Korea is trying to overcome economic depression with new development strategies and marketing.
An obvious fact: the credit and financial crisis that originated in the United States is spreading throughout the world. For example, in Asia, security market players are increasingly concerned that it may have a negative impact on the industry. Despite conflicting forecasts and fierce competition with China and Taiwan, Korea, as an Asian generator of high-tech ideas and developments, is looking for its own ways to solve emerging problems.
Some manufacturers struggle to achieve their sales targets while trying to stay afloat and maximize profits; others focus on solutions that are not in mass demand, but are highly profitable and inexpensive.
Well-known companies in the security industry such as CNB Technology, Huviron, Qtum, Seoul Commtech, Kocom and IDTECK have decided to increase their activities in North America. “One of our clients made a full prepayment on a previous transaction,” says John Cho, external marketing manager at CNB Technology, — “But in today’s situation, the company asks to increase the payment credit.” Sales in some developing countries also fell slightly, according to Yong Kang, foreign sales manager at IDTECK. “As a result of the collapse in stocks, some foreign investment is being pulled out of Asia. A lot of interesting safety projects have been put on hold.”
On the other hand, some DVR manufacturers, such as ServnTec and Chance-I, do not feel the impact of the crisis and continue to develop quite confidently in today's environment. Young Hwa Oh, director of sales at Chance-I, said optimistically about the prospects for the US market: “Protection of private property is in demand today more than ever, and the demand for security products will continue to increase.”
Expanding the zone of influence
According to RNCOS' analysis of the global CCTV market 2008-2012, the North American and European CCTV markets roughly account for 85% of global demand, making them the No. 1 battleground for Asian manufacturers. Many Korean companies have adopted aggressive marketing strategies in these regions, and some have increased advertising budgets to increase sales in these markets and seek new business opportunities.
Artnix is protecting its influence in the US market by offering more entry-level and mid-range solutions. Having in its assortment both video recorders and peripheral equipment, Artnix is proud of its scientific and technical potential. Among its latest developments is a video recorder with the ability to detect and recognize faces. The proprietary database structure, parallel data recording and storage system guarantees quick access to recorded events and stable operation of hard drives. Although Artnix bills itself as a high-end hardware manufacturer, it also supplies low-cost DVRs to its US retailer Wal-Mart. “More than 50% of our sales come from the American market, and we are still managing to achieve our projected profits for this year,” — says Juliette Park, External Sales Manager at Artnix.
Chance-I, known for its technologies in the field of image processing, compression and system software, is also targeting the retail market. Today, this manufacturer has two offices in Los Angeles and Washington to better promote and support its products.
IDTECK, originally a manufacturer of biometric access control and control systems, decided to expand its product range and offer the market an integrated video and access control solution — new PC-based video recorder with intelligent control software. According to Yong Kang, the company is focusing on mid-tier and mid-size projects. With great interest in the Middle East, IDTECK decided to hold its annual conference in October at the Dubai World Trade Center, thereby attracting buyers in the region to discuss ideas for possible applications of its solutions.
Seoul Commtech, a home automation solutions provider, planned its efforts to expand its markets long before the US financial crisis. “We began to expand our business by concentrating on foreign markets seven years ago,” — notes Chris Kang, assistant manager of Home& Security Export. “While the American economy looks unclear and promises nothing, orders from Russia and Europe have fully compensated for it,” — says Eddy Kim, General Manager of Sales and Marketing at Qtem. Since the Olympic Games, CNB has received many orders from China, while Kocom and IDTECK have maintained their profitability thanks to the development of numerous markets in the Middle East. DVR manufacturers Artnix and ServnTec expect to see continued growth in the South African and South American markets.
About branding
Branding certainly remains one of the most important aspects of marketing. “While many companies have focused more on R&D, IDTECK is working to strengthen its brand,” — says Yong Kang. IDTECK is not alone in this endeavor. CNB is also making efforts to create a strong brand. “We are confident that investing in marketing, especially brand awareness, will ultimately strengthen our sales,” — says John Cho. — In 2007, we derived 50% of our revenue from products sold under our own CNB brand.”
The best defense is an attack
“New products are the best way to increase sales,” — states Joon Park, Director of External Sales at Kocom. Technological improvement has always been the main goal for many Korean manufacturers. With extensive innovation in home automation, Kocom products always feature user-friendly features and advanced software.
Eddy Kim of Qtum echoes this sentiment: “We will continue to launch new products with special, customized capabilities for the end user, despite the financial situation in America.”
Qtim has the know-how — production of DVRs that can record images according to user settings and depending on network bandwidth. Since Qtum's new product is also in demand in Europe, the company is ready to launch DVRs with the H.264 codec.
In addition to Kocom and Qtum, other manufacturers such as Artnix, Chance-I, CNB and Huviron will continue to bring their R&D capabilities to new security products.
Making far-reaching plans
“What Really Boosted ServnTec's Sales in 2007,” — says Jake Lim, head of sales for domestic and foreign markets, — This is the advanced DVR production technology that the company has.” The DVR supplier attributes 70% of its sales to growing demand for IP solutions such as hybrid and standalone DVRs. MPEG-4 compression-based DVR, also known as casino DVR, allows full integration with any IP products and is aimed at use in government and public institutions and services, airports and casinos.
“While Chinese products are flooding the lower price segment of the market,” — says Kocom's Joon Park, — “More and more Korean manufacturers are refocusing on developing hi-end solutions in order to gain a foothold in this market segment and avoid intense competition.” Lewis Oh, assistant director of marketing and sales at Huviron, echoes this sentiment: “In the market segment where products are easy to make money on, there is always cutthroat competition, which results in weaker sales.” CNB, IDTECK and Seoul Commtech are following the same path.
“Quality of service, as well as the ability to quickly provide assistance to the consumer, is a key element in maintaining sales levels,” says Oh. “Huviron cameras are known for their high light sensitivity, durability and day-night operation mechanisms, and the high-quality and prompt service provided by the company is the most important competitive advantage.
The service also includes training seminars, technical support and after-sales service. Those companies that have opened overseas offices, such as Chanc-I, CNB and ServnTec, receive first-hand information from consumers through warranty and technical service networks.” Other companies such as Qtum, IDTECK and Seoul Commtech are more concerned with technical support. “The end consumer always requires efficient and accurate technical support,” — notes Eddy Kim. — Even despite the difference in time zones, our employees at the head office are ready to support foreign consumers at any time.”
Challenges and prospects
Manufacturers around the world are suffering from rising prices for raw materials. Korean companies are no exception. «Not wanting to increase product prices, they are trying to strengthen schemes to reduce costs through the development of new advanced technologies,» says Jake Lim of ServnTec.
Another problem to be solved — this is a search for strong and reliable distributors in foreign markets. “Unlike consumer goods, — says Yong Kang from IDTECK, — Installing safety equipment requires specialized technical knowledge.”