The physical security market has slowed down over the past two years as western manufacturers lost market share to their Chinese counterparts.
The physical security market has slowed down over the past two years as western manufacturers lost market share to their Chinese counterparts.
According to a report by Memoori, the total world production of physical security products at factory gate prices in 2016 was $28.44 billion, an increase of 4.5 percent on 2015. Over the last five years, the market has grown by a compound annual growth rate (CAGR) of 8.2 percent, showing a significant fall in growth over the last two years.
“The developed markets of North America and Europe have continued to lose market share to Asia and particularly China and this is set to continue to the end of the decade,” the report said.
The report further added that this is not good news for western manufacturers of video surveillance products as they have failed to establish a solid business base and significant share in China, while the two major Chinese manufacturers have sales of more than $5 billion between them and now have the kind of scale and allows them to reduce the prices to the levels that most western manufacturers can’t compete against.
“We forecast a CAGR of 5.65 percent over the 5 year period from 2016 to 2021,” the report added. “Not particularly optimistic considering that the market managed to grow by a CAGR of 7.83 percent during an unstable period from the end of 2010 to today. But whilst growth in volume terms will be well over 10 percent there is little chance of sales revenues achieving much more than half of this whilst the major Chinese companies continue reducing their prices in order to boost volume.”
Earlier this year, a report from IHS had given rise to similar conclusions when it said that the global physical security market value was weaker due to price erosion caused by Chinese manufacturers.