From “popular stocks” to “passers-by”, how did Taiwan’s security get beaten down by the mainland?

During this period, the fourth Taiwan Strait crisis has attracted widespread attention on major social media platforms.

As we focus our attention on the Taiwan Strait crisis, more and more attention naturally falls on Taiwan.

With the map software marking every street in Taiwan in detail, every Shandong dumpling restaurant and Shanxi noodle restaurant, this island separated from us by a strait, began to actually show the similarity between the two sides of the strait.

However, geographical proximity, living habits and even tastes are just the more emotional parts of this intricate historical plot.

As for the more rigid part, from the perspective of the development process of many industries, Taiwan and mainland China have not been able to keep pace with each other, but have shown different degrees of dislocation.

This is also clearly manifested in the security industry.

Taiwan’s security market, which is high and low

Taiwan and the mainland are separated by a strip of water, but in the development of the security industry, one opens high and moves low, and the other opens high and moves high, showing a diametrically opposite development process.

2001 was an unremarkable year for the security industry.

European, Japanese and Taiwanese brands occupy most of the mainland security market, with Japanese products accounting for 45%, American products accounting for 25%, and Taiwanese products accounting for 20%.

This year, Dahua and Haikang were established one after another.

In the mainland market, Taiwanese security companies represented by Liling, Mintong and other brands have been driving straight ahead, and they are far ahead of the mainland in terms of product quality and production efficiency.

As one of Taiwan’s niche industries, the security industry once became one of the most dynamic industries in Taiwan.

What is a niche industry?

The backbone of Taiwan’s economy is a large number of small and medium-sized enterprises, and niche industries are a characteristic economic model of Taiwan.

With the rapid transformation of the mainland from technology to industrial structure to economic model, in order to maintain the vitality of its own industry in the global market, Taiwan’s security industry has found a path that is different from the mainstream market, that is, to take the development path of a niche industry.

Niche is the transliteration of the English “Niche”, which means gaps and vacancies. Niche industries are small-scale industries with key technologies, also known as “invisible industries”. They are aimed at small markets that are not well-served. These The market also has relatively few competitors.

Niche industries have a long history in Taiwan, and products such as industrial computers, satellite navigation equipment, yacht manufacturing, and cooling fans for gaming products are well-known internationally.

Taiwan’s security industry has chosen such a “small and beautiful” path to win with a small amount and variety.

At its peak, the stock price of Jingrui Communications, the most competitive one, rose to 215 yuan, Shengtai rose to 318 yuan, Parity to 314 yuan, Caifu Electronics also rose to 89.3 yuan, and rose to 89.3 yuan in Haikang, Dahua, etc. Before, Taiwanese security companies dominated the market.

Security in mainland China started late. After the reform and opening up, all industries were waiting for development, and the rise of infrastructure construction brought a lot of security needs. Coupled with the 9.11 incident, the development of the security monitoring industry has been accelerated.

However, most of the domestic manufacturers at that time could only make some monitoring peripheral devices, and the whole market was still in Japan, Europe, North America, Israel and other countries, as well as the show field in Taiwan.

Beginning in 2008, due to policy factors, the exchanges between the Taiwan security market and the Chinese mainland market began to be frequent.

This year, the surveillance market set off a revolution from MPEG4 to H.264 video coding technology, and Chinese manufacturers made every effort to develop it.

On the other side of the Taiwan Strait, under the scouring of the financial tsunami in 2008, Taiwanese manufacturers had a serious inventory of MPEG4 machines and were unable to develop the budding video compression technology. Coupled with their skepticism about H.264, they took the initiative to press the pause button on research and development.

In the process of security from the simulation era to the digital high-definition era, the construction of domestic safe city projects has accelerated, and giants such as Haikang and Dahua have risen rapidly in the east wind of the times, and have become world-class security giants step by step. The throne of China has also become an important security center.

Foreign manufacturers who once set up camps in the domestic security market have gradually lost their place. Taiwan’s security companies have also suffered losses due to perennial losses, and their market value has suffered from Waterloo.

Xie Jinhe, chairman of Caixin Media, published an article on Facebook in 2017 titled “A Hikvision Beats an Entire Industry in Taiwan”. The ruthless wording of this article has attracted a lot of controversy , but also tore off the fig leaf of Taiwan’s security industry.

In the same year, Jingrui with the largest market value was reluctantly acquired by Delta. Shengtai’s share price fell to a fraction of its peak value, and Odd’s share price evaporated by nearly nine-tenths. This once most dynamic industry in Taiwan almost fell in a swooping posture. Valley bottom.

The first half has the upper hand, and Taiwanese security companies are increasingly marginalized in the second half. The export market has been losing ground, and the domestic market has been divided into 70% by cameras from the mainland.

But Taiwan has also struggled.

During the transformation of security to intelligence, a 100% Taiwan-made camera in 2017 with a price tag of 395 yuan can be regarded as a counterattack launched by the Taiwan security market against mainland products.

But this “395 Incident”, the form is greater than the content.

In’s view, the reason why Hikvision can sit firmly in the global security market is that, in addition to cost-effectiveness, breakthrough technical solutions, strict quality control, orderly production, and customer demand-oriented principles are not afraid of hardships. Tired spirits are the barriers that Hikvision has built for itself in the security market.

From a small security market to a big smart city market.

The top companies in the market have gradually turned their attention from a single video surveillance product to a development strategy with Internet of Things solutions as the core of the video industry, and then began to focus on market segments. Vertical areas provide solutions.

Taiwanese security companies also realized that the traditional security model is no longer “favorable”, so they have transformed one after another, and also opened up a new space for smart cities and digital transformation with “Internet of Things + AI”.

This transformation is indeed effective. For example, after expanding its business scope to mobile surveillance solutions, Taiwanese manufacturer Hi Sharp achieved an annual revenue growth of 8.13% in 2019.

The head effect of security enterprises is obvious. In the new round of transformation cycle represented by intelligent IoT, Taiwan security enterprises have the first-mover advantage, but under the strong suppression of domestic enterprises such as “Hai Dayu” and Megvii, this A first-mover advantage has become insignificant.

In the construction of smart cities, the mainland has already left Taiwan behind.

Taiwan security, the challenges may be far more than imagined?

Taiwan’s security industry started early. It used to be one of the most dynamic industries in Taiwan’s niche industries. However, it gradually died down in the future competition, and the challenger from the mainland came to the fore. What are the reasons behind it?

First, manufacturing technology has been overtaken by the mainland, and Taiwanese manufacturers have insufficient investment in technology research and development.

Looking back at the industrial history of the mainland and Taiwan, the financial turmoil in 2008 was undoubtedly an important turning point. However, Taiwan’s security industry has misjudged the development prospects of H.264 video compression technology, and it is also an important factor that cannot be ignored.

Today, the mainland’s manufacturing technology has far surpassed that of Taiwanese manufacturers, and more and more Taiwanese manufacturers have directly introduced monitoring systems from the mainland.

Compared with independent research and development, Taiwanese manufacturers choose to develop motherboards in the mainland, or manufacture them in the mainland, and bring the assembly work back to Taiwan.

Taking chip development boards as an example, more than 80% of Taiwan’s chips use development boards made in mainland China, especially those from HiSilicon.

There has always been a view that well-known mainland manufacturers such as Hikvision and Dahua entered the Taiwan market at low prices, which is actually a misunderstanding.

The second- and third-tier brands in the mainland have really entered the Taiwan market at low prices, while first-tier manufacturers such as Hikvision and Dahua, in addition to their high cost performance, are superior to their peers in terms of image quality, overall performance, and user-friendliness. Taiwanese manufacturer.

Second, the obvious industrial chain gap.

As the traditional security industry has further moved towards intelligent IoT after video IoT, the integration and development of various technologies has brought about the growth of the industrial chain, and the upstream and downstream structures of the industry have become more complex. The main players in the industrial chain include chip manufacturing. vendors, hardware manufacturers, software providers, system integrators, service providers and end users.

The extended industrial chain means that no company can make security products like in the past, and it is not easy for companies to be better and stronger in one link, and the close cooperation between upstream and downstream has become very important.

In contrast, it is difficult for Taiwan to form a cross-border industrial settlement in the mainland, and the single-handed model is not conducive to the integration and development of technology, iterative innovation, and the expansion of categories.

If the supply chain is to be restructured, millions of dollars of reinvestment will be required, time will be needed to re-run and adjust, and the competitiveness of the market and its own needs to be redefined and reviewed.

Third, the lack of long-term thinking leads to a vicious circle of short-sightedness.

The lack of technical discourse power has made Taiwanese security products into business support.

High-quality large-scale customers flow to “Hai Daewoo” and other manufacturers with solid technical barriers to serve many small customers, making Taiwan’s security products more and more complex, and the price is getting lower and lower, in fact, it has become a price war.

Businessmen pursue profit and quickly seize the market at low cost in order to survive in the short term, but at the same time, they should also think about and promote long-term strategies so as not to lose future opportunities.

Fourth, the situation is embarrassing, and he is stuck in a dilemma.

In 2017, Taiwan began to completely ban the use of mainland brands, covering hardware equipment, software and hardware integration, and cloud services.

In order to help Taiwanese security manufacturers strive for international competitiveness, the Industrial Bureau of the Ministry of Economic Affairs of Taiwan has begun to gradually promote the “Internet of Things Information Security Certification Mark”.

The label requires each device to obtain a certification report, which means an additional cost of 300,000 to 450,000 for Taiwanese manufacturers.

On the other hand, Continental Security’s equipment and systems have entered more than 150 countries around the world, and the pressure to compete with low-cost, high-performance products made in China continues unabated.

In this context, if Taiwan’s security industry wants to continue to move forward, it will undoubtedly require more policy and resource support from the government.

Taiwan is a small island suspended in the Pacific Ocean. Its special geographical location naturally affects its industrial development ideas. Coupled with the interference of complex political factors, foreign investment and brain drain occur from time to time. Dance on the tip of the knife, full of helplessness and worry.

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