Milestone lacks only China, and they address it

Milestone Systems that develops software for digital video surveillance, has signed a strategic partnership agreement with China's HikVision
Present in 90 countries all over the world, but not in China?

Denmark's Milestone Systems that develops software for digital video surveillance, has decided to do something about this, and has signed a strategic partnership agreement with China's HikVision. And this has happened in style. The signing ceremony took place in late October during the visit of Denmark's prime minister Anders Fogh Rasmussen's visit to China. Lars Thinggaard, Milestone's CEO, that took part in the visit as a part of the prime mister's official business delegation, inked the agreement.
Lars Thinggaard had the opportunity to introduce his new Chinese partners to Denmark's prime minister Anders Fogh Rasmussen (right).
Photo: Milestone Systems


A good partner
Hangzhou-based HikVision produces DVRs (Digital Video Recorders) and network cameras. According to the Danes they are an ideal partner counting more than 1,000 distributors/ systems integrators with contacts to many end customers all over China.

"Our employees in the Singapore office have known HikVision for many years and we have found it mutually advantageous to enter cooperation. This is because we are both of the opinion that the Chinese market is ready to move away from analogue towards digital surveillance systems," says Lars Thinggaard to news2biz CHINA.

Even though only 5% of the video surveillance systems sold today in China are digital, the market for digital systems is developing rapidly and systems are currently being converted from analogue to digital technology. The corresponding figure in the global market is 20%.

HikVision does not have an exclusive agreement with Milestone so the Danes are looking for other partners in the country. But it was decided to give the Chinese a chance for an indefinite period in a realisation that there will be no dramatic increase in sales in the short run.

"We did not have any significant sales in China before and when looking at video surveillance, China is still an emerging market. It is also a difficult market where the Chinese mentality regarding copyright the protection of intellectual rights makes it urgent to have your software duly protected against hackers," explains Lars Thinggaard.

Does not want to source in China
Mr Thinggaard thinks that Milestone is well-prepared for tackling both hackers and difficult markets. He aims to draw on experiences from the company's largest market, the US where Milestone has a daughter company and fetches over 40% of its turnover after just a four-year presence.

"We consider China a sales market and we have no plans of establishing a development department in that country in order to attract cheap labour. In the long term, we will consider if we want to open a sales office in the country," he adds.

As far as prices are concerned Milestones is a par with the competition that counts mostly companies from the US, Israel and Canada - and hardly any Chinese.

Competition may be stiff, not least due to the global crisis that has also found its way to China. The market researcher IMS has reduced the growth estimate for the industry from 40% to 30% annually for the next five years which applies both to China and the rest of the world - but it is still a significant growth.

None the less Mr Thinggaard expects a sales growth of 60-70% in South East Asia (including China) in 2009.

Milestone Systems, that is only ten years old, today has 175 staff and daughter companies in eight countries. The company fetches 95% of its turnover from exports, of this 10% comes form the APAC countries, 50% from EMEA and 40% in Americas - i e the US.

This article was written by journalist Aleksander Slaw for Northroup Newsletters. See their website at www.news2biz.com