Increasing security concerns against Chinese companies such as Huawei, Hikvision and DJI provide opportunity for higher cost rivals
Feb 11, 2019 (China Knowledge) - Increasing resistance and scrutiny by the US and other countries against Chinese tech companies such as Huawei, Hikvision and DJI over alleged security concerns may create opportunities for other suppliers to win contracts despite being costlier than their Chinese rivals.
Due to the presence of a large domestic market and intense competition at home, Chinese tech companies have been able to benefit from economies of scale, low-cost labor and an established manufacturing supply chain to outcompete their foreign rivals to become dominant players in their respective industries.
For example, Huawei has a 28% share of the global telecommunications equipment market, Hikvision has a 21.4% share of the global closed-circuit television (CCTV) and video surveillance market while DJI has an estimated 74% share of the global drone market.
In recent times, growing concerns over the market dominance of these Chinese companies have led the US to ban its government agencies from procuring telecommunications network and surveillance equipment from Chinese companies and the US Army to ban the use of DJI drones.
Apart from the US, other countries such as Australia, New Zealand, Canada and other European countries have also blocked or are considering limiting the use of Huawei equipment in their telecommunications networks.
As a result, such concerns may allow foreign rivals such as telecommunications equipment suppliers Cisco, Ericsson and Nokia as well as CCTV and video surveillance providers such as IDIS and Vicon which have been traditionally higher cost to win contracts from their Chinese rivals.
US officials are also reportedly increasing the size of their delegation to the Mobile World Congress in Barcelona this month, aiming to dissuade other countries from purchasing equipment from Chinese companies.
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