Chinese Suppliers Turning Challenges into Opportunities

asmag.com talks to Chinese camera, DVR, access control, central management software (CMS) and network management platform manufacturers as well as IP solution providers in Hangzhou.


The Chinese security association issued a report, showing that the electronic security market had grown between 60 percent and 70 percent in 2008, while predicting only 20 percent growth in 2009. The large domestic market is helping Chinese players expand overseas. "Chinese DVR producers have large enough sales margins to withstand global recessions. Appreciation of the Chinese yuan is reducing our space only for price discounts; it is not squeezing our profits," said Wang Zengqiu, General Manager at Dahua.


When it comes to global IP solution trends, H3C predicts healthy growth. "So far this year, H3C sales revenue has already surpassed the total for last year," said Liao Xudong, Product Director of the Multimedia Department at H3C. Liao predicted that the company would achieve 300-percent sales growth. The remarkable figure, he said, stems from targeting small and medium applications and niche markets. "Our strategies and focus on Safe City projects is clearly paying off," said Liao.


Access control represents a smaller market segment. According to Zhou Linjian, General Manager of Reformer, the company has positioned itself as a smart-card solution provider with reader products as well. "Many suppliers," said Zhou, "try to integrate every device, but then the true user-friendliness of such products is open to question."


The fact that big international names are getting involved in smaller applications (32-channel products), said Zhou, does not mean that they are becoming entry-level suppliers. "Eighty percent of the market centers around small applications, like those with 32 channels," said Zhou. "What we are seeing is bigger markets in China, especially after the Beijing Olympics. The government is paying a lot more attention to security. This, in turn, has brought opportunities for every manufacturer."


According to Xu Yubo, Vice General Manager of Skyvision, one-third of the company's revenue comes from small and medium application software and hardware products; two-thirds is from network management platform solutions as they involve more customization and service requirements.


"Our network management platform business," said Xu, "has posted stronger annual growth (more than 60 percent) from 2005 to 2007. We expect more than 50 percent growth in 2008."


"In China, demand is huge," stressed Hu Yangzhou, President of Hikvision. "Naturally, if that were to drop precipitously, it would pose a serious challenge to vendor ability to manage risk and capital."


Many Chinese manufacturers, said Hu, are touting their R&D capabilities, but few are truly innovative or have mature management skills. "The domestic market has grown too fast for suppliers to stop to strengthen management and training. Quick profits are the main reasons why Chinese manufacturers, especially camera players, lose out. The end result is price wars in low-end markets."


Going International
H3C is testing the waters overseas. "H3C, as an IT-IP solution provider, has strengths in that it can take the pulse of its domestic customers and end-users," said Liao. "Marketing our products overseas, however, means setting up effective distribution networks. Presently, we are attempting to establish partnerships in Europe, North America and the Asia-Pacific.


Skyvision, explained Xu, is selling some of its CMS products in developed countries like the U.K., where demand for large management platforms is rare. "Usually, 100 channels of video are regarded as big," he said. For small and medium CMS products, Skyvision sells through hardware suppliers like Hikvision and Dahua and, of course, local system integrators and distributors.


Overseas, said Hu, Chinese suppliers should stop attacking each other.
"Obviously, any professional buyer knows how to compare and choose. Criticizing your Chinese competitors means that everyone selling Chinese-made products suffers by extension."


Finally, according to James Wei, International Sales Manager at Dali, the company has chosen to win customers by playing by the book. "We follow whatever standards and certifications the market requires. You have to play by their rules to get ahead."