Shenzhen is a city that epitomizes China’s foray into the free market. Created as a special economic zone for the great capitalist experiment in the late 1970s, the once-sleepy village is now a maze of factories and high-rises.

This industrial hub is not only home to millions of residents — it’s also teeming with high-tech surveillance equipment. As part of a project that began a couple of years before the Beijing Olympic Games, the government installed about 200,000
surveillance cameras throughout the city, according to journalist Naomi Klein.

Right now, the Chinese government is in the midst of a massive security overhaul. When the dust clears, the sprawling city of Shenzhen will contain more than 2 million closed-circuit television cameras. That’s double the number of cameras lining the streets and shops of London.

Make no mistake about it — Big Brother is watching the Chinese every moment of every day.

Klein detailed the rise of the high-tech Chinese security state in Shenzhen in her pre-Olympics exposé in a 2008 edition of Rolling Stone:

“China today, epitomized by Shenzhen’s transition from mud to megacity in 30 years, represents a new way to organize society,” Klein writes. “Sometimes called ‘market Stalinism,’ it is a potent hybrid of the most powerful political tools of authoritarian communism — central planning, merciless repression, constant surveillance — harnessed to advance the goals of global capitalism.”

The surveillance industry in China is booming. It will be a $43 billion industry by next year, growing 20% annually for the next two years, according to the Chinese Security and Protection Agency. This robust growth won’t happen by itself. China’s ruling political party and big business will be supplying the cash to expand surveillance and security measures in every city and town in the country.

Whatever bumps or growing pains the Chinese economy will face over the next several years, it is all but certain that the current expansion of the security state will continue unabated. And one small company is emerging as a security and surveillance industry leader — nabbing lucrative government contracts left and right, all while buying out smaller competitors to fuel its growing business…

China’s Best Surveillance Play

In the latest issue of Penny Stock Fortunes, we let our readers in on a Shenzhen-based company that develops both surveillance equipment and software for the government and commercial sectors. The company provides surveillance networks, traffic monitoring, pollution detectors, alarms and an array of security devices and software.

Thanks in part to the Communist Party’s strict security demands, this company also has a history of winning large government security and electronic infrastructure contracts. These deals are so large in size and scope that just one or two wins could significantly impact its top line – and they already have one in the pipeline right now.

Thanks to aggressive government surveillance legislation, this company will have plenty of opportunities to grow its business in the coming months and years. More on this specific play in a bit…

Mandatory Government Programs Are Set to Boost the Security Industry

Life in China is not like life in the United States. The party wants to have it both ways: maintaining control over the population while growing its capitalistic enterprises. This grand compromise will be no easy task. It will take plenty of technology, security — and money.

With that in mind, the Chinese government has passed specific safety and surveillance ordinances. These laws mandate street surveillance for 660 cities, courts and entertainment locations. The projects themselves will be worth an estimated $25 billion over the next five–10 years. Our company also expects to earn additional contracts thanks to the government’s infrastructure and social welfare stimulus package.

Stocks That Will Continue to Shine

The Summer Olympic Games in Beijing was China’s coming-out party to the world. It gave the new industrial giant plenty of exposure — both positive and negative — no matter how hard the powers that be tried to control the message.

You see, China has everything to gain and a whole lot to lose. The country and those in power want to continue to see China grow and prosper into a top industrial nation. The risks of crime or uprisings would undermine these goals. That’s why security and surveillance remain important issues long after the final day of the Beijing Olympics…

With more than 15,000 companies out there servicing the Chinese security market, there’s no shortage of investment opportunities right now.

Sincerely,
Greg Guenthner

October 23, 2009

P.S.: For more details on this specific play, check out the Penny Stock Fortunes website…

Greg Guenthner

Greg Guenthner heads up Agora Financial’s small-cap division and is the founder of one of the only independent OTC research advisories in the industry. A graduate of George Mason University, Guenthner joined Agora in 2005 after several years as a journalist. He is managing editor of Penny Stock Fortunes and Bulletin Board Elite.

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