In recent years, the security industry has transitioned from a focus on municipal and commercial sectors to a broader civilian market. This shift marks a new phase in the development of the security sector, where residential and personal safety have become key areas of growth. However, despite the rapid expansion, challenges such as market fragmentation and inconsistent standards remain significant barriers to progress.
The rise of initiatives like "Safe City" has already driven major advancements in the security industry, but it is "Smart Home" that is now seen as the next big opportunity for the civilian security market. According to Deng Wenjie, Executive Vice President of the Shenzhen Security and Prevention Industry Association, the civilian market holds immense potential, and although it is still in its early stages, it is expected to grow rapidly in the coming years.
Hikvision and Dahua, two of the leading players in the security industry, have already started expanding into the civilian space. Smaller companies have been targeting this market for over two years, recognizing the long-term opportunities it presents. According to data from the Guangdong Institute of Advanced Industrial Science and Technology (GGII), the smart home market was valued at around $42 billion in 2009 and is growing at an annual rate of 20%–30%. By 2015, it's projected to reach 124 billion yuan.
Technological advancements such as the Internet of Things, cloud computing, IPv6, and ZigBee have further accelerated the development of smart homes, creating favorable conditions for the civilian security market. In 2012, the civilian security market grew by 20%, and experts predict a 30% growth rate in 2013. With the increasing adoption of smart home solutions, the market is expected to experience explosive growth by 2014.
Chen Zongnian, Chairman of Hikvision, emphasizes that both governments and individuals are becoming more aware of the importance of safety, presenting new opportunities for security companies. In response, Hikvision has launched a range of products tailored for the civilian market, focusing on small businesses and families. The company also emphasized service-based business models as a key strategy for 2013.
The initial wave of civilian security adoption began in first-tier cities, where residential communities became the primary testing ground for these technologies. As the market expands, security companies are now moving into second- and third-tier cities, with even some rural areas beginning to adopt monitoring systems.
One of the main reasons companies are shifting toward the civilian market is the growing polarization in the security industry. Large firms dominate government projects, which often require high technical standards, strong financial backing, and long payment cycles. This makes it difficult for smaller enterprises to compete, pushing them to seek opportunities in the civilian sector, which has lower entry barriers.
Government projects often use the BT (Build-Transfer) model, where companies receive only 20% of the payment upfront, 30% after project completion, and the remaining balance later—sometimes after one or two years, or even up to five years. This creates significant cash flow pressure, and many companies, including listed ones, face challenges due to high accounts receivable.
In 2012, Hikvision reported a sharp increase in accounts receivable, reaching 1.597 billion yuan, a 68.46% year-on-year increase. While this is a common issue across the industry, analysts note that it reflects the broader economic pressures faced during downturns.
Today, the domestic security industry is divided into three main groups: fewer than 10 companies with sales over 1 billion yuan, several hundred companies with sales between 400 million and 1 billion yuan, and tens of thousands of smaller firms operating in the 300–400 million range. These smaller players are the backbone of the civilian market.
However, the lack of standardized regulations remains a critical challenge. Currently, only certain sectors like transportation, finance, and fire safety have strict industry standards. In other areas, standards are either absent or not effectively enforced, hindering widespread adoption.
Zhang Yanli, Chairman of Shenzhen Songda Technology, highlights that without proper standards, security products struggle to scale. “If a product breaks, you can just replace it with another. That’s how a mass market is built,†he said. Similarly, Jia Ruichun, Director of the National Security Supervision and Inspection System Product Quality Supervision and Inspection Center Shenzhen Office, stresses that the development of security standards is urgently needed.
Jia explains that the slow pace of standardization is due to the fast-changing nature of technology and the complexity of the standard-setting process. Originally planned for release by the end of 2012, the national security standards were delayed until June 2013, and even then, no action was taken. A local camera manufacturer revealed that the push for standardization has been ongoing for six or seven years, but implementation has been stalled due to conflicting interests.
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