Nowadays, the domestic network security market is becoming more and more “volume”, which has become a relatively common feeling among everyone.
First, from a technical perspective, cybersecurity technology is updated and iterated very quickly, and companies and practitioners must constantly learn and update their knowledge to keep up with the trend. This has also led to a growing gap between practitioners, with companies and practitioners with strong technical strength gaining more market share and increasingly fierce competition.
Secondly, due to the fact that there are too many people and too little resources in the market, competition in the cybersecurity market is becoming increasingly fierce, which has forced some companies to resort to “malicious price wars” and other means to win customers in order to gain more market share, which has also gradually increased the price pressure in the entire industry.
It can be seen from the 2023 financial reports released by various listed network security companies not long ago that the loss trend of the network security industry is still continuing. The industry generally increases revenue but does not increase profits. Almost half of the listed network security companies have a downward trend in annual revenue. . Among them, half of the companies (15 companies) suffered losses, and 60% of the companies (18 companies) saw profits decline year-on-year.
At the same time, due to fluctuations in the macroeconomic environment, the security budgets of key industry customers and some local government customers continued to tighten, which also brought a considerable impact on the operations of network security companies.
Especially with the digital transformation of enterprises, the globalization and industrialization of cybercrime, and major changes in global geopolitics and economy, Chinese cybersecurity companies are facing unprecedented opportunities and challenges in the local and global markets.
Therefore, “going overseas” has become a new direction that many manufacturers have to think about.
Should I just “hold on a little longer” or go out and try my luck?
Although China's network security market has been mainly an “involution market” driven by domestic demand for many years, in recent years, Chinese network security companies' accumulation of technology and capital in the domestic market has laid a solid foundation for their “going global”. More and more Chinese companies are expanding their business to a global scale, and going overseas has changed from an “optional” to a “must-have” for companies.
In recent years, Chinese overseas companies are transforming from simple product expansion to more mature transnational operations and global development.
According to the statistics of S-Yuan Business Consulting, there are about 100 cybersecurity vendors exploring overseas markets in Hong Kong and Macau, about 50-60 in Singapore and Southeast Asia, and about 20 in the Middle East. Other regions, such as Mexico and Brazil in Latin America, Germany and Spain in Europe, Japan in Asia, and Russia, have also been gradually included in the discussion of going overseas.
*Image source: Internet, data compiled from public financial reports of various companies
Note:
ANHENG Information: The data source for overseas revenue in 2022 and 2023 is the “other regions” listed in the company’s annual report revenue analysis;
Amboton: The data source for overseas revenue in 2022 and 2023 is the “other regions” listed in the company’s annual report revenue analysis;
Yongxin Zhicheng: The data source of overseas income in 2023 is “other regions” listed in the company's annual report income analysis. This data is classified as “Hong Kong, Macao and Taiwan regions” in the company's 2022 annual report.
Leading companies such as Sangfor, Qi'anxin, and Green Alliance have accelerated their international business layout, and their overseas market revenue has increased significantly.
Sangfor’s overseas revenue reached 346 million, with year-on-year growth rates as high as 46.93% and 47.98% in 2022 and 2023 respectively; followed by Feitian Integrity with 317 million. The fastest growing overseas revenue YOY was British Software at 4033.14%, followed by Anheng Information at 303.61%. Feitian Chengxin has the highest proportion of overseas revenue at 42.89%, followed by Anbotong at 15.43%, and Shanshi Network Technology at 10.73%. The highest overseas gross profit margin is British Software's 99.06%, followed by Beixinyuan's 95.38%. The fastest growing overseas gross profit margin YOY is Qi'anxin's 371.49%, followed by 360's 318.72%.
Convinced
Image source: Sangfor official
In recent years, Sangfor has chosen to set its sights on overseas markets and actively invested in product research and development, talent training and other resources. In recent years, the company has been accelerating the expansion of overseas markets and businesses, and actively expanding and opening up incremental market space. At present, Sangfor's overseas business covers many countries and regions around the world. In Shenzhen and Changsha, and in the international market in Malaysia, Italy, and Mexico, it has set up a global CTI customer remote service call center with more than 500 seats. It has established local technical service teams in more than 70 major cities in the domestic market and in 12 countries in the international market. It has established more than 40 spare parts centers around the world. Based on a complete project management process and service management mechanism (ISO9001) and information technology service standards (ITSS) as standard service operation and maintenance system, it continues to provide global users with high-quality services covering the entire life cycle of the business and safe and reliable products and solutions. In 2023, Sangfor's overseas business revenue continued to grow rapidly, with revenue of 346 million yuan and sales percentage reaching 4.52%, an increase of 1.37 percentage points from 2022. The overall competitive pressure in overseas markets is relatively low, the gross profit margin is higher than that in the domestic market and the market space is broad. The company continues to expand in overseas markets and is expected to usher in good development opportunities.
Qianshin
Image source: Qi'anxin official
In addition to Sangfor, we have noticed that Qi'anxin has also made breakthroughs in overseas markets by relying on the “Belt and Road” strategy, successfully entering the markets of relevant countries and obtaining important projects.
In terms of overseas business, in October 2023, the company officially signed the largest overseas order for China's cybersecurity, building a cybersecurity command system for a certain country overseas, covering an overall solution of cybersecurity capabilities and services, with a contract value of nearly 300 million yuan. A total of 23 manufacturers from home and abroad participated in the bidding. This project is expected to become a national benchmark project of the “Belt and Road Initiative”, promoting China's cybersecurity industry to further go global, which is of milestone significance to the company itself and even to the entire Chinese cybersecurity industry. In December 2023, the company signed a memorandum of cooperation with the Hong Kong Science Park, officially settled in the Science Park, established an international R&D center and international business headquarters in Hong Kong, and signed cooperation agreements with four Hong Kong companies, namely China Resources Enterprise, China Unicom International, Deloitte China, and Hong Kong Telecom. In the future, it will carry out comprehensive and in-depth cooperation in the fields of innovative R&D, data security, service assurance, ecological cooperation, and marketing. In December 2021, Qi'anxin won a large order of 70 million yuan through international business, and focused on the field of APT tracking and analysis. In October 2023, the subsidiary company became the supplier of a cybersecurity command center construction project in the capital of an overseas country with a contract value of US$39.56 million, which is expected to promote the global development of China's cybersecurity industry.
Green Alliance
Image source: Green Alliance official
Based on various considerations such as “moving into a larger market, participating in global competition, and maintaining technological leadership and vitality”, NSFOCUS Technology, one of the leading domestic network security companies, has also increased its efforts to go overseas. The company has currently established overseas subsidiaries and representative offices in Silicon Valley in the United States, Tokyo in Japan, London in the United Kingdom, Singapore, and Sao Paulo in Brazil, and provides enterprise-level network security products and security products based on its core competitiveness globally. solutions and security operations services.
As a “pioneer” in going overseas, NSFOCUS has been expanding its overseas business for more than 16 years. Over the years, NSFOCUS has actively explored and developed the international market, participated in international market competition, and has taken the lead among domestic security manufacturers in exploring the international network security market. At the same time, we have accumulated experience in international operations through in-depth cooperation with local partners, actively integrated and absorbed international cutting-edge security technologies, and participated in international offensive and defensive competitions to ensure the effective interaction of domestic and foreign advanced network security technologies and support the sustainability of the company's security service capabilities and product technologies. upgrade.
It can be seen that Green Alliance Technology is further deepening its overseas market by relying on innovative technologies and professional services.
Yingfang Software
In recent years, Yingfang Software has begun to expand its overseas markets, strengthen cooperation with partners and SaaS delivery (CloudCDM), continue to serve financial and government and enterprise users at home and abroad, and continuously expand the market share of Chinese companies in the global data replication industry, providing advanced technical product solutions for users in Asia Pacific, the Middle East, South America, Africa, Russia, Europe and the United States.
While fully supporting the localization of products, the company is also constantly pursuing the internationalization of the enterprise and actively participating in global competition. By introducing experienced international professionals, the company has built an international operations team; by optimizing its operations in line with international standards The intellectual property management mechanism and data protection regulations plan promote China's data replication product solutions to overseas markets in Southeast Asia, the Middle East, Europe and the United States; by committing to the long-term development of global digital transformation and data security, we continue to enhance the international influence of the company's brand.
Yongxin Sincerity
Image source: Yongxin Zhicheng Official
In terms of market development, in addition to continuing to deepen its presence in the mainland China market, the company has established a wholly-owned subsidiary, Yongxin Zhicheng (Hong Kong), to be responsible for market development in Hong Kong, Macau, Southeast Asia, and countries and regions along the “Belt and Road”.
Yongxin Zhicheng is based in Hong Kong and connected to the world. With Hong Kong Cyberport as its international headquarters, it accelerates the layout of overseas markets and promotes the “exporting” of core products. It focuses on talent ability testing and evaluation, and has completed the construction of Hong Kong's first domestic network shooting range – Xiangjiang Network Shooting Range; it has built and operated the “Hong Kong Digital Wind Tunnel Evaluation Center” to provide digital security “family doctor” professional services for the Hong Kong local market, helping to optimize and upgrade Hong Kong's digital security system.
Hillstone Networks
Image source: Yongshan Stone Network Official
Shanshi Network Technology has achieved good growth in overseas market expansion in recent years, and its business volume has begun to take shape. Since its establishment, the company has insisted on serving customers with innovative technology and creating internationally competitive network security products for customers. The company has set up R&D centers in Suzhou, Beijing and the United States, forming a pyramid-structured R&D system with cutting-edge insights and execution capabilities at home and abroad.
It is reported that the company will further invest resources in the expansion of overseas markets, while also taking into account the assessment of key indicators such as profits and payment collection. Combined with the overall resource layout plan, the company hopes to gradually cultivate overseas markets to become a strong support for the company's business.
At present, Shanshi Network Technology's overseas market development focuses on Southeast Asia, Latin America and other places, and has established overseas technical service centers in Latin America and Europe to achieve localized coverage of overseas customer services. In addition, the company also focuses on the construction of overseas channel ecosystem and simultaneous expansion of multi-level channels. According to the company's latest financial report, its overseas market development still shows higher revenue growth than the domestic market. Shanshi Network Technology stated that in the future, it will further focus on improving efficiency, delve into key regions and key industries, deepen project operations and professional service delivery, and continue to enhance the company's international influence and the company's revenue growth structure.
Seizing a new “military land” overseas is not an easy task
For the network security business, its development relies on the growth of the digital economy. However, as the development of the Internet enters the stock era, the growth rate of demand for security business begins to slow down. Therefore, network security businesses have begun to seek a second curve, and “going overseas” is one of the options.
Although companies are currently going overseas in full swing, the process of establishing and expanding their overseas business is not a smooth journey due to differences in overseas environment, resources, and culture.
For example, if a client’s business is overseas but there is no enterprise node, it will lead to higher data transportation costs and worse timeliness. Secondly, there are subtle differences in sensitive words, illegal content, and rules between websites in different countries, which also requires companies going overseas to train more flexible algorithms.
At the same time, understand local rules, train machines to recognize different labels in different regions, deploy overseas nodes, and even meet the local deployment of some customers overseas… If you want to accurately and quickly respond to the needs of various customers, you can also It requires a lot of expenditure, and how to control costs is also a big problem when going overseas.
Different from the marketization path of TO C products, the most difficult thing for TO B products is how to accurately find customers. In China, different cyber security companies have different strategies. Some cast a wide net for banner advertising; some post on knowledge-based vertical platforms such as Zhihu for marketing; some hold large-scale events such as forum summits and use community fission. etc. to acquire customers. But this logic may not necessarily apply overseas. For the majority of overseas companies, acquiring customers is also a challenge.
In addition, how to give full play to the advantages of product customization, fully understand the real needs of the host country and enterprises, and be able to start from the immediate needs of customers and develop customized projects and products that are in line with the interests of the host country is not an easy task. .
It can be seen that although new strategic opportunities brought by going overseas are emerging, at the same time, many uncertain factors are also gradually increasing. If companies going overseas want to better cope with risk management and control challenges and the competitive challenges brought about by global operations, they must continuously improve their risk management and control capabilities and comprehensive competitive strength.
From the perspective of the overall environment, it is an inevitable trend for network security to go overseas. By participating in the global competition system, fully understanding the world's network security landscape and current situation, and truly starting from actual combat and honing technologies and products, this may be the secret for network security companies to escape the “involution” vortex. Of course, before this happens, the majority of network security companies must also understand that doing overseas business in the early stage is very likely to “lose money and make money”. This matter must be fully psychologically prepared before choosing to “go overseas”.
However, whether it is technology or market, as the network security business landscape changes accelerating, 2024 may be the “first year” for Chinese network security companies to go overseas.
References:
https://www.secrss.com/articles/65899
https://baijiahao.baidu.com/s?id=1793400690463550163&wfr=spider&for=pc
https://baijiahao.baidu.com/s?id=1794651461780140128&wfr=spider&for=pc
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