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IHS Markit research: “Chinese Manufacturers – The Sleeping Giant of the Consumer Video Surveillance Industry”

A new analysis form IHS Markit says Chinese supplier branded consumer video surveillance equipment accounted for approximately 5 per cent of U.S. market revenues in 2016. However, the report warns the recent explosion of supply and demand for consumer video in the Chinese domestic market is a “potential ticking time bomb” for American market stakeholders.

January 13, 2017  By Jimmy Dearing IHS Markit

Consumer demand for surveillance has grown in the shadow of the smartphone explosion. Smartphones have given video surveillance suppliers the perfect platform to develop their user interfaces and give consumers instant access to their surveillance system from anywhere. Better wireless technology, mobile data coverage and connections speeds, cloud storage and analytics have also helped facilitate new demand.

However, the other main contributing factor to the growing demand has been the improvement to the affordability of equipment. Camera prices have almost halved in the past three years alone. Here lies the threat to the companies currently capitalising on the new demand. If the market is price sensitive enough, then the suppliers with the lowest prices will eventually gain control.

The issue for U.S. suppliers

• The average selling price of a consumer-grade, standalone network video surveillance camera in the U.S. was $95 in 2015. However, in Asia, the average selling price was just $27.

• Should these Chinese manufacturers intensify their export attempts this could present the current U.S. market incumbents with a real problem. U.S. suppliers are unable to compete at these prices because most of them actually OEM their product from a Chinese manufacturer to begin with.

• In China, these OEMs are able to sell to the domestic market at such low prices because they sell direct to consumers via online retailers like Taobao (part off the Alibaba group). Very few Chinese manufacturers have managed to get their cameras on U.S. retailer’s shelves nationwide and building the relationships and brand recognition necessary to do so takes a great deal of time and investment.

What US market suppliers can do to maintain market share

• Maintain a premium brand reputation.

• Keep their retailers happy.

• Integrate their video offerings with other highly sought-after home applications such as home automation, alarms or entertainment systems.

• Accept that the average camera price is going to continue to fall and adjust accordingly.

For market statistics from IHS Markit, go to Consumer and DIY Video surveillance Report – 2016.

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