Secure Russia: Trends and Prospects of the Russian Market of Security Systems
Over the past year, the landscape of the Russian market of security systems has changed dramatically. A number of large companies abandoned it, and their place was promptly taken by companies from China and Turkey. Exit of software suppliers was also a factor.
Peculiarity of majority of security system manufacturers is that they have various systems (from fire safety to video surveillance) in their product lines. Only a few manufacturers from Northern Europe concentrated on a single area or related ones. That is why suspension of sales or complete exit of major international players from the Russian market had an impact on as many as several segments of it.
Video Surveillance Systems
At the end of 2022, more than 21 million video surveillance cameras were functioning in Russia. The total volume of the market of video surveillance systems exceeded $1 billion in 2021-2022. Alongside with that, according to the Federal Customs Service, quantitative turnover of video surveillance systems dropped by 20% (or by more than 1 million units) in 2022.
Chinese manufacturers still keep the lead in the rating of imported video surveillance systems. 10 largest suppliers account for about 68% of the total volume of import. The remaining 32% are ‘second echelon’ Chinese manufacturers, as well as European and Japanese brands that have abandoned the market.
Access Control Systems
The volume of the Russian ACS market at the end of 2022 can be estimated at $190-200 million. In terms of equipped access points (in units), their number reduced in 2022 against 2021 by approximately 6.5-7%.
Sanctions imposed in 2022 have affected all the market players. First of all, a number of large European, American, and Japanese manufacturers had to close their Russian offices and suspend sales and services. Access to RFID, the key technology, was restricted, and supplies of processors and chipsets being the basis for creation of controllers considerably reduced. Besides, one should not disregard the deficit of various chips and semiconductors that formed as early as in 2019-2021 and has not been completely overcome so far.
Fire Safety Systems
In the past year, the volume of the Russian market of fire safety systems was about $115 million. China occupied the leading positions in terms of the import volume with more than 65% of the total number of imported systems supplied from the Land of the Rising Sun.
Specificity of the Russian market of fire safety systems last year was in significant excess of demand over supply. Exit of Western brands has led to upsurge in the interest in Chinese and Russian solutions, meanwhile, Russian manufacturers were considerably overloaded with their existing orders. Peculiarity of fire safety systems is that not all of them are interchangeable. Tentatively speaking, while a camera can be changed for an option from another manufacturer with no losses, this is not always possible when it comes to fire safety systems.
The volume of the Russian market of cybersecurity systems was estimated at $186 billion in 2021. It should be noted that the share of Russian players in it was 61%, whereas the share of foreign ones was 39%. Despite pessimistic forecasts of decline of the market of digital security systems by 15-20%, it demonstrated a positive trend by the same 15-20% (up to $230 billion) in the past year.
About 20 vendors working in the IT security segment abandoned the Russian market in spring 2022. The total number of companies that have frozen their projects in Russia or withdrawn from the Russian market reaches forty.
It is important to realise that exit of a software manufacturer or developer from the market will have adverse consequences not only in the short term but also in the medium and long term. It is clear with the short term: it is no longer possible to purchase products, while ‘grey’ lots are expensive, and there may be difficulties with their support. Risks are more significant in the medium and long term. For example, a manufacturer may discontinue services and technical support for Russian partners, with the result that their equipment will become a bunch of metal. Difficulties in supply of consumable and spare parts and in software update are another risk.
Developers of residential and commercial real estate have found themselves in difficulties as well. Those companies which had bought the necessary systems before February 2022 faced, at best, difficulties when connecting and updating them. However, those developers whose projects were at the initial or medium readiness stage, had either to look for alternatives or to redesign buildings completely for new system models.
Points of Growth
Security Systems for Buildings. It is no secret that construction is one of powerhouses of the domestic economy: together with related industries, it provides up to 10% of GDP and up to a quarter of the total workplaces. Moreover, the Russian construction sector went through the difficult year of 2022 generally without significant losses: housing commissioning in Russia over the past year exceeded 100 million sq. m., for the first time in a long period. Commissioning of commercial and industrial real estate was far below (about 4-5 sq. m.) in the past year, however, in the coming years one should expect certain recovery: this concerns both construction of new business and production facilities and renovation of existing ones. Accordingly, one should expect an increase in demand for various security systems (fire alarm, security alarm systems), ACS, as well as video surveillance systems (including CCTV).
Supplies of Components for Security Systems. Alongside with ready-assembled security systems themselves, supplies of components for their manufacture, upgrade, and repair are equally important. Deficit of certain parts (in particular, microchips) started to be recorded in the Russian market of security systems as early as in 2019, when a crisis of manufacture of various electronic components occurred in the world. In 2020-2021, it was aggravated by the coronavirus pandemic that caused decline in manufacture of microchips as well and roaring demand for them in other industries. Under the circumstances where production and commercial ties that existed before February 2022 are broken, Chinese and Turkish manufacturers of electronic components get a chance to secure a foothold in the Russian market. All the more so as the demand for them is still high.
Software Supplies. Apart from exit of a number of manufacturers of security systems (ACS, fire alarm, security alarm systems, CCTV) from the Russian market, cessation of supplies of foreign software, e.g. from the USA, became a serious challenge. Largest customers, including management companies whose portfolio contains hundreds of thousands of square metres of residential and commercial real estate, have found themselves at risk. Cessation of software execution could in fact turn expensive equipment into a set of microcircuits and chips. That is why customers are directly interested in prompt market entry of reliable software suppliers being ready not only to sell software but also to provide complete maintenance and support.
Partnership in Digital Security. What can have more potential than joining the efforts of two global leaders in information security? Exit of Western vendors has opened a window of opportunity primarily for Chinese players that got a chance not only to enter the Russian market but also to take advantage of competences of the top-rank Russian IT companies under joint projects. Given the experience gained by China in countering digital threats, the resulting collaborations can considerably change the landscape in the digital security market.
Securika Moscow: an Important Step for Entering the Russian Market
Under the current conditions, Chinese, Turkish, and Indian manufacturers of security systems are well positioned to fill promising niches in the Russian market. This concerns various security systems: from video surveillance to ACS. Participation in Securika Moscow is an excellent opportunity to get to know the Russian market of security systems and converse with the industry’s chief experts.
Moreover, the exhibition participants will get a unique chance to find new partners: Securika Moscow 2023 exhibition was attended by nearly 20 thousand professionals from 79 regions of the RF and 27 countries, 93% of them influence the making of decisions on equipment purchase.
Securika Moscow exhibition will make it possible for participants from China, Turkey, India, and other countries to find new partners and to show themselves to the best advantage right during the events.
The 29th International Exhibition of Security and Fire Protection Equipment and Products Securika Moscow will be held on 16–18 April 2024 in Crocus Expo IEC (Pavilion 3, Hall 14).