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Supply side reform and de-capacity impact on the security industry

In 2016, under the great pressure of economic downturn and GDP growth continued to decline, the Central Economic Work Conference proposed a series of economic reform measures. The impact of “supply-side reform and de-capacity” on various industries is particularly critical. The structure of economic development and the improvement of total factor productivity have become the main theme of future national economic development.

The security industry has been flourishing for more than a decade. The brand premium has become a killer in the market competition. In the market trend of falling prices, the recognition of brand equipment by government and enterprise customers is constantly increasing, and the market convergence of industry self is caused. A large number of small and medium-sized equipment manufacturers have disappeared or even disappeared in the shock. The central government’s economic strategy of “supply-side reform and de-capacity” has also released a strong signal, focusing on innovation-driven development and eliminating backward-skilled enterprises (state-owned enterprises mainly refer to zombie enterprises). The security industry has certain special characteristics. It does not belong to the complete market economy system. The government or the consumer end affected by the government occupies a large part of the market. In this policy environment, it is necessary to pay attention to the possible impact of the security industry.

The supply-side reform is to use incremental reforms to promote the adjustment of stocks. By optimizing the investment structure and opening up the industrial structure, we will start from the supply and production sides, and promote economic development by liberating productivity and enhancing competitiveness. Specifically, it is required to clean up zombie enterprises, eliminate backward production capacity, and lock the development direction into emerging fields and innovation fields, and create new economic growth points. Based on the analysis of the functional attributes of video surveillance, security has contributed a lot to the creation of new economic growth points, especially the continuous deterioration of global security and the urgent need for domestic stability (Nine ministries and commissions "construction" to build a large public safety network), domestic security The industry will continue to grow at a high rate of growth. Only in the current domestic capital environment, due to the huge debts of the government, in order to avoid and share the risk of project construction, a new financing model may arise (such as PPP), but before the new model is mature, the government is mainly responsible. Based on the trade-offs of various risks, the government-invested projects have become more conservative in the past two years, so the backward SMEs will likely be phased out.

This round of reforms will further simplify administration, deregulate, and improve innovation capabilities in terms of policy instruments. In this policy environment, the qualifications required for related security projects in recent years have been relatively loose. However, due to the industry's own market development needs, the threshold for enterprises to enter the security industry has decreased, but the cost of participating in industry competition has increased substantially. The risk of competition has also increased sharply. Therefore, for foreigners, security companies do not have to panic and must do their own products and services.

However, in response to this supply-side reform, authoritative sources believe that the key point lies in the relationship between the government and the market. As the Chinese economy enters a new normal, government incentives are changing, government power has not decreased significantly, but enthusiasm for doing things has weakened. In order to give play to the role of the government in supply policy, on the one hand, it should reduce administrative examination and approval, speed up fiscal and tax reform and reform of state-owned enterprises, loosen up private enterprises, promote financial innovation, and encourage entrepreneurship; on the other hand, we must redefine government incentives and establish The new type of political and business relationship has changed the relationship between enterprises and the government from "dependency type" to "independent type", and changed the role of the government in the economy from "intervention type" to "service type".

However, in order to adapt to the adjustment and optimization of the industrial structure of China's economic development in the future, the security enterprises should not only neglect the construction of high-efficiency operation teams and enterprise organizations except for technological innovation, product quality control and service system construction. Only internal With the engine running healthy, the company can move forward quickly and smoothly.

In the overseas market, as the debt crisis still plagues the development of the European economy, the domestic market is facing the risk of continued shrinking exports. Last year, a large number of manufacturing shrinkage and the collapse of small and micro enterprises were also affected. However, in China's overseas security equipment market, due to the lack of comprehensive competitiveness in the developed markets of Europe and the United States, the market is dominated by emerging markets such as Southeast Asia and South America, which makes the revenue of several major equipment manufacturers in overseas markets not fall. Increase is also caused by this reason.

"Supply-side reform and de-capacity" is an economic strategy proposed by China's economy facing transformation and industrial restructuring. In the harsh environment of high inflation rate, difficult employment, shrinking exports, overcapacity, and stagflation in the economy, the security industry is ** There are many factors in demand (such as urbanization construction, road construction, equipment renewal), but the industry also needs to make adjustments. “To de-capacity, de-stocking, deleveraging, cost reduction, and short-boarding” are also suitable for the security industry. In the round of industry reshuffle, the development of Anqi Enterprise must keep pace with the market and survive before it can live well.

2016 security industry impact estimate:

1. The proportion of government and enterprise customers' recognition of the brand has increased, and the living space of foreign companies will be further squeezed;

2. The cost of manpower and materials increases, and the business operations are more carefully calculated;

3. Enterprises pay more attention to R&D and innovation capabilities, and talent strategy and market propaganda are imminent;

4. The overall situation of the security industry will not change, and the market share of large enterprises will continue to expand.