In 2004, respondents from mainland China and Hong Kong exported US$42.9 million home security products. Respondents from Taiwan and South Korea exported US$19.5 million and US$15.2 million, respectively.
Exports contributed between 40 percent and 80 percent of mainland China and Hong Kong makers' revenue; and more than 80 percent of South Korea and Taiwan makers' revenue.
Orders for home security products — consisting of intruder or burglar alarms; video doorphones; and fire, smoke and gas detectors — usually come in small volumes. As such, performance-to-price ratio remains the major consideration.
Two unique characteristics of the product line serve as non-tariff barriers to the entry of new makers in the industry: The need to meet product safety standards and secure safety certifications in various markets, and the need for turnkey system solutions consisting of control panels and detectors.
A total of 48 companies were interviewed for this report. Statements made in this report regarding the home security industry are derived from data contributed by the 48 respondents. Among the findings are:
Production Centers
• Guangdong province is the manufacturing hub of home security products in mainland China. Zhejiang province follows.
• Chung Ho city is the key manufacturing center in Taiwan, Taipei is second.
• Daejeon is the production center in South Korea.
Manufacturing Capability
• The industry produces an average of 1.1 million units every month, of which 414,700 units are wired and wireless intruder alarms, 272,450 units are video doorphones, 295,400 units are fire/smoke detectors, and the rest are other home security products.
• Most makers outsource a significant portion of their production processes, with some handling only the R&D, QC and final assembly of the products in-house.
• There is a very high level of quality awareness. Each of the companies featured have acquired at least one management quality system, with ISO 9001 being the most common.
Component Sourcing
• Components for both wired and wireless alarms such as detectors, sensor modules, LCDs, ICs, circuit systems and RF modules are usually sourced from the mainland, Japan, Taiwan or the United States.
• For video doorphones, components such as CMOS and CCD sensor modules, LCDs, CRTs and ICs are sourced from Japan, Taiwan, South Korea or the United States.
• More than half of the makers foresee prices of intruder alarm components to increase between 5 percent and 15 percent. Video doorphone components, on the other hand, are forecast to remain stable.
Exports
• Own-brand sales account for 58 percent, 66 percent and 78 percent of exports from mainland China and Hong Kong, Taiwan and South Korea, respectively. The balance goes to OEM/ODM.
• A big chunk of shipments go to Western Europe and North America, 33.2 percent and 29.5 percent, respectively. Other destinations are the Middle East, Eastern Europe and Southeast Asia.
Industry Overview
This report provides an overview of the manufacturing and export capabilities of home security product makers in mainland China, Hong Kong, Taiwan and South Korea. The product line of these makers includes intruder or burglar alarms, video doorphones, and fire, smoke and gas detectors.
A total of 48 companies were interviewed for this report: 27 from mainland China, 11 from Taiwan, seven from South Korea and two from Hong Kong.
For 29 of these respondent companies, Global Sources researchers developed in-depth profiles by conducting face-to-face interviews with these company's key officials, touring their factories and observing manufacturing processes firsthand.
The 19 other featured companies provided Global Sources with key information on their current production capacity, export and price trends as well as their production, export and price projections for the rest of 2005 and beyond.
In this report, Global Sources analyzes data based on ownership of the companies and not on the location of production bases.
In addition, analysis is limited to the information provided by respondent makers.
Mainland China and Hong Kong
For mainland China and Hong Kong makers, Guangdong province is the locus of home security products manufacture, hosting 69 percent of the respondent companies' production facilities. A key advantage of Guangdong as a sourcing center includes the presence of a mature electronics support industry that ensures the availability of services such as mold design and production, plastic injection and SMT.
Guangdong's proximity to Hong Kong likewise facilitates the sourcing of imported components such as PIR sensors, CCD/CMOS sensors and TFTLCD panels.
Zhejiang province follows Guangdong as a key manufacturing hub. Zhejiang — particularly the cities of Hangzhou, Ninghai and Wenzhou — hosts 13 percent of factories of mainland and Hong Kong makers.
The industry in mainland China is relatively new, with most companies being privately owned and established in the mid-1990s or later.
Industry analysts note that due to the industry's infancy, there is as yet little competitive advantage for mainland China in performance-to-price ratio compared with Hong Kong, Taiwan or South Korea.
Still, companies on the mainland and Hong Kong already have experience supplying some major brands and clients.
Among these are Carrefour, GE Security, Look-C (Australia), RadioShack, Sony and Wal-Mart.
Mainland makers, industry analysts note, are ready to expand their export activities.
Certain factors, however, make expansion to overseas markets challenging for mainland companies. According to industry analysts, among these challenges are meeting the different product safety standards of various markets and the need for mainland makers to secure different kinds of product safety certifications. In addition, analysts also note the lack of turnkey system solutions consisting of control panels and detectors as another factor that weakens mainland makers' competitive ability in the global market.
Supplier Profile
Advantech Co. Ltd
Advantech Co. Ltd was established in 1990 and entered into the development, production and marketing of video doorphones in 2000. It has been listed in the Taipei Stock Exchange since 2000. The company, the largest IPC (Industrial PC) supplier in Taiwan, boasts annual sales of US$250 million to US$300 million. The company has three main product lines — industrial automation, applied computing and network computing. Its core technologies include SBC (Single- Board Computer) cards and embedded PC cards that the company uses to develop customized products like panel PCs, mobile medical terminals or wireless home security systems.
Advantech is one of the early technology developers of SOM (System on Module) that can help buyers develop products with customized specifications within 30 days. In the past few years, the company has been applying its core technologies to applications and products that greatly use wireless, video and HMI (Human Machine Interface) technologies. Among the products developed with the technology are home security products like video-based residential terminals.
Currently, it has a monthly production capacity of 1,000 video doorphones with monthly output averaging at 500 units.
In 2005, the company forecasts an increase in the production and export figures of video doorphones.
Last year, Advantech realized US$3 million in sales of video doorphones, with 80 percent or US$2.4 million coming from exports.
The company generates 60 percent of its total revenues from own-brand sales, under its in-house Advantech brand. The remaining 40 percent come from ODM business.
The company allocates 10 percent of its output to the domestic market and ships the bulk overseas. Its main export destination is the Middle East, which absorbs 40 percent of production, followed by Japan with 30 percent and Western Europe with 20 percent. Products are shipped via Keelung and Taichung ports.
To better promote its products in the domestic and overseas markets, the company attends major trade exhibitions such as SecuTech and IFSEC.
Manufacturing Capability
The company is based in Neihu, Taipei, Taiwan and maintains a production facility in Donghu.
Its factory covers a total area of 15,744sqm and is equipped with five production lines. Its workforce increased from 1,200 in 2004 to 1,500 in 2005, of which 600 are production workers.
The factory handles cosmetic designing, electronic circuit sub-assembly and final assembly processes in-house, while mold making, plastic injection molding, painting and silkscreening, and sensor/detector module production processes are outsourced to other factories. The company has been implementing a lead-free production process in its factories in Taiwan and mainland China since 2004. The purpose of this is to meet the requirements of Europe's RoHS on products for export to Europe.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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