In 2014 Chinese video surveillance manufactures sent out a strong message to the major western markets that they are moving up the value chain with better than "just OK" products at significantly lower prices than local offerings; And have extended and improved their distribution network to include System Integrators and provide local back-up services.

2 companies in particular Dahua and HIKVision have led the charge and last year established a firm presence and substantially increased their market share in many western countries.

The media and research companies have all warned that the Chinese manufactures present a very serious threat to western products, which we would agree with in some segments of the market. However some very misleading figures are being published about their dominant size by basing their revenues on total system compared against product sales for western companies. They suggest that the only way to stem the flow is to follow the Chinese model and lower their prices.

Shaving off some margin may be necessary but to compete on price would be a disastrous policy for the Chinese will continue to lower their price if they have to. It looks inevitable that at the bottom end of the market further ground will have to be conceded to imported Chinese products.

The only long-term solution is to innovate, improve the quality and value of products and target growth markets. These are not only solutions to protect the home market but are also positive measures to increase their share of the largest and fastest growing market in the world; namely China. So why not take on the completion in the high ground where they currently lack leading edge products? It seems an obvious solution!

Most of the leading edge manufacturers have expended a lot of effort in trying to open up this market but sadly without much success. There seem to be 2 reasons for this. The first is that the public sector dominates the spend on Video Surveillance in China with most of this going to the massive Safe City projects and this protects indigenous manufacturers. In addition analogue cameras are still popular and the opportunity to win through IP Network cameras is not often possible.

Nevertheless with the private sector market opening up new opportunities and the fact that the penetration of security systems measured by sales per GDP in China is less than a third of that in western markets the latent demand for IP Networked systems will eventually have massive growth. There are strong indications that this is about to rapidly happen.

The Chinese government last year announced that they will invest in a massive research programme into the Internet of Things (IoT). Part of that programme will include making Safe Cities Smart and that cannot be done without IP network cameras. Western IP technology will be required here, because winning in the IoT game will bring a colossal impetus to growth and prosperity to all economies and protecting the interests of local camera manufacturers is not going to be allowed to get in the way.

Twice before over the past 50 years, information technology developed in the west radically reshaped competition and strategy; we now stand at the brink of a third transformation - the IoT. IP Nework cameras are a vital part of this transformation and are the Swiss Army pen knife of sensors. China needs these leading edge products and therefore we believe China is still the No 1 Market Opportunity for Video Surveillance.

For more information on the Global Security Market, including Video Surveillance and Access Control, view our report - http://memoori.com/portfolio/physical-security-business-2014-2018-access-control-intruder-alarms-video-surveillance/