The security market is evolving rapidly, with a growing focus on the civilian sector after reaping substantial profits from municipal and commercial applications. While the growth rate in the civilian segment is impressive, the industry still faces challenges such as market disorder and inconsistent standards, which act as barriers to further development.
Smart Home initiatives are now creating new opportunities for the civil security market to take off. According to Deng Wenjie, Executive Vice President of the Shenzhen Security and Prevention Industry Association, the civilian market holds the most potential despite being in its early stages. Hikvision’s Jiang Haiqing also emphasized that security products for civilians are still in the development phase, but their future looks promising.
Major players like Hikvision and Dahua have already started expanding into the civilian space, while smaller companies have been targeting this market for years. According to GGII data, the smart home market was valued at around $42 billion in 2009 and has been growing by 20-30% annually. By 2015, it's expected to reach 124 billion yuan. The rise of technologies like IoT, cloud computing, IPv6, and ZigBee has further fueled this growth.
In 2012, the civilian security market grew by 20%, pushing companies to accelerate their expansion. Deng Wenjie predicted a 30% growth in 2013, with explosive growth expected by 2014 as smart home adoption increases. Hikvision’s Chen Zongnian believes that both governments and individuals are increasingly aware of the need for safety, creating ample opportunities for companies to grow.
Hikvision has launched civilian-focused security products and is shifting its strategy toward service-based offerings, targeting small businesses and families. The residential communities in first-tier cities have been the starting point for this market, with competition intensifying among companies. However, as the market expands, even second- and third-tier cities, and some rural areas, are beginning to adopt monitoring systems.
With government projects dominating over 70% of the market, SMEs find it increasingly difficult to compete. Large firms dominate these contracts, often using BT models that require upfront payments and long-term financing. This financial pressure makes it hard for smaller companies to survive, pushing them toward the civilian market where entry barriers are lower.
Hikvision reported a significant increase in accounts receivable in 2012, highlighting a common issue in the industry. Galaxy Securities analyst Zhang Li noted that high accounts receivable ratios are not unique to Hikvision but reflect broader challenges during economic downturns.
Currently, the domestic security industry is divided into three tiers: a few large enterprises with sales over 1 billion yuan, mid-sized companies with sales between 400 million and 1 billion yuan, and thousands of small firms operating in the civilian market.
Standardization remains a major hurdle. Only sectors like transportation, finance, and fire departments have strict product requirements, while other areas lack enforceable standards. This inconsistency hinders integration and limits consumer choice. Zhang Yanli emphasized that without proper standards, the mass market cannot be fully developed.
Jia Ruichun, director of the National Security Supervision and Inspection System Product Quality Supervision and Inspection Center, highlighted the urgency of developing industry standards. However, the process is slow due to rapid technological changes and complex regulatory procedures. Despite initial plans to launch national standards by the end of 2012, the implementation has been delayed multiple times, with no clear timeline yet.
A Shenzhen-based camera manufacturer admitted that the push for standardization has been ongoing for six or seven years, but delays persist due to conflicting interests among stakeholders. Without clear guidelines, the security industry will continue to face challenges in achieving sustainable growth.
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