The market in China started in 2003. There’s a lot of small players – the majority have less than US$10 million of revenue per year. It’s still very much dominated by five-person shops that provide value-added installations. Right now we’re the largest, even though our revenue is about US$427 million last year, which is less than 5% of the total market [of more than US$8.5 billion]. It’s like any young industry. You see it highly fragmented now, but after a decade or so of consolidation, then you’ll see a clear winner.

 

China in the past has not used CCTV as a form of security application. It was mainly human [surveillance]. CCTV is an old technology, but it started to be implemented [in a big way only recently] in China because of the telecoms infrastructure. In the past, everything relied on dug lines. The prevalence and the advances in the Internet, fibre optics, compression technology, YouTube, these allow you to see things remotely over the Net. They have helped a lot in terms of trying to improve the visibility applications of CCTV.

 

All our intellectual property is [developed] in China. All our R&D is in China. We work with universities, Beijing University, Wuhan University, so we have joint IP with them. We are a Chinese company; 95% of our revenues come from China. From the point of view of Chinese authorities, we are a domestic company that went to the U.S. to raise capital in order to build a business in China.

 

From our perspective we don’t deal with the military. Our space is within the civil areas, in really improving the safety standards and on. We don’t want to go into the defence area. We don’t do that at all.

 

We make and install cameras for traffic management systems, disaster recovery, emergency response, pollution detection – everything on a city-wide scale basis. It’s called the Safe City concept. It’s similar to what you have in London, which probably has the most cameras anywhere, about 3-4 million cameras in one single city. Shenzhen has about 800,000. Guangzhou has about 1 million cameras already installed. But the penetration rate for surveillance cameras is about 20%.

 

Not yet. That’s where we want to be eventually. In our business plan, there are three different phases. Phase 1 we become a manufacturer. In China, if you manufacture products, you actually get certain approvals and licenses, and once you get those approvals and licenses, you can bid for government projects. We now have the largest security-related manufacturing park in China.

 

We’ve acquired some companies in the software space, whereby you put several different cameras into one platform, so we can bring everything on your console. We’ve also acquired a company that is into traffic management systems software.