Security and Surveillence Prospects in China

The surveillance and security industry in the PRC was established at the beginning of the 1980s, and surveillance and security products were used primarily by government agencies, financial institutions, transportation and large-scale companies. The demand for security and surveillance continues to grow,with demand coming from organisations and businesses which operate in many different areas of the market. The sustained growth in the PRC economy and the advancement of the information technology over the last decade have served to fuel the growth and development of the PRC surveillance and security industry.

The surveillance and security industry in the PRC has also benefited from government-initiated programs and regulatory drives, such as the “3111 Plan” program and the continued adoption of the State Ordinance 458, which mandates all vendors in China to install surveillance and security installations for various private and public entities, including defences, airports, government offices, educational institutions, bus and railway and transportation control.
The following factors should contribute to the growth the industry and lead to a demand in surveillance, command and control systems in the future:

(a) Supportive governmental policies
China’s development policy for information industry is outlined in Five-Year Plans headed by the Ministry of Information Industry. Currently the country is in its 11th Five-Year Plan (2006-2010). Part of the 11th Five-Year Plan is to promote the establishment of an emergency services system in cities. The central government has so far mapped out an overall emergency response system, 20 special plans and 85 departmental plans.

In addition, the Chinese government has launched “3111 Plan” program, which requires security surveillance systems to be installed in 660 cities throughout the PRC for the purposes of street surveillance. “3111 Plan” program is part of the Chinese government’s Safe City Project, which is a nation-wide initiative to enhance general security in the cities of the PRC, including the implementation of new surveillance cameras in areas with high traffic, amounting to approximately 660 cities in the PRC. Furthermore, on the 30 December 2005, the central government issued the National Outline for Medium and Long Term Science & Technology Development Planning (2006-2020), placing public security safety as the foremost of their agenda.

The government has also planned to invest RMB700 billion in this initiative over the 15 year period. The commitment to enhancing public security via technological advancement was reiterated in the National Meeting on Comprehensive Management of Public Security, held in Suzhou in April 2006.

(b) Increased awareness of work safety
Work place safety is another key concern which will drive demand for emergency response and
control and surveillance systems. For instance, companies in the coal mining industry in the PRC are increasingly emphasizing on the safety standards of the mines, after some casualties cases
were intensively covered by the media earlier this year. Some of the provincial and municipal
governments have made it mandatory for coal mining companies to install surveillance systems to ensure work place safety.

(c) Increased awareness of emergency monitoring and response
According to the UN’s “International Strategy for Disaster Reduction”, the number of victims of
natural disasters have increase three-fold between the period of 1990 to 2003. The occurrences of natural disasters have also increased from 261 to 337 during the same period. More recently, the natural disasters that befell the PRC earlier this year (the snow storm in Southern China in January and the earthquake in Sichuan in May), have alerted the provincial and municipal government to the importance of surveillance, command and control systems in the event of an emergency.

(d) Increased use of surveillance systems for crime prevention and law enforcement
Advancements in technology, sophistication and capabilities of security monitoring systems,
especially systems deploying closed-circuit television network cameras, have resulted in increased acceptance of and reliance on such surveillance systems for prevention of crimes such as theft, burglary and vandalism. The increased security concerns over terrorism globally after events such as the attacks on the World Trade Centre in New York, the United States of America, the bombing of the J.W. Marriott hotel in Jakarta, Indonesia, and the train bombings in Madrid, Spain, have also served to convince authorities of the advantages of having in place an adequate surveillance system.

(e) Future events and activities leading to demand for monitoring and traffic control systems
In the public sector, special events such as the World Expo 2010 in Shanghai and the 16th Asian
Games 2010 in Guangzhou will drive the demand for surveillance, command and control systems. The World Expo, for example, is expected to draw 70 million visitors to Shanghai between May to October 2010. Municipal governments hosting such events will typically enhance their existing surveillance, command and control systems to ensure security and better manage the traffic conditions prior to the events.

source: Fanwo Technologies Limited IPO Prospectus