According to a new report from Omdia, formerly IHS Markit, the recent outbreak of the coronavirus could have a significant impact on the global video surveillance market due to falling demand and product issues driven by labor and component shortages in China.
Given that China accounts for 90% of global production of video surveillance cameras and 45% of worldwide market revenues in 2019, the research firm says that any coronavirus-related disruption to production, supply chains or workforces in the country could affect the market, which is forecast to generate just under $20 billion in revenues this year.
“Given China’s status as the world’s largest producer and consumer of video surveillance cameras, the country wields a proportionately massive influence on the global market for these products,” Tommy Zhu, senior analyst for video surveillance at Omdia said in a statement. “Video surveillance equipment suppliers in China currently are contending with reduced production because of a lack of manpower and delays following the Lunar New Year. Meanwhile, domestic demand for general-purpose video surveillance products is likely to cease or suffer delays as the Chinese government focuses on coronavirus control.”
Zhu added that the recent lockdown of Hubei province, sparked by the outbreak of the virus, has severely affected neighboring areas— such as the cities of Beijing and Shanghai, and the provinces of Guangdong, Zhejiang, and Jiangsu—which are taking various measures to control the spread of the epidemic. One such measure was the extension of the Chinese Spring Festival holiday—initially set to end Jan. 30—to Feb. 2, with a majority of the country’s provinces, municipalities and autonomous regions ordering businesses not to reopen until at least Feb. 10. A 14-day quarantine is also being imposed on specific sectors of the population affected by the outbreak.
“While these labor issues have had only a minor impact so far, if the epidemic continues to spread and infections rise in number in the second quarter, the effects of the coronavirus on video surveillance hardware supply will be severe, not only in China but worldwide,” Zhu said.
Logistical Issues
Transportation and logistics issues are also having a huge impact on the supply of video surveillance equipment, according to Zhu, given the backlog incurred before the Spring Festival, combined with new restrictions in travel and transport in place both domestically and internationally due to the coronavirus.
Supply Chain Impacts
In addition, China is home to several major suppliers of lenses, CMOS sensors and system-on-chip devices used in cameras and other video surveillance devices. Though these companies have now gradually returned to work after the Spring Festival holiday, Zhu said staff shortages are possible because the epidemic may reduce the output of various components, even as the full impact of the virus is yet to be determined.
Conversely, Zhu said the major video surveillance equipment vendors are the top clients for video surveillance component suppliers, and supply to video surveillance is likely to be prioritized.
Looking Ahead
If the epidemic is successfully contained by the end of March and the disruptions reduced by April, Zhu said the impact of the virus on the video surveillance market will be minor. However, if the epidemic continues to spread and infections rise in number in the second quarter, then the effects of the outbreak on industry and on many other markets will be severe.
