International. Due to the Coronavirus outbreak, the industry still faces a risk of falling demand and a potential production bottleneck brought on by labor and component shortages in China, according to Omdia (formerly IHS Markit).
The production of video surveillance equipment is largely concentrated in China, with the country accounting for 90 percent of the global production of video surveillance cameras and 45 percent of the global revenue of the global market in 2019. As a result, any coronavirus-related disruption to production, supply, chains or the workforce in the country could have a significant impact on a global video surveillance market totalling US$19.9 billion in 2019.
"Given China's status as the world's largest producer and consumer of video surveillance cameras, the country exerts proportionately massive influence on the global market for these products," said Tommy Zhu, senior video surveillance analyst at Omdia. "Video surveillance equipment suppliers in China are currently facing reduced production due to lack of manpower and post-Lunar New Year delays. Meanwhile, domestic demand for general-purpose video surveillance products is likely to cease or suffer delays as the Chinese government focuses on controlling the coronavirus."
Labor pains
With the closure of Hubei province, severely affected neighboring areas, such as the cities of Beijing and Shanghai, and the provinces of Guangdong, Zhejiang and Jiangsu, are taking various measures to control the spread of the epidemic. One such measure was the extension of the China Spring Festival holiday, initially scheduled to end on January 30, until February 2, with most of the country's provinces, municipalities and autonomous regions ordering businesses not to reopen until at least February 10. A 14-day quarantine is also being imposed on specific sectors of the population affected by the outbreak.
Meanwhile, companies that needed to start working after the holidays were ordered to get permission from the government, and employees were encouraged to work from home as much as possible.
"While these labor issues have had only a minor impact so far, if the epidemic continues to spread and infections increase in number in the second quarter, the effects of the coronavirus on the supply of video surveillance hardware will be severe, not only in China but around the world," Zhu said.
Logistical nightmares
Transportation and logistics issues are having a big impact on the supply of video surveillance equipment, given the backlog ahead of the Spring Festival, combined with new restrictions on travel and transportation at home and abroad due to the coronavirus.
Component supply issues
China is home to several major suppliers of lenses, CMOS sensors, and system-on-chip devices used in cameras and other video surveillance devices. These companies have now gradually returned to work after the Spring Festival break. However, staff shortages are possible because the epidemic can reduce the production of several components, even though the full impact of the virus has not yet been determined.
On the other hand, the main suppliers of video surveillance equipment are the main customers of the suppliers of video surveillance components, and it is likely that the supply of video surveillance will be prioritized.
Looking Forward
At best, with the epidemic successfully contained in late March and disruptions reduced in April, the impact of the virus on the video surveillance market will be minor. However, if the epidemic continues to spread and infections increase in number in the second quarter, the effects of the coronavirus on the video surveillance industry and many other markets will be severe.
