A Brief Introduction to Establishment Background of Zhao Yang Electronics (Company in Canada)

For the past few years, the international terrorism has been rampant increasingly, aggravating the threats to the social security. All countries in the world have increasing security demands, and the security market becomes more prosperous, and there are large-scale demands due to the development of urban intellectualization, the infrastructure construction and the large-scale activities and events. The traditional security market represented by European and American countries has strong demands, which will also promote many domestic security enterprises to go abroad, and increase their shares in the overseas market by cultivating a global vision, attracting the global talents, building a global delivery system and producing products suitable for localization.

I. Necessity for Zhao Yang Electronics to expand the overseas market

In the semiyearly report, Hikvision pointed out that the demands of the security video monitoring market are also rapidly expanding as the security video monitoring market in developed countries in Europe and America rapidly recovers and the demands significantly increase. In 2017, its sales revenue was RMB 9.361 billion in overseas markets, accounting for 29.32% of the gross operating income, with an increase of 40.62%, compared with that of the same period last year.

In 2014, Dahua grasped the opportunity of recovery of overseas market and established relatively complete sales channels in each continent. As of Jun. 30, 2017, it has established 37 overseas branches in more than 180 countries and regions in Asia Pacific, North America, South America, Europe and Africa. In the first half of 2017, its operation revenue of overseas business was RMB 2.681 billion, with an increase of 42.19%, compared with that of the same period last year, accounting for 35.92% of gross operating income.

Zhao Yang Electronics should focus on the future and promote the steady development by formulating long-term development strategies, faced with the constantly changing industry environment and bran-new market demands. It is important for Zhao Yang Electronics to expand overseas markets to realize the sustainable development strategies under such a grand strategic background.

II. Selection of Zhao Yang Electronics for the overseas markets

   First of all, the characteristics and current status of several major overseas markets, including North America, South America, Europe, the Middle East and Asia, are analyzed.

1. North American security market– there are many demands and fierce competitions. The relevant information shows that North America is the largest security market in the world at present.

2. South American market – the products are imported mainly. The development characteristics of its security market are that there is stable growth and fierce price competition and less security product manufacturers and the products were imported from America mainly in the past. For the past few years, the Korean brands have been everywhere, and the competition, especially price competition, is as intense as that in the North American market. Another characteristic of South American security market is that customers pay more attention to the product price than the product quality. However, customers in the United Kingdom and the United States pay more attention to the product quality.

3. European market – customers have stable demands and pay more attention to the product quality. The security market in Western Europe, represented by Germany, the United Kingdom, and France accounts for 36% of the global security market. There are diversified competitions, obvious high-end and low-end product differences and different distribution channels. The European market is dominated by a single market, all countries focus on their own markets and few enterprises are in chain operation. The market has strong acceptance of new products, there are diverse products, and customers pay attention to the cost performance of products.

4. Asian market – there is a strong inclusiveness to the products. As the security industry rapidly develops in the Asian market, the security awareness of people has gradually increased. There is a strong inclusiveness to the products in the Asian market, and there are high-end, mid-end and low-end products. Customers like the famous brands, mainly the brands of Japan and the United States at present. What is worth mentioning is the Japan market with the strictest requirements on the product quality in the world. Hong Kong and Macao with clear demands on the security products and high requirements on the product quality are representatives of the Asian market. Compared with the American market and European market, the Asian market is still in the growth phase, and its production, distribution and market system should be further improved.

5. Middle East market - for the past few years, the national security is extremely important as the marketing environment in the entire Middle East market changes, more attentions are paid to the diversified development of the economy and the situation is relatively turbulent. The demands on the security products rise continuously. Middle East market has been monopolized by companies in the United States, Japan, Germany, the United Kingdom, and Spain for a long time.

In consideration of the regional wars, the border military conflicts, the social security, the terrorism, the political factors, the laws and regulations, the national conditions and public opinion, the natural disasters, the health care and other factors, the North American market is confirmed as the best investment market after the comprehensive evaluation. After research, Zhao Yang decides to invest to develop the Company in Canada to explore the North American market.

III. Key development strategies of Zhao Yang (company in Canada)

1. Segment the market, give play to advantages, investigate the project sufficiently, and strengthen the solutions: As an internationalization-centered enterprise, it should give an insight into the security markets in different countries. For example, the developing countries such as Brazil, India, the Middle East and Southeast Asia are at the development phase, the demands on the mid-low end security products and solutions account for a large proportion. In Canadian market, the overall solutions and high-end products are important. Therefore, when exploiting the market in Canada, Zhao Yang Electronics should successfully connect the solutions and the market demands through the sufficient market research and the feasibility demonstration until the formation of the final scheme, fully express the appeal of local customers, and meet the standards and guild regulations identified by the international industry. With the mature hardware products and high-quality technical services, the foundation will be laid for the sustainable development of Zhao Yang Electronics (Company in Canada). On the other hand, the operation and maintenance of security systems bring generous profits. Zhao Yang Electronics has favorable technical advantages with the operation service technology, so that it can take part in the operation service competition and achieve victory with the reasonable cost performance.

2. Establish a good partnership: the progress of Zhao Yang Electronics in exploiting the market can be effectively ensured by correctly handling the partnership. Integrating with the local society is the biggest difficulty. Because it is necessary to gradually be familiar with the local business risks, policies, cultural traditions, and manners and customs, Zhao Yang Electronics (Company in Canada) needs to form the partnerships with the local distributors, project contractors, labor unions and other institutions after establishment to gain more supports and reduce resistance in operations.

In the future, Zhao Yang Electronics (Company in Canada) will, based on the deep understanding of diversified demands of customers in the development tendency of intellectualization and globalization, promote the research and development of technology, expand the business of comprehensive urban solutions and globalization strategy, and pay attention to emerging businesses such as big data operation service of video, machine vision, video conference system, professional unmanned aerial vehicle, intelligent security and robot, so as to achieve the sustainable development objectives of Zhao Yang Electronics (Company in Canada) in overseas markets.