March 2, 2020 By SP&T News staff
Although the coronavirus outbreak has had a minimal impact on the video surveillance market, the industry still faces a risk from falling demand and a potential production bottleneck spurred by labour and component shortages in China, according to a recent report from research firm Omdia.
Production of video surveillance equipment is heavily concentrated in China, accounting for 90 per cent of global production of video surveillance cameras, and 45 per cent of worldwide global market revenue in 2019.
Any coronavirus-related disruption to production, supply chains or workforces in the country could have a significant impact for a global video surveillance market totaling US$19.9 billion in 2019.
“Given China’s status as the world’s largest producer and consumer of video-surveillance cameras, the country wields a proportionately massive influence on the global market for these products,” said Tommy Zhu, senior analyst, video surveillance, Omdia, in a research note.
“Video surveillance equipment suppliers in China currently are contending with reduced production because of a lack of manpower and delays following the Lunar New Year. Meanwhile, domestic demand for general-purpose video surveillance products is likely to cease or suffer delays as the Chinese government focuses on coronavirus control.”
With the lockdown of Hubei province, severely affected neighboring areas — such as the cities of Beijing and Shanghai — are taking various measures to control the spread of the epidemic.
One such measure was the extension of the Chinese Spring Festival holiday — initially set to end Jan. 30 – Feb. 2, with a majority of the country’s provinces, municipalities and autonomous regions ordering businesses not to reopen until at least Feb. 10.
Meanwhile, companies that needed to start work after the holiday were ordered to obtain permission from the government, and employees were encouraged to work from home.
“While these labour issues have had only a minor impact so far, if the epidemic continues to spread and infections rise in number in the second quarter, the effects of the coronavirus on video surveillance hardware supply will be severe, not only in China but worldwide,” Zhu said.
Transportation and logistics issues are having a huge impact on the supply of video surveillance equipment, combined with new restrictions in travel and transport in place domestically and internationally.
These companies have gradually returned to work after the Spring Festival holiday.
However, staff shortages are probable as the epidemic may reduce the output of various components, as the full impact of the virus is yet to be determined.
On the flip side, the major video surveillance equipment vendors are the top clients for video surveillance component suppliers, and supply to video surveillance is likely to be prioritized.
In the best-case scenario, with the epidemic successfully contained by the end of March and the disruptions reduced by April, the impact of the virus on the video surveillance market will be minor.
However, if the epidemic continues to spread and infections rise in numbers in the second quarter, and then the effects of the coronavirus on the video surveillance industry and on many other markets will be severe.
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