Aug 15, 2018, 09:42 ET
CLEVELAND, Aug. 15, 2018 /PRNewswire/ -- On August 13, President Trump signed the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which authorizes FY2019 appropriations and sets forth policies for Department of Defense (DOD) programs and activities.
The law also includes a policy that caused concern among several Chinese suppliers of video surveillance equipment. Beginning in August 2019, government agencies (e.g., cabinet-level departments, military branches, and others facilities such as federal prisons) from buying or contracting to buy telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, or video surveillance equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company. It also bars the purchase of any such equipment produced by an entity believed to be owned or controlled by the Chinese government.
Additionally, beginning in August 2020, these government agencies will also be barred from entering into, extending, or renewing a contract with an entity that uses any of the above-mentioned telecommunication and video surveillance equipment.
This second provision is most concerning to the specified firms, uncertain about how broadly the ban will be interpreted.
Hikvision commented in a statement: "The ban itself will not have substantial impact on the company's business. But due to its unclear points and semantic ambiguity in some terms, the bill might generate broader interpretations, which could extend the ban from federal agencies to non-federal installations [from using our products]."
According to Jennifer Mapes-Christ, Senior Analyst and Manager of the Consumer & Commercial Goods group at the Freedonia Group, "The US government market for video surveillance systems is expected to exceed $700 million by 2021. While that is a relatively small piece of the total US market for these products, there are some significant areas of growth for high-tech video surveillance equipment in the government market, including the 'digital wall' along the US-Mexico border featuring advanced surveillance and analytics technology."
Furthermore, she notes, "China-based firms are becoming increasingly important suppliers to the US video surveillance market. Hangzhou Hikvision has been a rapidly growing player, rising to one of the top 5 firms by 2016, due to its ability to compete on both price and quality."
Mapes-Christ continues, "Much like the larger consumer electronics industry, the manufacture of video surveillance products has largely shifted to Asian countries, particularly in countries with low labor costs. Furthermore, the well-known production processes make these products easy to manufacture and transport. Imports – the lion's share of which come from China – now account for the nearly all of the video surveillance equipment sold in the US."
She adds, "Although Huawei and ZTE have been marked as national security threats by the US since 2012, concern about security vulnerability of cameras provided by other China-based firms as well has been increasing over the last few years. Concern is particularly extended to companies with ties to the Chinese government with the perception that they might be able to exercise control over the equipment."
Additional analysis of the video surveillance industry can be found in the Freedonia report Video Surveillance Equipment in the US.
For the full list of Freedonia's security industry studies, visit: https://www.freedoniagroup.com/industry-category/secu/security.htm
About The Freedonia Group – The Freedonia Group, a division of MarketResearch.com, is a leading international industrial research company publishing more than 100 studies annually. Since 1985 we have provided research to customers ranging in size from global conglomerates to one-person consulting firms. More than 90% of the industrial companies in the Fortune 500 use Freedonia Group research to help with their strategic planning. Each study includes product and market analyses and forecasts, in-depth discussions of important industry trends, and market share information. Studies can be purchased at www.freedoniagroup.com and are also available on www.marketresearch.com and www.profound.com.
SOURCE The Freedonia Group
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