in China logos can be seen in many commodities and this truly happens in security equipment manufacturing too. China vendors definitely bring in more varieties or cameras and DVRs. But, at the same time we do hear of quality issues even from some major brands. We being a systems integrator would definitely recommend China-made products as an option if our customers require it, however, we will highlight the potential quality issue as well as cater for more cost on maintenance efforts so that product malfunctioning can be detected at an early stage and a one-to-one replacement can be arranged as soon as possible."

Alberto Bernabe, CEO, CCTV Center (Spain): "The evolution of Asian companies, mainly from China, has really benefitted from the economic context. The market has appreciated low cost solutions rather than quality, service, or added value. I think both Hikvision and Dahua have managed to take advantage of this rapid growth to position them in a more professional segment, creating and adapting their products to fit the real needs of the market in different countries."

Bob Mesnik, President, Kintronics (U.S.):  "When Hikivison first became available in the U.S. in 2011, Kintronics tested their cameras, and found that they were not as good as many of the other cameras we were selling (Axis, Canon, Samsung, and Sony). In 2014 we found that their new cameras had improved in quality and performance. Their lower price point has accelerated the general margin decrease in IP cameras. This general trend towards commoditization and self-installation has created business challenges for the dealers. Lower camera prices from Chinese manufacturers have increased acceptance and quantity of IP cameras. Also, as the cameras have become more of a commodity, profit margins have fallen."

Bram Creemers, Category Manager, Nedis (Netherlands):  "The growing importance of Chinese companies in this field has indeed been highlighted by companies like Dahua. It shows the intrinsic strength of Chinese manufacturing compared to the rest of the world. Since our business is 90 percent dependent on Chinese manufacturing, it is a good development. But because we are dealing with security products, the reliability factor plays a more important role here than with other product groups."

Reza Eissari, Technical Manager, PFN Technology (Iran): "Hikvision and Dahua jumped to the top 10 list last year, but one of the reasons is that the labor cost in China is the lowest in the world and the cost of hardware production is too low. Furthermore, they have plan for mass production so would be able to compete with the price of other international manufacturers. But actually, the problem is that they do not use very high-end components in order to can control just SOHO market."

Nitin Wadhwa, Head of Sales and Marketing, Securex Agencies (Kenya):  "We have worked with Hikvision for the mentioned period. We have become accustomed to their products because of their open platform and ability to be integrated with a variety of other security systems, products, and brands. This open approach has made them cost effective and highly convenient. As our partners, we encourage Hikvision to continue manufacturing quality products that are easy to use and install."

Rustu Arseven, GM, Tesan Iletisim (Turkey): "It has not been a surprise for us to see the rise of Hikvision and Dahua. It was only natural for us to seek Taiwanese and Korean manufacturers in our search for quality OEM production for our ttec brand. It was not very easy to find stable, innovative and quality-sensitive manufacturers in China, where tests are not thorough and trustworthy. But Chinese manufacturers have started closing the gap especially after 2008. Since 2012, improvements have become much clearer – they have become more professional. Once they have been able to establish a better corporate structure, they started manufacturing more stable devices, and tests have become more thorough, which helped them become successful analog camera solutions providers. Since IP-based solutions demand high knowledge of software next to hardware, there is still some way to go. I am guessing that the quantity of demand for IP cameras from the market has also been effective on this matter. If the claim had been higher, certainly there would have been more effort to provide better quality on IP solutions as well. In the end, Chinese competitiveness relies on large quantities of production. Hikvision and Dahua’s greatest success has been their metamorphosis from being OEM manufacturers to brands that have taken a place among global brands. After 2012, Chinese manufacturers changed their approach towards IP products and started dominating the market with new hardware and software solutions. These developments in China have affected our conditions as well. We especially have taken our ttec branded analog product manufacturing to China. Then around two years ago, we started manufacturing our IP products in China as well. Compatibility between our products has provided us a good place in the market next to our competitors."

Victor A. Yugai, CEO, VideoSCAN (Russia): "The last results of Security 50 rankings were not unexpected for the video surveillance market. With a surprising amount of annual growth in the total revenue for both Chinese majors, their presence in the top 10 list is not a big surprise. We can be unhappy with the corporate style of Chinese companies, we may not be satisfied completely with the quality or their attitude to intellectual property rights, but they are global players in the surveillance market. Perhaps they have their own problems, but they are fast to correct their mistakes. Economically justified ten years ago, a large-scale relocation of production from countries such as Korea or Taiwan to China does not look so attractive in the medium term."

Alon Salpeter, CEO, Web2see (Israel): "My opinion is that those manufacturers made a big change to the market by dropping the prices of IP products down to a level where I think many of the European and American manufacturers will not be able to survive. I believe this low price is not realistic and in the end they will have to adjust the prices higher. As a Milestone distributor who supports Hikvision, Dahua, and other manufacturers, I get to cooperate with these manufacturers and mix them with others in the same installation. My concern is that they have now started selling NVR boxes at very low prices with declared parameters that are obviously exaggerated with multiple manufacturers’ support."

Rok Bajec, GM, Mobicom (Slovenia): "The situation at this moment is that major Chinese companies have complete control on the world’s video surveillance market – sales volume of both companies together is bigger than the sales volume of all other companies. Chinese manufacturers are price markers. For some European and US producers, there is no longer any chance to survive in the global market, as hardware platform is completely in the hands of Chinese manufacturers; the only field on which they can fight is software development and solution, where Chinese companies are still weak."

Jorge Fernando Bardales Duarte, President, Tecnologia, Acceso y Seguridad (TAS) (Central America): "China has now improved the quality of their products, and that factor combined with low prices has launched some Asian manufacturers into the worldwide market. Hard-work and aggressive sales helped these companies to be in the top 10. However, a mistake of some Chinese companies is not focusing on the long term relationships or strategic partnerships – they only focus on sell, sell, sell – a lot of companies selling the same product drive to a price war, and this is not good for business."

David Watkins, National Account Manager, Y3K Euope (U.K.): "During Y3K’s 15 years of trading, it has been very interesting to see how the Asian video surveillance manufacturing supply chain has evolved to where we are today, with some very well-known brands based in Taiwan and Korea disappearing. The power house that is China has moved forward initially as an OEM or ODM manufacturer to finally establishing internationally recognized brands. Where the Chinese manufacturer in the past had been conservative, looking only to supply to mature markets, these new brand leaders are looking to introduce technological innovations, which is refreshing. The most important factor to Y3K’s continued growth has been our ability to listen to our customers’ requirements and make sure we can offer products into a local market that meet the local demands and to react quickly in introducing the very latest technology in a user-friendly format. This we will continue to do with an in-depth knowledge of our marketplace."

Aleksandrs Orlovs, Distribution Director, ELKO Group (Latvia): "Major companies were “rising stars” a few years ago, and now they are a real threat for Asian manufacturers who have yet to find a way to survive and keep their shares of the pie. Chinese vendors usually have fewer resources to set local representatives in each market and support different types of marketing activities, but even this is changing. Many users consider Chinese vendors as low-quality manufacturers, but that is more related to their previous experience. As a distributor, we are constantly evaluating opportunities coming from China and if there is a particular demand for some solutions."

Product Adopted:
Network Cameras

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