China security market: housing market still promising

According to iSuppli Corporation, 2012 China security industry's operating income is expected to be from 151 million in 2007 to $ 247 million, compound annual growth rate of 10.3%.

In 2008 the market revenues will grow to 176 billion, up by 16.3% in 2007. At the same time, the global security market revenue this year will reach 425 million, compared to 2007 6.7 percent.

This strong growth reflects China's security industry for mass market consumption potential.

Recent iSuppli Corporation in an industry survey showed that the current international financial and economic crisis is not yet on the China security market growth is expected to result in significant impact.

China's leading security industry application can be broadly divided into four categories: video surveillance, access control, intrusion detection and intelligent management system.

Monitoring system in occupies the greatest market share, 26.3%, followed by the access control and intrusion detection systems. Although prison, airport and seaport, and other government related area is the traditional watch market, but involves the financial industry, civil, transport and commercial and residential construction and other fields of commercial applications demand will grow rapidly over the next five years, the growth rate will be applied in all categories.

With the price drop and standardized, and the price is easy to install and operate products emerged, the Internet Protocol (IP) camera application is expected to gain mass market consumer acceptance.

IP camera's overall effective markets ((TAM) to 2012 will be greatly increased to 72 billion, which is 38 billion in 2007. Biometrics, camera, video recorder (DVR) and intelligent transportation card (ITS) will be the fastest four applications. 2007-2012, the application of the compound annual growth rate will reach 36%, 16%, 15% and 13%.

Figure 5 shows the iSuppli Corporation for 2007-2012 China security application revenue forecasts.

Figure 5: 2007 – 2012 China security market forecast operating income (in millions)

Source: iSuppli Corporation, 2008-12-market demand for security products and varied, covering many fields, including manufacturing, Government, finance, transport, education, health care, residential and commercial buildings.

In the international market, the main users of security products is the Government, industry and individual families. In China, manufacturing, residential and commercial buildings is the business income of the top three of the largest market segment, the aggregate share of more than 55%.

China security industry profit rich, attractive CHANGHONG and TCL, and other large-scale domestic consumer electronics manufacturers have joined.

Therefore, it is expected that this will result in profit dilution.

Information technology (IT) and consumer electronics manufacturers influx will speed up the security supply chain integration.

First, consumer-oriented IT company will create a more convenient and easy-to-use products to meet market demand.

Secondly, those companies will promote security equipment and components for the standardization and enhancement, thus contributing to the overall system solutions and support large vendor brand development.

Third, IT companies will use the intranet/Internet connections and streaming media, such as the latest technology to improve product performance, and accelerate product development time.

IT may bring short term market growth, but it might damage the long-term profit Outlook of the industry, so as to distort the overall development of the industry.

Security system manufacturers should note that a trend is the product standardization.

It will promote security applications more widely adopted. Personal income is rising, as well as the public security more seriously, will create a favourable market situation. Home/consumer market is expected to be substantially expanded.

Following household appliances, furniture and consumer electronics, security device is the most popular household consumers, the first four categories.

In the new residential buildings, often in the construction process is the prior security system installed. These modern and standard products for most consumers are usually very simple, and easy to Setup and operation. However, over the next five years, consumers are more likely to own purchase video surveillance cameras and intrusion detectors, and other security devices without building security experts.

Figure 6 shows the iSuppli Corporation for 2008-2012, China security market revenue market share changes in the forecasts.

Figure 6: China security market segment revenue market share changes forecast (market share percentage change)

Source: iSuppli Corporation, 2008-12-2007-2012, with a market share of domestic applications is expected to be from 18.8% 22.1%.

Over the Government's spending on security will decline. However, for monitoring traffic and video monitors retail growth faster, will promote the growth of China security market. Security system in the manufacturing of penetration rate is high, it is expected that future growth in this area will be slowed down.