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On November 10, 2001, Shenzhen AMB was just over, and China officially joined the WTO! This session of the Expo has become the world’s third largest security exhibition following the United States Security Exhibition and the British Security Exhibition on a grand scale.
The hot exhibition is a “barometer†for industry development and market demand, which is at a time when China’s security industry is undergoing rapid development. By November 2004, China had entered the WTO for a full three years.
It may be a coincidence that China’s accession to the WTO coincides with the time of the annual domestic security exhibition. In fact, every year's security exhibition will play an important “wind vane†role for the entire security market in the next year. Therefore, joining the WTO at the 2001 Shenzhen Security Fair was a hot topic and focus of discussion in security circles.
Joining the WTO has brought unprecedented opportunities and challenges to China's industry. The security industry is a relatively late starter industry and relatively young and fragile. However, compared with various industries, the security industry has its own characteristics and advantages. In addition to the advantages shared by other industries, the security industry has a more favorable factor than other industries. Two months before China's accession to the WTO, that is, on September 11, 2001, there was a September 11 incident that changed the "status" and "fate" of the entire security industry. After 9.11, the security industry thrived. With the attention of governments and society as a whole to safety, as a high-tech security product, the market demand suddenly rose. It not only brings unexpected development opportunities to the security industry in the world, but also to China's security industry. Take the United States as an example. In the past, many corporate giants that did not involve security have begun to enter the security industry. In China, since 2001, giants of information and home appliance companies have also entered the security industry. In order to form a "joining WTO", China's security industry and other industries have different special backgrounds.
Three Years after China's Entry into WTO, China's Security Industry "de" and "lost" inventory
Three years after joining the WTO, China's security industry has its gains and losses. It is mainly reflected in the following aspects:
1. The overall scale of China's security industry has greatly increased, and it has evolved from an "industry" that has not been noticed to an "industry" of initial size and hope;
2. With the entry of giants of international security companies, they have brought more OEM/ODM opportunities to Chinese companies, making China a global security product manufacturing center that has begun to take shape;
3. China's security companies have made great progress and development in technology. In cooperation with foreign security companies, they have learned and mastered more advanced technologies and management experience. More and more companies have independent intellectual property rights. In individual technical fields, China's security industry has even reached the ability to compete with foreign companies;
4. The awareness of market competition of China's security companies has generally increased, and the strength and risk-resistance capabilities of enterprises have been significantly improved;
5. The brand awareness of China's security companies has gradually increased, and a number of Chinese security brands with relatively high reputation have initially formed.
With the further opening of China’s accession to the WTO and the opening of the market, the Chinese security industry has also lost many valuable things, mainly in the following areas:
1, lost some of the market. After joining the WTO, more giants of international security companies have taken over China, causing domestic companies to lose some markets, especially high-end products.
2, lost many advantages. Such as local advantages, short logistics and service distance advantages, cultural advantages, product low-cost advantages.
Joining the WTO, China's security companies have suffered tremendous impact and pressure
"After joining the WTO, it is like a double-edged sword. It can bring economic development to our country and bring pressure and severe challenges to the economy and the enterprise." (Li Runsen)
China is a huge market. For large markets such as China, many foreign manufacturers will not easily let go. After joining the WTO, many multinational security companies began to move Asia Pacific headquarters and R&D centers from Singapore or Hong Kong to mainland China, such as GE, JVC, Honeywell and others.
China's accession to the WTO provides opportunities for foreign manufacturers to set up factories in China. After 2001, some manufacturers that have set up factories in China have increased their investment in China and expanded their production scales, such as Panasonic, Samsung, and Tomron.
Since the accession to the WTO, more transnational security companies have entered China. According to statistics, before the accession to the WTO, there are about 20-30 foreign investors who come to China every year to ask for advice. However, only 4-5 of them are accepted by the market, and the success rate is less than 20%. After entering the WTO, foreign companies entering the Chinese security market every year have increased year by year. Moreover, these transnational corporations are no longer cautious and cautious as they were in the past. At the beginning of their entry, they merely set up an office tentatively, but at the very beginning, they have shown a strong ambition to win and they are trying to open the Chinese market as soon as possible. This has caused domestic security companies to bear tremendous competitive pressure invisibly.
In the past, enterprises faced domestic competition. Even facing foreign companies entering the Chinese market, they were often surprised at the fact that because of the small number of companies, the second reason was that domestic companies had many advantages at home. However, after joining the WTO, companies face the harsh environment of "international competition domestically and domestic competition internationalization".
In accordance with the principle of fair competition in the WTO, tariff barriers have been weakened and replaced by technical barriers. This is the technical threshold that developed countries in Europe and America set up to limit the access of disadvantaged companies to international markets. Developed countries such as Europe and the United States have used legal means to establish technical barriers such as technical standards, certification systems, and inspection and quarantine systems, and to increase their market access standards, so as to raise the demand for products from other vulnerable countries to enter their markets, and to set higher thresholds to achieve The purpose of protecting the domestic market. Taking the home appliance industry as an example, as a result of technical barriers, the annual losses to China's home appliance companies are as high as 45 billion U.S. dollars, which exceeds 25% of the total annual export volume. Up to 60% of export companies have encountered technical barriers. This loss in the security industry cannot be ignored. Due to the relatively backward technology of developing countries, especially upstream technologies and core technologies, they are mostly in the hands of a few transnational corporations in developed countries. Therefore, it is difficult to compete with enterprises in developed countries on the same platform. For Chinese security companies, technical barriers have become a major trade barrier for non-tariff barriers.
Prior to the accession to the WTO, many foreign companies had to adopt the technology-for-market approach to enter the Chinese market because of the “barriers†of high tariff barriers. The technology-for-market swap is a common strategy for foreign companies entering the Chinese market. Usually used in the form of a joint venture or wholly-owned production plant in China. Part of the product is for export, and part of it can be sold in the country. According to relevant policies, you can enjoy tax and other benefits. However, in the cooperation with Chinese companies, the so-called technology-for-market, they provide Chinese companies with only third-rate technologies or technologies they have already eliminated. The real core technology, they will not surrender.
After joining the WTO, foreign security giants can directly export large quantities of products to China. Therefore, they can set aside their domestic partners and directly operate their businesses in China. This has caused domestic companies to lose many opportunities to learn advanced technologies, making domestic security companies more passive.
Over the past three years since joining the WTO, many multinational giants have not set aside the Chinese market while aside their domestic partners. On the contrary, China's huge market potential and low labor force, as well as relatively good infrastructure and good investment policies and environment, are extremely attractive to them. As a result, many multinational security companies have chosen to build production bases in China, produce them in China, and sell them around the world. Such as C & K, Panasonic, Samsung, Tomron, BOSCH and so on.
At present, the import tariff on security products is still relatively high. Take the camera as an example, the tariff is 33% and the VAT is 17%. If you hold a government license to manufacture in China, the tariff can be reduced by about 10%.
Tomron of Japan Co., Ltd. started building a factory in Foshan, Guangdong in 2000, and now their production costs have been successfully reduced by 20%. The key materials needed to make CCTV lenses are polycarbonate and ABC, which are particularly cheap in China and about 30%-40% cheaper than Japan. Tomron's factory in Foshan has now grown to more than 3,000 people, and it has become a global production base for Dragons. On average, 90% of its products are supplied to the international market each year, and only 10% of its products are sold domestically.
The United States is currently the world's largest producer of security products, but 80% of security products in the United States are commissioned.
C&K was the first security company to enter China. As early as the 1960s, C&K's anti-theft alarm detectors were installed at the National Palace Museum’s National Palace Museum. Today, almost all of C&K's products are manufactured in China and then sold worldwide. Today, Honeywell has more than 4,000 employees in China.
As the best-selling brand in the Chinese camera market, Panasonic has a market share of up to 30% in high-end markets such as banks in China. The cameras produced by Panasonic now supply almost all the world's needs, including Europe, the Americas, Asia, and Japan. Today, Panasonic Suzhou is moving toward the goal of a “world factoryâ€. On this basis, Panasonic built an industrial park in Hangzhou.
Quality without borders. Foreign security giants not only have excellent product quality, but also have a strong brand effect. In high-end markets such as finance and national key projects, the products used by foreign famous brands are still mostly used. With the anti-corruption and advocacy of honesty and government procurement becoming open and transparent, the era of relying on “support†and “protection†by the government is gone forever. However, some industry users still have different degrees of respectful foreign psychology, even if the quality is equal, foreign products will still be used. As a result, domestic companies have lost many opportunities.
The success of Beijing's bid for the Olympics was a pleasure for domestic security companies for a while. However, soon, the Beijing Olympics security big orders were divided by Panasonic, GE and other international giants. The principle of Beijing Olympic infrastructure construction is fair, just and transparent. The advantages of these transnational corporations are unmatched by domestic companies. It can be said that on large projects, domestic companies simply cannot compete with them.
On the other hand, many domestic information and home appliance giants have also entered the security market since 2001, which also brings great competitive pressure to traditional security companies. Compared with foreign companies, these companies have more advantages, more understanding of China's market conditions, but also have certain financial strength and sales network and other advantages.
In short, China's accession to the WTO has brought tremendous pressure and impact on immature domestic security companies. However, China's security companies have withstood the tests of storms and are gradually becoming mature.
Three years after China's entry into the WTO, China's security industry has gained more opportunities
Joining the WTO marks a new stage in China's reform and opening up. In the past three years, the Chinese economy has undergone tremendous changes: the gross domestic product (GDP) has grown cumulatively for 2 years by 25%; in 2003, China’s per capita GDP exceeded the US$100 billion mark for the first time, which is a very important indicator. In general, the per capita GDP of US$1,000 is the critical point for the development of the security industry. In the past three years, the sustained and rapid development of the national economy has stimulated the market demand for security products and led to the rapid development of the security industry.
In the past three years, China’s total foreign trade volume has doubled and the total volume of export of security products has nearly doubled. This rate is rare in the world. China’s world trade position has increased from sixth place in 2001 to third place in 2004. Three years have passed since China’s accession to the WTO. Three years after its accession to the WTO has also made China a hot spot for global industrial transfer. To date, more than 400 of the world’s 500 largest multinational companies have invested in China. With the large-scale industrial transfer in developed countries around the world, China has become an important base for world manufacturing transfer. Because the infrastructure has advantages over other developing countries, and has a large number of laborers with low costs and the world's largest potential market for consumption, the speed with which China attracts world investment in manufacturing is staggering. Including not only low-tech industries such as textiles and garments, household appliances, electronics (including security), IT Release date: 2006/9/8 13:06:33
Three Years of China's Security Industry's Gain and Loss after China's Entry into WTO
China's security industry "joins WTO" in a special context.