Buoyed by the burgeoning demand for security products and surveillance solutions across China, New York-listed China Security & Surveillance Technology, Inc. (CSST) is anticipating to hit its revenue projections of US$380 to $400 million for the full year 2008. Besides capitalising on robust domestic demand, CSST is also leveraging its growing reputation to establish its footprint in highly promising international markets.
"We are quite well positioned to enjoy a period of sustained growth in our business. We have a sound strategy in place to capitalize on the demand for holistic security and surveillance solutions, both domestically and internationally," said Terence Yap, vice chairman and CFO of CSST.
Three-pillar strategy encourages company growth
Recent developments demonstrate the three-pillar strategy that CSST is following with considerable success to meet its growth aspirations. The three pillars are; expansion in China, with continued focus on Tier 2 & Tier 3 cities and greater impetus on Tier 1 cities; selective international expansion by partnering with reputed organizations that have established footprints in the target geographic markets and lastly, value-added partnerships and mergers & acquisitions.
The company continues to aggressively target the Tier 2 and Tier 3 cities in China and fulfil their surveillance needs. The Safe Cities Program adopted by the government in 2006 - a five-year plan to make cities safer with the installation of high-tech surveillance systems in high-volume foot traffic areas - is a key driver of demand. With almost 660 cities working on this program, CSST is benefiting immensely from the concerted push to boost the security environment across the country.
Already, CSST has started implementation of its surveillance solutions in several Safe City projects. Recently, the company started implementation of Safe City projects in Kunming City (valued at RMB 209.4 million) and Yinchuan City valued at RMB 260 million). The company will use its financing facility from China Construction Bank to fund the working capital requirements of the Kunming City project.
Meanwhile, CSST will be the lead contractor for a second project in Yinchuan City which will involve connecting the monitoring and communications network among 69 local police stations within Yinchuan City with the police bureau at the city and provincial levels. This project, expected to be completed within two months, is worth approximately US$9.3 million.
"A combination of the depth of our product offering and the quality of our service is instrumental in the progress we are making in China. Equally critical is our ability to build strong and lasting relationships with local city governments in China," says Terence Yap.
Expanding security surveillance solutions in big cities
While CSST has historically focused on Tier 2 & Tier 3 cities, where the security services market is hugely fragmented, the company is now expanding its surveillance gaze on the large cities as well. For the first time ever, CSST bagged two significant security projects in Beijing recently. The two projects are cumulatively valued at about US$8 million.
One of these is to provide security surveillance solutions to the People's Bank of China at its central office. The second project, where CSST will be the sole contractor, is to implement a video surveillance platform within a 30-kilometer radius of the Beijing Capital International Airport (PEK). This will enable the existing airport security operations centers to simultaneously monitor various remote sites, which include secured airport areas and public parking lots.
The company says this is proof of the progress CSST is making in its domestic expansion and growth. "Undoubtedly, bagging these projects in Beijing is extremely encouraging as we press forward with plans to expand the delivery of our business solutions throughout China," says Terence Yap.
Overseas expansion of security products and solutions
While China will continue to be the key driver of CSST's business at least in the foreseeable future, the company is beginning to tap into important international markets that show considerable promise for security products and solutions.
It must be said though that the company is adopting a slow and steady approach to its international expansion plans, preferring to identify and work with reputed and compatible partners from those markets.
"We are certainly looking out for suitable international expansion opportunities and our strategy for now is to work with high profile, well-established companies that can significantly boost our sales and expand our global footprint," says Yap.
As highlights of this strategy, in May this year, CSST signed a memorandum of understanding (MoU) with Sojitz Corporation, a leading trading company in Japan, to explore opportunities to work with the latter in distributing the CSST's security & surveillance products and services. By forging this relationship, CSST hopes to benefit from Sojitz's large global footprint of offices, subsidiaries and affiliates, as well as leverage its operations in diverse sectors including: aviation, construction, forestry, plastics, chemicals, mining, petroleum, textiles and international trade.
Meanwhile, CSST is also eyeing the booming Indian market for security products which is witnessing an unprecedented boom in the retail and infrastructure sectors. Moreover, the security and surveillance needs in India are not too different from those in China. As a first step to exploiting the vast potential of this market, CSST recently entered into an alliance with Smile Security and Surveillance Pvt. Ltd, a Bangalore-based company. With this alliance, CSST hopes to leverage on the local partner's complementary strengths and on-the-ground knowledge of the market conditions. In addition, CSST has also tied up with electronics manufacturing services (EMS) company Smile Electronics to have their high-tech surveillance products manufactured locally in India.