Part Three of the Series “Crossing Cycles: The Blank Spaces and New Life of Their Transformations”
When Hikvision defines industry standards with its “All-Rounder” persona, and Dahua builds alliances as an “Ecological Co-builder“, Yushi Technology, as the “Third Player” in China’s security industry, faces a particularly difficult and compromising transformation journey. Lacking Hikvision’s massive scale and Dahua’s ecological breadth, Yushi’s journey in the Internet of Things (IoT) resembles a solitary path under the shadow of giants: amidst the IoT wave, Yushi seems to have found its positioning—a narrow yet solid track, combating competitors’ vastness with focused depth. But can this path truly lead it to break through, or is it merely a reluctant choice in the cracks between giants?
1. Transformation Motivation: A Passive Choice for Survival in the Cracks
The transformation of Yushi Technology stems from a reality more severe than that faced by Hikvision and Dahua: in the large-scale war of the general security market, it is destined to lose.
l Direct Pressure from the Ceiling: In the traditional camera and DVR/NVR market, the landscape has long been solidified. The duopoly of Hikvision and Dahua, with their unparalleled channel and cost advantages, occupies the vast majority of market share. Although Yushi has established a foothold through early accumulation in IP and product quality, its revenue scale (according to its parent company Qianfang Technology’s financial report, annual revenue is around 10 billion) is an order of magnitude lower than the former, leaving extremely limited growth space.
l Continuous Squeeze on Profit Margins: The price war in the red ocean market hurts smaller participants more deeply. Yushi must find a high-margin business model to maintain healthy R&D investment and sustainable development. Continuing to struggle in general hardware is akin to slow suicide.
l Rebalancing Parent Company Resources and Self-Positioning: After being acquired by Qianfang Technology, Yushi gained support from capital and industry resources but also faced pressure to prove its strategic value and synergy. This means its transformation cannot be aimless; it must form a strong complement with Qianfang’s deep accumulation in smart transportation, smart cities, and other fields.
Therefore, Yushi’s transformation is not a question of “whether to transform,” but rather a life-and-death question of “how to transform to survive and thrive.”
2. Transformation Path and Key Actions: Focus, Deepening, and Cultivation
Yushi has chosen a path distinctly different from Hikvision and Dahua—rather than becoming a broadly covered “platform-type” enterprise, it aims to be a “solution expert” deeply embedded in the industry. Its strategy can be summarized as “one core, two wings flying together.”
Core: From “Product Supplier” to “Scene Solution Expert”
Yushi has completely abandoned comprehensive competition with giants on hardware parameters, instead focusing resources on a few key industries, pursuing extreme scene implementation capabilities. Its core value of “pragmatic innovation” clearly reflects this strategy: no talk of abstract ecosystems, only concrete projects.
Action One: Deep Industry Focus, Becoming a “Big Fish in a Small Pond”
Unlike Hikvision and Dahua, which cover hundreds of sub-industries, Yushi concentrates its firepower on the two main channels of “Urban AIoT” and “Enterprise AIoT.” Within these, it further focuses on several advantageous areas:
l Smart Transportation: This is the area where it has the strongest synergy with its parent company Qianfang Technology. Yushi no longer merely provides traffic cameras but offers a complete set of “Traffic Management Brain” solutions, from integrated perception and edge computing units to intelligent traffic event analysis platforms, deeply participating in urban traffic optimization and management.
l Smart Campuses/Buildings: For enterprise clients, it provides a one-stop, modular IoT solution for campus management, covering access control, attendance, parking, and energy management. Its goal is not to sell the most cameras but to become the “general integrator” of campus management.
l Public Safety: While maintaining traditional advantages, it extends into more specialized fields such as emergency command and forest fire prevention, providing customized solutions that incorporate industry knowledge.
Action Two: Technology Deepening, Creating “Small but Beautiful” Sharp Products
In the wave of general AI chips, Yushi realizes that computing power is not its advantage. Therefore, it adopts a strategy of “deep integration of software and hardware,” developing specialized products and algorithms for specific scenarios.
For example, in the smart construction site scenario, it does not launch a general AI camera but an “industrial-grade” smart camera integrated with specific algorithms that can accurately identify hard hat usage, area intrusion, and open flame smoke.
In the retail scenario, it provides not just foot traffic statistics but a “retail data collection terminal” that can analyze customer movement patterns, shelf attention, and even recognize age and gender.
In the charging pile sector, it offers not just charging equipment but an AI video charging pile that integrates Yushi’s years of accumulated AI visual algorithm technology, achieving triple intelligent management of “anti-occupancy, anti-danger, and anti-anomaly.”
This ability to define products “born for the scene” gives it a competitive edge that is difficult to replace with standardized products in specific niche markets.
Action Three: Channel Empowerment, Creating a “Community of Destiny”
Yushi’s ecological strategy differs from Dahua’s “broad alliances”; it leans more towards “deep binding.” It concentrates resources to support a group of core partners with deep roots in specific regions or industries, jointly developing industry solutions and providing far beyond conventional technical support, project reporting protection, and profit margins. Yushi aims to build a small but highly capable “elite channel network,” convincing partners that deep cultivation in a specific field with Yushi is more profitable and sustainable than being “one of millions of partners” with Hikvision or Dahua.
3. Transformation Results: Stability with Development Concerns
Although Yushi Technology’s transformation results have not been disclosed in detailed financial reports like those of listed companies, its market presence and business status provide some insight.
1. Establishing Brand Barriers in Niche Areas: In fields such as smart transportation and smart campuses, Yushi has become a brand frequently mentioned by clients during bidding, with the completeness and professionalism of its solutions gaining market recognition, successfully transitioning from “alternative” to “one of the top choices.”
2. Improved Profitability: By focusing on high-margin enterprise and industry-level solution businesses, Yushi effectively hedges against the pressure of declining prices for general products. Its per capita profitability remains at a high level within the industry, reflecting the effectiveness of its “elite” operational strategy.
3. Achieving Differentiated Survival: Most importantly, through this transformation, Yushi has successfully carved out a relatively safe “strategic isolation zone” for itself. In niche areas that Hikvision and Dahua are either too busy to attend to or unwilling to invest much effort in, Yushi has become a difficult-to-replace expert player.
It is important to note that the “vertical industry deep cultivation” strategy chosen by Yushi sounds appealing, but it faces numerous obstacles in execution.
1. First, the cost of industry focus is self-limiting market scale. The areas where Yushi focuses, such as smart transportation and smart campuses, although advantageous, have limited overall market scale. The total capacity of these niche markets is less than one-third of the general security market. This means that Yushi has given up the opportunity to compete with giants in a broader market from the very beginning.
2. Secondly, technology deepening faces talent challenges. A former technical director who left Yushi admitted: “The best AI algorithm talents tend to prefer platform-type companies because they have richer data and scenarios. Yushi faces great difficulty in attracting and retaining top talent, which directly affects the technical depth of its customized solutions.”
3. More importantly, channel strategies encounter real-world resistance. Yushi’s attempt to build an “elite channel network” has faced feedback from many partners that, in actual projects, when Yushi’s solutions compete head-on with Hikvision and Dahua, it still struggles to win. “Unless Yushi is willing to make greater concessions on price, customers often still choose the more well-known brands,” a regional distributor stated.
4. Market Impact: Catalyzing Vertical Deepening in the Industry
Yushi’s transformation strategy has had a unique impact on the security and IoT markets:
1. Proving the Feasibility of the “Vertical Deep Cultivation” Model: Yushi’s success (even if partial) demonstrates to the industry that, under the monopoly of platform giants, there is still space for survival and development through extreme specialization. This has encouraged a number of medium-sized enterprises and startups to abandon the platform dream and delve deeply into niche areas.
2. Intensifying Competition in Niche Markets: As the “Third Player,” Yushi’s strong entry into specific tracks has significantly raised the competitive threshold for projects that might have been handled by local small companies or giant agents. It has “rolled up” lower-tier competitors with more professional solutions.
3. Promoting Deep Customization of Solutions: Yushi’s positioning as a “scene expert” objectively forces Hikvision and Dahua to also launch deeper solutions in corresponding fields, thus promoting the entire industry’s evolution from “selling products” to “selling value.”
However, Yushi’s transformation has not changed the overall market landscape. The security IoT market remains a duopoly, and Yushi’s presence is still weak.
5. Challenges and Future: Thorns and Fog on the Independent Path
Although Yushi’s path is clear, the road ahead is still fraught with thorns.
1. Natural Limitations of Market Scale: The total volume of vertical industry markets ultimately cannot compare with the vast general market. Will Yushi encounter a new growth ceiling? After exhausting the current cultivated track, where will the next growth point be?
2. Technological Dependence and Innovation Risks: “Deep customization” is a double-edged sword. It implies high R&D costs and longer return cycles. If there is a misjudgment in the technological route or a shrinkage in demand for a key industry, it will deal a heavy blow.
3. Downward Dimension Attacks from Giants: Once Hikvision and Dahua complete their platform and ecological layouts, they will have the capability and resources to establish dedicated divisions to conduct “precise strikes” on Yushi’s core niche markets. At that time, can Yushi’s “moat” withstand the resource onslaught from giants?
4. The Patience of the Capital Market: As a subsidiary backed by a listed company, Yushi needs to continuously prove its growth potential and profitability to its parent company. Will this performance pressure force it to deviate from its long-term focused strategy for short-term reports, falling back into generalized competition?
6. Final Thoughts
The IoT transformation of Yushi Technology is essentially a survival strategy under suboptimal choices. In the face of insufficient strength to confront giants directly, choosing to deeply cultivate vertical fields is indeed a wise move, but this path is not easy to walk.
This path inevitably means it cannot enjoy the scale halo of platform-type enterprises, nor can it tell grand capital stories like ecological co-builders. However, it has allowed Yushi Technology to survive successfully and earn respect on various specific battlefields. Its story tells us that in the business world, being “big and complete” is a form of success, and being “small and beautiful” is also a victory, while the most dangerous position may be that of those without a clear positioning—”centrists.” How far Yushi’s independent path can go will be the ultimate test of its strategic determination, technical insight, and organizational resilience.
Under the law of the strong getting stronger in the technology industry, Yushi’s independent path is destined to be lonely and arduous.
Part Three of the Series “Crossing Cycles: The Blank Spaces and New Life of Their Transformations”