Chinese Companies Loading Up On Debt, Buying Out Western Ones

It's a trend far beyond surveillance.

Here's an interesting article from the Financial Times that explains what is going on and the risks involved. The article notes that companies owned / controlled by the Chinese government, have “unlimited access to funding from state banks”."

Perhaps the most fascinating observation is at the end:

"Chinese companies had been largely content to earn renminbi revenues because of a consensus that the Chinese currency was undervalued and because the return on capital inside China was strong.

“Now this has all changed. The return on capital inside China has fallen, the renminbi is no longer obviously undervalued and the capital account has been opened, allowing outward investment”

What Hikvision does with its $3 billion debt will be interesting to see? Will they follow the Chinese trend and spend that on major western security manufacturers?

Who would be worthwhile for them to purchase? Hikvision already has a strong beachhead on our shores and has made some recent gestures that point to pushing toward the enterprise.

Perhaps they could purchase a card access product?

Hikvision already has a strong beachhead on our shores...

Now if they could just secure the Northern border somehow, maybe from Vancouver* to Montreal**, a enterprise class pincer movement would be hard to resist.

*Avigilon, **Genetec

Oh brother...

I was going to go with Arecont Vision, so they can claim to be 'Made In America' :)

In all seriousness, I do not know what their philosophy is on accusations. One person who has direct knowledge of Hikvision's approach says that they would look for something big, something that would make a splash, i.e., not Citilog. Looking at the pattern of other Chinese companies acquisitions, it seems reasonable to me.

With that in mind, I could see an Avigilon deal be a possibility. Avigilon might be ready to sell after the last 2 challenging years and Hikvision could provide the premium that would justify an Avigilon exit. Hikvision would then vault itself into the heart of the mid to upper end Western market.

Again, I do not what Hikvision's approach is so I will wait and see.

Acquiring Avigilon also allows 'Made in America'.

Even better, 'Manufactured in Texas'...

Btw, did you get a chance to check out that link from yesterday about Phillips, a Dutch company, being stopped from selling their LED lighting division to China by the U.S.! For no apparent reason.

Maybe a sign of things to come?

Light bulbs > security cameras? :)

I saw it. I do not know enough about what is behind the US government interfering in that deal, though that certainly has to be factored in by Hikvision as a risk factor in any potential sizable acquisition.

Light bulbs > security cameras? :)

It's a trend far beyond surveillance.

The Chinese government directly owns many of these companies and the US government doesn't like the trend. I don't either, please tell me how secure your building/company will be when a Chinese government owned and operated company is the only remaining producer of IP camera's? IP controlled anything for that matter. A IP enabled lightbulb is an even more innocuous Trojan horse.

How indeed, when the software security of these products is relatively non existent and the majority of those companies put hardcoded admin passwords (backdoors) in their products?

China respects no international laws or governing bodies. All they offer is poor lip service to our intellectual property regulations. Why should we give them anything?

New stats show Chinese banks accelerating debt / lending:

And here is a Bloomberg article on it. They interpret it to be positive in the short term, since more money injected in the economy means more investment, more spending, etc. It's simultaneously being viewed as risky in the long run since it increases the risk of wasteful, inefficient spending. Net/net, these moves indicate that the race to the bottom will continue this year.

"...beachhead..." you say?


1. a defended position on a beach taken from the enemy by landing forces, from which an attack can be launched.

"...pincer movement..." you say?

The pincer movement, or double envelopment, is a military maneuver in which forces simultaneously attack both flanks (sides) of an enemy formation. The name comes from visualizing the action as the split attacking forces "pinching" the enemy.

Why the military terms? Are we at war with China? Or perhaps it's good 'ole "yellow peril."

The term Yellow Peril was coined by German Emperor Wilhelm II in 1895, but the theory that Asian peoples represented a menace to the West originated in the late nineteenth century with Chinese immigrants as coolie slaves or laborers to various Western countries, notably the United States.

Or were you all just being witty?

"Oh, hah hah! Yoo so wi-tee! High-yah!" (sarcasm intended)

The pincer movement or double envelopment, is a military maneuver in which forces simultaneously attack both flanks (sides) of an enemy formation. The name comes from visualizing the action as the split attacking forces "pinching" the enemy.

Yes, exactly. The metaphorical pinchers are Avigilon from Vancouver and Genetec from Montreal.

Why the military terms?

Because War and Business are both zero-sum games, therefore they will share certain high-level strategies. The squeeze-play is one of them, and is common in game theory.