26 Sept 2016
Rising Civil Unrest Sees Brazil's Security Sector Set to Prosper
Unemployment, political turmoil and growing civil unrest maybe bedevilling the wider Brazilian economy, but the situation has sparked double-digit growth in the security sector, with Chinese manufactures seemingly well positioned to benefit.
As Brazil's recession drags into its second year to an accompaniment of increased political turmoil, the resulting unrest is stimulating demand for enhanced security set-ups, especially video monitoring systems. While the public sector still accounts for by far the largest proportion of the country's security market, the dramatic rise in demand from both businesses and individuals is expected to lead to double-digit growth. This has proved a particular boon for China-sourced equipment, which has become increasingly well regarded in this price-sensitive market.
Belying the recessionary pressure elsewhere, Brazil's security sector is expected to grow at around 10% per annum. While this was good news for every exhibitor at Sao Paolo's International Security Conference and Fair, including purveyors of sensors, electric fencing, automatic barriers and biometric security, the true beneficiaries were those companies specialising in camera and video security systems.
Fronting up the exhibition was Intelbras a wholly Brazilian business with a security division enjoying robust growth. Renan Antoniolli, a Senior Engineer with the company, said: "Last year, we grew by some 10-15% and we believe this is a trend that is clearly set to continue. We have a particular focus on providing unified platforms for banks, industry, and Government. In Brazil, the state, federal and municipal governments account for about 30% of the market."
Intelbras supplies unified video monitoring and image processing platforms in partnership with Genetec, a Canadian developer. The Intelbras-Genetec Security Center allows users to define lines and areas, with an alarm triggered if they are crossed or entered. Abandoned or removed objects can also be highlighted.
The company's systems were one of the highlights of the show, at least if the crowds overflowing its stand are anything to go by. Its software-driven systems can work with a range of hardware, a facility that has again boosted China's prospects in the sector. Taking a broadly positive view of mainland-sourced equipment, Antoniolli said: "We don't see a great deal of difference between cameras or DVRs from China, the USA or Europe. The technology is often developed elsewhere, but China remains the world's factory."
This belief was reiterated by many of the companies presenting security systems compatible with non-proprietary hardware. Tracking the changing perceptions of China-made security equipment, Eduardo Boni, Editor of Brazil's Digital Security magazine said: "The Chinese were the first to offer the Brazilian market micro cameras and security systems, but their poor quality gave them a bad reputation.
"In 2015, we began to see a more prominent Chinese presence at our security events, with higher-quality equipment and more advanced technology brought to the table. This year, they now seem to be forcing a change of strategy for many of Brazil's security market leaders."
A clear indication of this came during a presentation by Sao Paulo-based Axyon, attending the show to promote WiseNet Lite, new range of low-cost cameras from Korea's Samsung Techwin. Introducing the range, Eric Beraldo, Axyon's Marketing Manager said: "These cameras are particularly designed for markets such as Brazil, markets that are notoriously price-sensitive. They have been launched in response to similar systems from Dahua and Hikvision [two China-based security camera specialists]. We have removed the internal camera intelligence to create a very price-focused option, some 50% cheaper than our traditional camera lines."
"We are looking at small businesses for these products. Of course, we still have the more robust intelligent cameras – notably the WiseNet III – for those who have bigger budgets."
Representing a nationwide distributor with more than 1,200 re-sellers, Beraldo had a particular insight into the growth of the market. He said: "I have heard people predicting a market growth of 12%, but I don't expect that in the more sophisticated electronic security sector.
"The Brazilian economy is in trouble. There is going to be increased unemployment and that can lead to increased violence and higher levels of theft. There will be more business for people selling CCTV protection and for those offering private home security systems."
Professor Renaldo Menezes, an Electrical Engineer on the editorial board of the Journal of Security, the leading Brazilian trade publication in the sector, was another to recognise the increasing importance of China-made equipment in the Brazilian security market. He said: "Most of the new electronic security systems installed in Brazil – especially if they involve a CCTV facility – will be sourced from China – even if they carry the name of a Brazilian company."
"Over the past decade, a number of Chinese brands – notably Hikvision and Dahua – have been gaining market share over Axis [US] and Samsung and LG [both from Korea]. Their products are now in use by an enormous number of customers as OEM systems, often installed under a Brazilian brand name."
A concern for some – particularly in the case of big projects – is that Chinese companies are now looking to sell directly through the distributor and the integrator, cutting out the reseller. Highlighting this, Menezes said: "Brazilian companies wanting to work with a Chinese supplier must negotiate carefully when entering into a partnership. This is despite the fact that competitive pricing and increased quality on the part of the major Chinese brands is creating good market opportunities."
In line with Menezes' analysis, Hikvision and Dahua did indeed have strong presences at the Show, as did Axis, Samsung and LG. Headquartered in the US, Axis was demonstrating the success of its newly-installed monitoring system on two of the busiest highways in Sao Paolo, with 82 of its cameras now collecting high-definition images 24 hours a day. Operators in the control centre can select people or vehicles to auto-track, and can also zoom in for details while retaining the long-range view. In total, 500,000 vehicles pass daily through these 47 km of monitored roads, a route often favoured for criminal getaways.
In the case of Hangzhou-based Hikvision, it was keen to make it clear that its focus was very much on developing partnerships. Among its new products on display was a Turbo HD analog video system, capable of offering real-time output with either 1080P and 720P images, all transmitting up to 500m by cable. The system was also said to be fully compatible with both IP and SD analog cameras.
Its Smart integrated surveillance system, designed for use in car parks, banks, high traffic areas and retail installations, is based around IP cameras, which can automatically detector intruders or the movement of any object. It has also just added the low-light Darkfighter camera to its range, which is said to be able to capture good images in light levels down as low as 0.002 Luz.
Lin Xiong, an Overseas Sales Engineer with Dahua, was on hand to demonstrate a range of video options new to Brazil, including fish-eye and thermal IP cameras. At present Dahua works with in close association with Digifort, a Brazilian video surveillance specialist that also partners with Bycon, Axis and WDC Networks.
Commenting on future market prospects, Xiong said: "The market for intelligent programming products will continue to grow in Brazil. We offer good quality and there is a lot of room for expansion, though I believe we are already the biggest camera supplier."
Song Zimin, Deputy General Manager of Dahua, also saw cause for optimism, saying: "The economy in Brazil is contracting, the president is in trouble, and there are people on the streets. You could say it is economic and political winter in Brazil.
"It is a good time to invest. We will be preparing the ground during the winter for the coming spring. We have actually had a very good feeling from the show. We will be opening the champagne later."
Statistics from a number of professional organisations attending the show would seem to support such optimism. SIESE-SP, the trade body representing electronic security system installers in Sao Paolo, believes that the market has grown at an average of 10% per annum over the past decade and is currently predicting 12% growth for 2016. According to its figures, the Sao Paolo market alone was worth some US$900 million in 2015, with more than one million cameras installed, roughly one for every seven residents.
Mobile personal security, as well as systems for fixed sites, were also widely featured at this year's event. Looking to take advantage of this was Felipe Fontes, a multiple start-up entrepreneur. He was on an apparent mission to build communities via Alfabee, a smartphone-based personal security alarm that can send audio and your location to other nearby smartphone users.
Explaining his crusade, Fontes said: "It all started as a social project. I wanted to help a friend who was worried about their personal security. Now, though, I see it as about empowering neighbourhoods.
"It links you to people nearby and it doesn't have to be an alarm. You can ask people in your locality to look for a lost dog or tell them you have furniture to sell."
The concept has already won the backing of Cisco, a high-tech multinational, which saw it rolled out for the Rio de Janeiro Olympic Games. It is now being launched commercially by Nearbee, a Brazilian company, with support from Axyon.
While inside the fair, business continued briskly, outside the country continued its slide to civil unrest. With corruption hearings pending, civil unrest an everyday occurrence and unemployment set to surge, a climate is emerging that is sure to nurture the security sector, representing a clear opportunity for manufacturers and distributors in Southeast Asia.
ISC Brazil 2016, the 11th International Security Conference and Fair, was held at the Expo Centre Norte in Sao Paulo from 15-17 March.
John Haigh, Special Correspondent, Sao Paulo