Government Investments Still Most Important Driver for Growth, Finds Frost & Sullivan

SINGAPORE , Jan. 19 /PRNewswire/ -- Due to the Beijing Olympics and government sponsored '3111' project, the Chinese security market kept its high growth rate of above 20% in 2008 while this number was about 7% in the United States . It is expected that this high growth rate could last until 2012.


According to Frost & Sullivan's China Consultant of Electronics & Security Shuguang Zhang, in the first three quarters of 2008, the Chinese economy continued to boom with average GDP growth rate of 9.9%. Although China underwent the obvious drag of global gloomy economy in the fourth quarter, the Chinese economy's growth trend did not change when taken into account the Chinese government's incentive polices and low correlations between Chinese economy and western countries.

"The Chinese government's economic incentive package of $586 billion covered 10 main aspects, and most of them will directly or indirectly stimulate the development of the security industry. It is estimated that this investment will bring $1.5 billion of direct demands for the Chinese security market in the following 2 years," he said.

In the following years, he added, government investments will still be the most important driver for market growth. "On the other hand, customers' increased awareness of security needs and available technologies also brings hope for wider applications of electronic security products in the future," Zhang continues.

He adds that the security industry will see the government strengthen its supervision over standardization and qualification control in 2009. At the same time, the government sponsored 'Safety City' construction will remain the hot battle land for key players to compete in. Accompanying the entries of IT and Telecom giants into the security industry and current competition landscape, are the mergers and acquisitions tide that will soon follow.

One of the hot sub-sectors for 2009 to 2011 as identified by Zhang include the video surveillance sector which is expected to continue to take the largest market share, but with moderate growth rate due to the extensive price cuts. Other sectors include new technologies such as biometrics and intelligent video analysis which will be new origins of profits for leading security product manufacturers in the next three years.

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SOURCE Frost & Sullivan