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China Security Industry Development Report

I. Basic Information

With the impetus of the ¡°Safe City Project¡±, City Alarm & Monitoring System (¡°3111 Project¡±) and also the Large-scale international events such as World Expo (Shanghai)and Guangzhou Asia Game , China security industry kept a very high rate growth during 2009 and 2010. Security industry has got a high speed growth and the size became larger. According to statistics, there are more than 18,000 enterprises and almost one million employees in the whole China security industry. Compared with 2007, the market size increased more than 40% reached about 200 billion RMB. The industrial chain has been widened and the industrial structure also shows to a new feature. Security service provider has got a rapid development, in the other hand, various kinds of intermediary services, risk assessment services, construction supervision services, performance assessment services and products & projects maintenance services all have started and developed along a specialized Direction.

There have three important major areas in China security industry, each of them have their own characteristic. More than half of the country's production manufacturers and production capacity are concentrate in the "Pearl River Delta" region, it has a complete system of security products manufacturing, and the development of export-oriented economy in this region is very fast; Base on a abundant technological strength, financial strength, investment strength and a high level starting point, the enterprises in the "Yangtze River Delta" region are very competitive; "Beijing and Tianjin" region adapt to the market demand ,the development of the manufacturing industry and engineering enterprises are all grow very fast. In the other hand, Security service provider has got to started and development. There is also a great potentiality for this region.

Key enterprises growing fast, achievements have been made in brand strategies. In recent years,the scale of key enterprises has grown markedly, some of them even showed a exponentially growth in the base, and they really become the market leaders in industry. The statistics date in 2010 shows that, there were about 100 security enterprises with an annual output value more than 100 million Yuan. And a large number of enterprises with an annual output value of 80-150 million, got into the ranks of medium-sized, these were all made the industrial concentration been greatly improved. Following 9 Safer manufacturers got the title of ¡°China well-known mark¡± in year 2004 and 2005, there were 5 video intercom system manufacturers and 7 safer manufacturers got the title of ¡°China well-known mark¡± in 2007. Because the evaluation system of video equipment has been completed, a number of security enterprises will expect to receive the title of ¡°China well-known mark¡± in 2010.

II. Technological Innovation

China security industry technology innovation system has been formed. With a higher security market demand, technological innovation was growing fast in security industry. The first key laboratory called "security technology & risk assessment key laboratory of the Ministry of Public Security" has been put into service, lots of enterprises have increase scientific investment, R&D cost reached around 5-10percent of the total sales revenue. Key nation scientific research institute as a leader, with enterprises as the mainstay, the technological innovation system has been build.New technologies, new products continue to emerge.

Security products developed with digitization, networking and intellectualization; The commodities and systems shall be constantly upgraded, new technology and product come continuous; IT technology in the security system has became widespread, based on the IP technology, remote network monitoring system started to develop, integration capabilities have greatly improved, and there also comes more and more corresponding solutions; DVR products & technology and large-scale network integration technology are all at the forefront of the world; Some enterprises were starting in a ¡°chips¡± level researching project and the industry has showed a great vitality. "The research & demonstration of social security dynamic warning and control technology " which is the "11th Five-Year Plan" national scientific and technological support project has made an important progress; On the side of integrated system of prevention and control technology, completed the problems of dynamic warning,¡± system performance" assessment and relevant theory & model of the security risk assessment; On the technologies of typical community emergency public places and disposal side, Established evacuation model, a typical public place to develop contingency plans for emergencies and emergency command and disposal programs, completed the evacuation model, developed contingency plans, emergency command plans and disposal program plans for the typical social emergencies in public places; on the side of public comprehensive disposal platform technology& applications technological research, prepared and published the technical standards of city alarm& monitoring network system and developed

the matching network system integration platform software, this platform software can be compatible with other sub-topic¡¯s systems; on the side of video data acquisition, information transfer / exchange, intelligent analysis of video image and application of biometric identification, completed a prototype machine of the authentic video capture / encoding transmission, wireless broadband video data encoding / transmission / encryption and decryption, and build a mobile video transmission system for the prototype machine, developed a software and a intelligent evaluation platform for intelligent analysis, completed the evaluation system and samples treasury of Human Face Recognition monitoring products.

III. The Market

The scope of applications become more and more widely. Market demand of government agencies, financial agencies, transportation agencies, education agencies, museum, and other public places experienced sustained and rapid growth; there are large-scale applications in dozens of departments like telecommunications, oil, electricity, water, industrial and mining enterprises, forest fire prevention, also lots of new demands like Communities, household consumption and so on; along with the growth of the "Safe City Project¡±, market demands from second and third level cities begin growth. Automatic networking of electronic alarm system and TV monitoring system in public places and business process area are all developed quickly in financial segment. First, all the network and self-service banking must have security infrastructure whether it's newly built or reconstruction or relocation; Second, Constructing facilities which are wearing out or failed to come up to required standard; Third, transform and improve the existing remote monitoring centers in branches, to urge the second-lineup branches and sub-branches with management functions to establish monitoring center, aim to All the network and self-service bank can be remote monitoring ¡°Safe Hospital Plan¡± and ¡°Safe Schools Plan¡± are warming up the system security market. In order to comply with the request of Emergencies and protection system, 7 ministries such as Ministry of Health unified release a official document called ¡°The sentiment about create ¡®Safe Hospitals Plan¡¯¡±; Schools security has entered the agenda of leaders at all levels, Besides main channel and important place, the focus are all on the construction of the schools network monitoring and control center, and applied the center to the invigilation work and such works. An application requirement in different areas has different characteristics. Security technologies in the museum system have been not only large-scale application, and also began to development on a regular track, it gradually formed a complete system of museum system industry security standards, and the application has become the industry's "model". Rail transportation with high requirements for security technologies from the beginning, it called for a unified system to make the dynamic monitoring network-based and intelligent, also the this system can put emergency and application work together. On the product side, Video surveillance and alarm system products market is growing faster; market development of other products is stable. Preliminary statistics showed that the rate of video surveillance products sales growth is about 40 percent, and it¡¯s accounted for 60 percent of the electronic security products total in 2010; Other products, such as access control systems, intercom systems, transmission systems, security doors, Safer, explosion-proof security is developed smoothly, such as product development, The pace of development in general remain at between 10-20%. About the marketing, trends of market segmentation are becoming evident, new marketing ways are developed smoothly. With the expansion of the security applications and competition in the market, security products enterprise changed their passive way; they intensify the publicity force to end user groups, according to customer needs, providing them with solutions, promote the market segmentation step and make the market more professional. The marketing way has a new goal, some professional security marketplaces, stores and online-shops were appear, these are all the spirit prevailed among the security industry marketing.

IV. Enterprise Development

In recent years, security enterprises maintained a sustained, rapid and sound development. The size of security enterprise were became larger than ever, more assets and employees and high R & D capability heighten enterprises vocational level; Capital operation has become one of the shortcut and fast-growing business model to enterprises. Following the public companies like YAAN Technology, GST Holdings Limited, CSST Group and Blue Star Technologies were listed on the abroad stock exchange, Zhejiang DALI Technology and DAHUA Technology have listed on the domestic stock exchange successful in 2010, and it was enormous leverage in industry. Merger and acquisition activities are very frequently, such as CSST Group which was already have takeover 22 companies to create their own business framework very quickly by Merger and acquisition. Enterprise management become more scientific and standardized, more and more enterprises adopt a modern enterprise management system and management methods, this make core competency, brand awareness, sense of innovation and service come to next step. Enterprise cultures are taken seriously than ever, many enterprises believe that a special culture is the ¡°Ultimate Goal¡± for them. The excellent performance after when Chuan earthquake showed security enterprises social responsibility, and development is growing stronger day by day.

V. The Problems

The problem in the Management of industry, there is no clear national legislation about security industry and management level is still a weak point for security industry. There is still have not an effective management way to control the quality of security project, making and selling of counterfeit and shoddy goods still a very big problem to China security industry.


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