Security industry ushered in the rapid development of video surveillance is expected to break 100 billion
In recent years, China's security industry has maintained rapid growth, with the compound annual growth rate exceeding 23% during the "Eleventh Five-Year Plan" period. According to the “Twelfth Five-Year Development Plan†of China's security industry, the total industrial output value in 2015 will reach 500 billion yuan. According to the compound annual growth rate of 20% in the whole industry, the output value of the video surveillance system will exceed 100 billion yuan, accounting for more than 50% of the security electronic system, and become the largest segment with the most growth potential.
During the “Twelfth Five-Year Plan†period, China will base itself on the national conditions, science and technology, and the industrial base, focusing on cultivating and developing seven strategic new developments in energy conservation and environmental protection, a new generation of information technology, biology, high-end equipment manufacturing, new energy, new materials, and new energy vehicles. industry. In 2015, the value added of the seven strategic emerging industries accounted for about 8% of the gross domestic product. In order to help investors discover the value of investment, the newspaper launched the “Survey of the Seven Strategic Industries in Different Emerging Industriesâ€. Through field surveys and expert interviews with reporters, the paper explores the sub-sectors with the most potential for development.
Currently, listed companies such as Hikvision and Dahua are leading players in the video surveillance industry and occupy half of the back-end DVR market. Starting from the second quarter of this year, an unexpected "price war" disrupted the existing industry structure of video surveillance, and the industry's enterprises have become very divided and their concentration has further increased. At the same time, the entire product line of leading enterprises is becoming more and more mature. From the back-end DVR market that holds more than 60%, it is advancing into the front-end camera field.
In the industry restructuring and the transformation of leading enterprises, the reporter conducted a field survey of several video surveillance companies including Hikvision, Shanghai Weiqian and Xianshi Electronics.
[Security companies busy expanding production]
In April this year, Hikvision, the leader of video surveillance, moved to a new site in Binjiang District, Hangzhou City. In less than four months, the production line that can accommodate more than 1,200 workers has been able to operate normally.
The reporter interviewed the agency and came to investigate. Not too big a conference room was crowded with more than 50 people, but there were still people coming. The staff only kept moving the stools in. It is said that such a situation has occurred almost once a week in recent months, and it has reached more than 100 people in many cases.
In the 60,000-square-meter production building in the company's campus, the production line for the front-end camera is located on the third floor, while the production line for the rear-end product DVR (Digital Video Recorder) is on the fourth floor, and the first and second floors are warehouses.
Today, the factory's camera output can reach 5,000 a day, including analog and high-definition cameras; and DVR's daily output is around 2,500. A staff member told the reporter, “When the number of orders is large, the workers on the production line will also work overtime during the weekend.†And the entire company, it is almost unwritten that 5 o'clock does not get off work. “The company will open at 8 o'clock in the evening. The 3 shuttles will send employees to the urban area,†said a Hai Kang employee. “R&D personnel are often even later.â€
The same rush also appeared in the cameras and DVR workshops of Shanghai Weigan Video Technology Co., Ltd. (hereinafter referred to as “Shanghai Weiqianâ€). The reporter saw in his factory in Shanghai's Xiasha Town that facing the security industry's “golden nine silver tenâ€, the workers were working in two shifts. Yang Yang, director of Shanghai Weigao Market, told reporters that the company is considering moving manufacturing to a lower-cost Shenzhen in South China and expanding its production scale.
In another Shanghai display company, Jinqiao Export Processing Zone, Shanghai Xiansi Electronics Co., Ltd., the reporter Qiaoyu Company was in the process of “packaging and movingâ€. Li Shun, general manager of the video surveillance division of the company, told reporters that it was located in Zhejiang. Jiashan Yaozhuang's new factory production scale is now five times. It is expected that the sales volume of video surveillance displays will double to 200 million this year.
[Video monitoring system output value will break 100 billion]
According to the "12th Five-Year Plan for Development of China's Security Industry" (hereinafter referred to as "Planning"), the scale of China's security industry has expanded rapidly during the "11th Five-Year Plan" period. By 2010, the industry's total output value has reached more than 250 billion yuan. Increased by more than 23%; among them, the output value of security products was approximately 100 billion yuan, especially for security electronic products, with an average annual increase of 25%, while the video surveillance system accounted for 55% of the proportion of security electronic products, much higher than the entrance Control system, anti-theft alarm system and other categories.
The construction of "Safe City" is the industry's most recognized driving force. In 2004, the Ministry of Public Security and the Ministry of Science and Technology initiated the creation of the first batch of science and technology strong police demonstration cities in 21 cities including Beijing, Shanghai, Langfang, Dalian and Nanjing. In August 2005, the Ministry of Public Security further proposed the construction of a “3111 pilot project†and selected 22 provinces to carry out pilot projects for the construction of alarm and monitoring systems at the provincial, city, and county levels. Strongly promoted the pace of the construction of "Safe City". With the successful acceptance of the “3111 Pilot Project†in 2008, various localities have launched or expanded the “Safe City†construction project, effectively opening up the demand space for video surveillance systems.
Taking Chongqing as an example, according to the planning of the municipal government, the system integration access capacity for newly-built and expanded video surveillance points shall be constructed at not less than 500,000 video surveillance points. It is estimated that the total project construction investment will be approximately RMB 5 billion.
In addition, the market for industrial applications is rapidly opening up. "Planning" proposes that with the progress of "safety construction", some traditional fields such as finance, culture, transportation, government and other security applications will be more in-depth; a group of new applications such as education, health, sports, energy, communications, The demand for factories, mines, and other enterprises has increased rapidly; the application of security for communities and residents has begun to heat up, and social application processes have accelerated. Market applications are gradually extended from central cities, big cities to second- and third-tier cities and rural areas, extending from the coastal areas to the central and western regions and border ports, and have formed a certain amount of market demand.
["Price war" hits the new pattern of the industry]
The data shows that Hikvision, Dahua, and other major leaders accounted for more than 60% of the market share of the DVR market, and the remaining 40% were occupied by the second and third tier brands and Shenzhen Xiaochang. After nearly a decade of development, the production of second- and third-tier brands has also gradually become more widespread. As a result, the prices of these products have decreased and they have begun to impact the original market structure.
Reporters saw two major security products in Shanghai - Beijing West Road and Suijiang Road, SEG electronics market, respectively, security products, channel operators often hold the mainstream leading and cottage brands in the hands of two types of products; and when the reporter indicated that the product is only When it comes to its own factories or hotels, merchants have begun to spare no effort to sell the cottage brand, and hinted that the discount may be lower.
“Big brand management is strict and price transparent; instead of selling products such as Dahua, Haikang and other first-line brands, it only earns logistics and a little rebate. We are more willing to sell small brands with relatively opaque prices and earn higher profits. "A store owner surnamed Liu told reporters that in this situation, the market share of high-end brands is gradually being eroded.
In this market context, in May of this year, DaHua shares took the lead in launching a new 4-way DVR product, priced at less than 400 yuan; immediately after that, Hikvision also reduced the price of a certain DVR product of the same specifications to Similar level, even lower than the price of the second and third line brands of similar products. Faced with the same price, the user's preference began to shift to the first-line brand. “This move is very effective, and it is almost a one-step recovery or even an expansion of the existing market; the original encroachment and challenges are quickly contained.†Yang Yang, who personally experienced the price war, told reporters.
At the end of April this year, Shanghai Weiqian began to cut prices to launch a high-end economic D1 product, the price from the original 3000-4000 yuan as low as 1999 yuan. “The effect is very good,†Yang Yang told reporters. “Since the price cut at the end of April, the product has been in short supply, and the production line has been running at full capacity.â€
This may only last for a month and a half. Dahua reduced the price of D1 products of the same specifications to about 1,700 yuan. "The first-tier manufacturers shipped and produced large enough to reduce procurement and production costs; so by mid-July, after the price reduction of UOB, our shipping pressure changed. Big."
After this battle, Shanghai Weiqian began to make adjustments on its own. On the one hand, taking into account the high production costs in Shanghai, the company plans to relocate its factories, shift production and manufacturing links to Shenzhen or its surrounding areas, and expand production scale and reduce costs. On the one hand, the company's gross profit margin has been forced down. The company also launched a differentiated market product line, full-line HD network cameras, embedded high-definition hybrid hard disk recorders, embedded NVR, expanding the company's emerging market share.
ã€Industrial reshuffling and restructuring are equally important】
“The price war has enabled large companies to grab market share and crack down on a large number of small businesses and further increase market concentration,†said an industry veteran.
Whether or not the price war hurts the profits of the leading companies, Wang Ji, general manager of Dahua's Shanghai area, said, “Of course, Dahua’s products will be replaced every two years, and they will be able to obtain processing power, hardware and software. The upgrade can be said to be the same performance of the product, the price dropped, but the company's profits have also increased, because the cost has been reduced even lower."
Wang Ji said that the entire video surveillance industry does have the problem of market expansion and lower profits. According to statistics, the current gross margin of the video surveillance industry is about 40%. Wang Ji told reporters that in order to ensure profits, companies must transition to solution providers. "As a solution provider, not only does the company have a higher threshold for integration capabilities and product integrity, but it can also shield some small and medium-sized competitors, and it can also protect profits from comprehensive product support."
At present, the leading enterprises are making horizontal arrangements, infiltrating into the entire field of video surveillance, and using brands, channels, and capital strength to dominate the market, which further weakens the survival space of SMEs.
At present, China’s security companies with output value exceeding 100 million yuan have reached about 100. The “Planning†proposes that the “Twelfth Five-Year Plan†should focus on building leading enterprises and encourage qualified companies to use capital strength to reorganize mergers and acquisitions, or to implement strong alliances. A group of internationally competitive enterprise groups will be formed as soon as possible so that they will become the backbone of the development of industrial intensification; at the same time, a group of small and medium-sized SMEs will be supported to develop into the “specialized, refined, special, and new†market segments. Large- and medium-sized enterprises are the mainstay, and small enterprises provide a new pattern of professional supporting services. They are divided rationally, organically, and coordinatedly.
During the “Twelfth Five-Year Plan†period, China will base itself on the national conditions, science and technology, and the industrial base, focusing on cultivating and developing seven strategic new developments in energy conservation and environmental protection, a new generation of information technology, biology, high-end equipment manufacturing, new energy, new materials, and new energy vehicles. industry. In 2015, the value added of the seven strategic emerging industries accounted for about 8% of the gross domestic product. In order to help investors discover the value of investment, the newspaper launched the “Survey of the Seven Strategic Industries in Different Emerging Industriesâ€. Through field surveys and expert interviews with reporters, the paper explores the sub-sectors with the most potential for development.
Currently, listed companies such as Hikvision and Dahua are leading players in the video surveillance industry and occupy half of the back-end DVR market. Starting from the second quarter of this year, an unexpected "price war" disrupted the existing industry structure of video surveillance, and the industry's enterprises have become very divided and their concentration has further increased. At the same time, the entire product line of leading enterprises is becoming more and more mature. From the back-end DVR market that holds more than 60%, it is advancing into the front-end camera field.
In the industry restructuring and the transformation of leading enterprises, the reporter conducted a field survey of several video surveillance companies including Hikvision, Shanghai Weiqian and Xianshi Electronics.
[Security companies busy expanding production]
In April this year, Hikvision, the leader of video surveillance, moved to a new site in Binjiang District, Hangzhou City. In less than four months, the production line that can accommodate more than 1,200 workers has been able to operate normally.
The reporter interviewed the agency and came to investigate. Not too big a conference room was crowded with more than 50 people, but there were still people coming. The staff only kept moving the stools in. It is said that such a situation has occurred almost once a week in recent months, and it has reached more than 100 people in many cases.
In the 60,000-square-meter production building in the company's campus, the production line for the front-end camera is located on the third floor, while the production line for the rear-end product DVR (Digital Video Recorder) is on the fourth floor, and the first and second floors are warehouses.
Today, the factory's camera output can reach 5,000 a day, including analog and high-definition cameras; and DVR's daily output is around 2,500. A staff member told the reporter, “When the number of orders is large, the workers on the production line will also work overtime during the weekend.†And the entire company, it is almost unwritten that 5 o'clock does not get off work. “The company will open at 8 o'clock in the evening. The 3 shuttles will send employees to the urban area,†said a Hai Kang employee. “R&D personnel are often even later.â€
The same rush also appeared in the cameras and DVR workshops of Shanghai Weigan Video Technology Co., Ltd. (hereinafter referred to as “Shanghai Weiqianâ€). The reporter saw in his factory in Shanghai's Xiasha Town that facing the security industry's “golden nine silver tenâ€, the workers were working in two shifts. Yang Yang, director of Shanghai Weigao Market, told reporters that the company is considering moving manufacturing to a lower-cost Shenzhen in South China and expanding its production scale.
In another Shanghai display company, Jinqiao Export Processing Zone, Shanghai Xiansi Electronics Co., Ltd., the reporter Qiaoyu Company was in the process of “packaging and movingâ€. Li Shun, general manager of the video surveillance division of the company, told reporters that it was located in Zhejiang. Jiashan Yaozhuang's new factory production scale is now five times. It is expected that the sales volume of video surveillance displays will double to 200 million this year.
[Video monitoring system output value will break 100 billion]
According to the "12th Five-Year Plan for Development of China's Security Industry" (hereinafter referred to as "Planning"), the scale of China's security industry has expanded rapidly during the "11th Five-Year Plan" period. By 2010, the industry's total output value has reached more than 250 billion yuan. Increased by more than 23%; among them, the output value of security products was approximately 100 billion yuan, especially for security electronic products, with an average annual increase of 25%, while the video surveillance system accounted for 55% of the proportion of security electronic products, much higher than the entrance Control system, anti-theft alarm system and other categories.
The construction of "Safe City" is the industry's most recognized driving force. In 2004, the Ministry of Public Security and the Ministry of Science and Technology initiated the creation of the first batch of science and technology strong police demonstration cities in 21 cities including Beijing, Shanghai, Langfang, Dalian and Nanjing. In August 2005, the Ministry of Public Security further proposed the construction of a “3111 pilot project†and selected 22 provinces to carry out pilot projects for the construction of alarm and monitoring systems at the provincial, city, and county levels. Strongly promoted the pace of the construction of "Safe City". With the successful acceptance of the “3111 Pilot Project†in 2008, various localities have launched or expanded the “Safe City†construction project, effectively opening up the demand space for video surveillance systems.
Taking Chongqing as an example, according to the planning of the municipal government, the system integration access capacity for newly-built and expanded video surveillance points shall be constructed at not less than 500,000 video surveillance points. It is estimated that the total project construction investment will be approximately RMB 5 billion.
In addition, the market for industrial applications is rapidly opening up. "Planning" proposes that with the progress of "safety construction", some traditional fields such as finance, culture, transportation, government and other security applications will be more in-depth; a group of new applications such as education, health, sports, energy, communications, The demand for factories, mines, and other enterprises has increased rapidly; the application of security for communities and residents has begun to heat up, and social application processes have accelerated. Market applications are gradually extended from central cities, big cities to second- and third-tier cities and rural areas, extending from the coastal areas to the central and western regions and border ports, and have formed a certain amount of market demand.
["Price war" hits the new pattern of the industry]
The data shows that Hikvision, Dahua, and other major leaders accounted for more than 60% of the market share of the DVR market, and the remaining 40% were occupied by the second and third tier brands and Shenzhen Xiaochang. After nearly a decade of development, the production of second- and third-tier brands has also gradually become more widespread. As a result, the prices of these products have decreased and they have begun to impact the original market structure.
Reporters saw two major security products in Shanghai - Beijing West Road and Suijiang Road, SEG electronics market, respectively, security products, channel operators often hold the mainstream leading and cottage brands in the hands of two types of products; and when the reporter indicated that the product is only When it comes to its own factories or hotels, merchants have begun to spare no effort to sell the cottage brand, and hinted that the discount may be lower.
“Big brand management is strict and price transparent; instead of selling products such as Dahua, Haikang and other first-line brands, it only earns logistics and a little rebate. We are more willing to sell small brands with relatively opaque prices and earn higher profits. "A store owner surnamed Liu told reporters that in this situation, the market share of high-end brands is gradually being eroded.
In this market context, in May of this year, DaHua shares took the lead in launching a new 4-way DVR product, priced at less than 400 yuan; immediately after that, Hikvision also reduced the price of a certain DVR product of the same specifications to Similar level, even lower than the price of the second and third line brands of similar products. Faced with the same price, the user's preference began to shift to the first-line brand. “This move is very effective, and it is almost a one-step recovery or even an expansion of the existing market; the original encroachment and challenges are quickly contained.†Yang Yang, who personally experienced the price war, told reporters.
At the end of April this year, Shanghai Weiqian began to cut prices to launch a high-end economic D1 product, the price from the original 3000-4000 yuan as low as 1999 yuan. “The effect is very good,†Yang Yang told reporters. “Since the price cut at the end of April, the product has been in short supply, and the production line has been running at full capacity.â€
This may only last for a month and a half. Dahua reduced the price of D1 products of the same specifications to about 1,700 yuan. "The first-tier manufacturers shipped and produced large enough to reduce procurement and production costs; so by mid-July, after the price reduction of UOB, our shipping pressure changed. Big."
After this battle, Shanghai Weiqian began to make adjustments on its own. On the one hand, taking into account the high production costs in Shanghai, the company plans to relocate its factories, shift production and manufacturing links to Shenzhen or its surrounding areas, and expand production scale and reduce costs. On the one hand, the company's gross profit margin has been forced down. The company also launched a differentiated market product line, full-line HD network cameras, embedded high-definition hybrid hard disk recorders, embedded NVR, expanding the company's emerging market share.
ã€Industrial reshuffling and restructuring are equally important】
“The price war has enabled large companies to grab market share and crack down on a large number of small businesses and further increase market concentration,†said an industry veteran.
Whether or not the price war hurts the profits of the leading companies, Wang Ji, general manager of Dahua's Shanghai area, said, “Of course, Dahua’s products will be replaced every two years, and they will be able to obtain processing power, hardware and software. The upgrade can be said to be the same performance of the product, the price dropped, but the company's profits have also increased, because the cost has been reduced even lower."
Wang Ji said that the entire video surveillance industry does have the problem of market expansion and lower profits. According to statistics, the current gross margin of the video surveillance industry is about 40%. Wang Ji told reporters that in order to ensure profits, companies must transition to solution providers. "As a solution provider, not only does the company have a higher threshold for integration capabilities and product integrity, but it can also shield some small and medium-sized competitors, and it can also protect profits from comprehensive product support."
At present, the leading enterprises are making horizontal arrangements, infiltrating into the entire field of video surveillance, and using brands, channels, and capital strength to dominate the market, which further weakens the survival space of SMEs.
At present, China’s security companies with output value exceeding 100 million yuan have reached about 100. The “Planning†proposes that the “Twelfth Five-Year Plan†should focus on building leading enterprises and encourage qualified companies to use capital strength to reorganize mergers and acquisitions, or to implement strong alliances. A group of internationally competitive enterprise groups will be formed as soon as possible so that they will become the backbone of the development of industrial intensification; at the same time, a group of small and medium-sized SMEs will be supported to develop into the “specialized, refined, special, and new†market segments. Large- and medium-sized enterprises are the mainstay, and small enterprises provide a new pattern of professional supporting services. They are divided rationally, organically, and coordinatedly.
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