Hikvision Takes Dealers To Morton's Steakhouse

Hikvision USA roadshow took their Houston area dealers to Morton's, one of the most expensive US steakhouses, this week:

Being a Hikvision RSM must be amazing: $150 - $200k a year comp, super low pricing combined with double-dip discount sales (e.g., while this roadshow was running, Hikvision products were up to 15% off at ADI), a big expense budget, an all you can eat and drink event in 2 weeks at ISC West:

Well, not all amazing, you do need to work for the Chinese government...

Agree
Disagree
Informative
Unhelpful: 1
Funny

Morton's is quite luxe compared to the gas station sandwiches consumed in the trenches.

Agree: 1
Disagree
Informative: 1
Unhelpful
Funny: 6

The math kinda doesn’t add up, huh?

trust me, they nickel and dime in all other areas. This is just for show. 

Agree: 2
Disagree
Informative
Unhelpful
Funny

Where are they nickel and diming? For example, we hear consistent reports that their compensation is significantly above market for video surveillance manufacturers.

Agree: 1
Disagree
Informative: 2
Unhelpful
Funny

Sub par Health and wellness benefits 

non existent continuing education benefits 

No profit sharing

Irrational travel and employee expense reimbursements policies

Minimal employee product training and education

.....to name a few.

Agree
Disagree
Informative: 5
Unhelpful: 1
Funny

non existent continuing education benefits

Minimal employee product training and education

I think quite a lot of salespeople do not find those 2 to be key priorities...

I don't know the particulars about the others, though I think profit sharing is less common in this industry (especially for RSMs) and given what Hikvision is paying its salespeople, may be less a concern anyway.

 

Agree: 2
Disagree
Informative
Unhelpful
Funny

Woopty Doo. The worlds largest manufacturer is taking their customers out to a nice steakhouse. This is what happens when you are #1, you take your customers that made you #1 out to a nice place.

Whats the next report gonna be? "Thanks to the Chinese Govt, Hikvision RSM uses triple ply toilet paper to wipe their butts with"

LOLOLOL!

Agree: 7
Disagree
Informative
Unhelpful
Funny: 4

Hikvision is not #1 in the US and Hikvision's dealers are generally way smaller than their bigger rivals.

It's great for Hikvision dealers but, my goodness, shouldn't Hikvision have all the dealers with all these giveaways and discounts? They are #1 in those two.

Agree: 1
Disagree
Informative
Unhelpful
Funny

Hikvision is not #1 in the US and Hikvision's dealers are generally way smaller than their bigger rivals.

According to who? Markets and Markets? 

If Hikvision is taking their dinky small customers out to the best steak houses, then what does the so called #1 manufacturer get their humongous customers? A set of steak knives??

Agree
Disagree
Informative
Unhelpful
Funny: 2

Hikvision is aware of this. Both Axis and Avigilon have greater US revenue than Hikvision USA.

If Hikvision is taking their dinky small customers out to the best steak houses, then what does the so called #1 manufacturer get their humongous customers? 

I am not aware of Axis nor Avigilon having bashes like the one Hikvision is throwing their dealers at ISC West 2018. That's good for Hikvision, presuming it actually leads to profitable business and not simply bribing dealers to stay.

Agree: 1
Disagree
Informative
Unhelpful
Funny

then what does the so called #1 manufacturer get their humongous customers?

So much profitable business, customer leads, and support that they do not need to augment it with dinners and giveaways?

I get the idea of rewarding your best customers, but sometimes when you're already making enough money to take yourself and your entire company out to Morton's, there is little attraction in one steak for free.

 

Agree: 1
Disagree
Informative
Unhelpful
Funny

I am not aware of Axis nor Avigilon having bashes like the one Hikvision is throwing their dealers at ISC West 2018

They should just buy their best customers a ticket to the Hik party.

Hikvision = #1 in cameras and parties

Agree
Disagree
Informative
Unhelpful
Funny: 5

They should just buy their best customers a ticket to the Hik party.

LOL - you are on fire this month!

Agree: 2
Disagree
Informative: 1
Unhelpful
Funny

Big deal I used to host two hundred plus dealers at Ceasars when my revenue wasn't even close to Hilvision USA. 

Its there money they can spend it on promotion anyway they want. 

Those functions are a great way to get to know your customers. 

 

Agree: 2
Disagree
Informative: 1
Unhelpful
Funny

Larry, thanks for the feedback! The point of calling out things like this (remember this Houston one is just one of many going on), the Hikvision UK Dinner At A MonasteryHikvision 71 European City AI Roadshow 2018, the dozen USA cybersecurity events, the 1000 or so invites to Tao next week, etc. is to emphasize the high cost of marketing.

Larry, one of your most common defenses of Hikvision is how inexpensive things are to make in China. But a counter to that is how much Hikvision is spending on sales and marketing.

My experience (and we've seen this with Avigilon most recently) is that mega spending on sales and marketing is unsustainable. A company wants to aggressively expand, puts top-line growth ahead of profits or cost efficiency and just goes for it. But unless the China Communist Party really wants to subsidize installing network devices inside the US forever, it will stop as all such mega sales and marketing campaigns do.

Agree
Disagree
Informative: 1
Unhelpful
Funny

“We will never lose on price.” - Jeffrey He

Agree
Disagree
Informative
Unhelpful
Funny

I agree.

 

Here at my small startup 2017 was our first year, and so far we are on track to double 2017's sales. I have invested all the profits back into marketing, demo equipment, extra truck, employees, etc. But I make a measly $300/week salary. Thank goodness the wife has a good job.

 

While obviously on a slightly different scale, I see Hikvision in a similar position as myself. We are both sacrificing profit to fuel growth.

 

The difference is when my growth stabilizes, and I start to take a real salary and profit, I will have a business based on quality installs, competent staff, etc. Hikvision will still be known for cheap products and free steak. What happens when the sales and free steaks go away?

 

 

 

Agree: 6
Disagree
Informative: 2
Unhelpful
Funny

John anyone who reads and understands what is going on here knows you will bash Hikvision everytime you get the chance and the more I write about it the more opportunity you have to do so. 

Honeywelll under Ben Cornett used to pay for hundreds of dealers to go to the Kentucky Derby including airfare. Steak dinners are peanuts. Bosch is also known to spend big on dealers. Pelco was the most lavish of all. Point being it's good business and by far not only Hikvision uses this method to grow their relationship with dealers. So what, it has nothing to do with the communist party in china. 

I don't see any gun to the head of any of those dealers to attend any functions put on by Hikvision.

Agree: 4
Disagree: 1
Informative
Unhelpful
Funny

Larry, no one doubts businesses take customers out but you are glossing over important structural differences. Let me enumerate them for you.

(1) Honeywell, Boch, Pelco, Axis, Genetec, etc. They take large dealers out that are buying hundreds of thousands of dollars of product at high margins, so there's lots of money built in to fund this. The average Hikvision dealer does way less revenue and Hikvision does way more events.

(2) As you say "Pelco was the most lavish of all." Pelco and most companies do not 'lavish' people anymore. The events are smaller, the money spent is less and the beneficiaries are far more limited to larger, more lucrative customers.

(3) Those other companies rarely offer sales. Why? Because they knew by taking them to dinner or race tracks or whatever, they could justify their prices. By contrast, Hikvision's sales are non stop. This is just from this morning's ADI newsletter:

And last week was another dealer double dip:

It can be good business to wine and dine but it's not good business if you need to wine and dine and drop your prices at the same time.

Agree
Disagree
Informative
Unhelpful: 1
Funny

As an example of the unprecedented marketing spending combined with discounting, new ADI April front page:

If you are going to have to resort to pay ADI to promote you cutting your prices, why spend so much on wining and dining?

Agree: 1
Disagree: 2
Informative
Unhelpful: 3
Funny

You have no idea what margins they have and neither do I. It's really there business to decide how to promote.

also you don't know how much those dealers buy and neither do I 

I can tell you i never discriminated who I invited to my parties in Vegas. Little dealers become bigger dealers. To me a customer is a customer.

I bet if these sales don't work they wouldn't do them. 

 

Agree: 3
Disagree
Informative: 1
Unhelpful
Funny

John,

This is called Marketing. Most companies do it in some form or another. It is money spent on advertising in hopes to bring in new customers. To give you an example, whenever you promote your Hik Scandals on Facebook, you spent money on Advertising in order to bring in new customers.

Taking customers to Dinner is quite a common practice in many industries, not just this one. This is still somewhat of a form of Marketing but more of an act of "customer appreciation". To give you an example, your weekly reporting on Hik Scandals (such as this one) are a way to show the customers that you originally marketed to on Facebook, is a way to appease your target market. 

Hope that helps clear things up. 

BTW, the weekly scandal reporting does not appease me. Therefore, as IPVM's MVC, I require steak and wine next week. Perhaps you can find a restaraunt with a train them and you can dress in a striped train engineers suit. As I walk in, I would prefer that you loudly say "All Aboard the Hik Money Train! Destination: Obscense Profits! Chugga Chugga Toot toot!"

Please let me know when and where. 

Agree: 3
Disagree
Informative
Unhelpful
Funny: 3

the weekly scandal reporting does not appease me. Therefore, as IPVM's MVC, I require steak and wine next week. 

Sigh, you can be my +1 at the Hikvision TAO event at the IPVM VIP table...

And thank you for explaining marketing to me. No one doubts marketing has a role, the question is Hikvision's unprecedented combination of marketing spending and discounting.

Agree: 1
Disagree
Informative
Unhelpful
Funny

Sigh, you can be my +1 at the Hikvision TAO event at the IPVM VIP table...

 

I figured you would reserve that seat for Xi Xinping? I am honored.

Agree
Disagree
Informative
Unhelpful
Funny

"It can be good business to wine and dine but it's not good business if you need to wine and dine and drop your prices at the same time."

Why do you care so much?

It is not your problem

and nobody asking you for advice

Can you stop pleazzzzzzzzzzz!

Agree: 3
Disagree
Informative
Unhelpful
Funny: 1

U4, you are now Hikvision's top defender on IPVM!

Why do you care so much?

We care about covering the industry. There's no bigger topic in this industry than the changes driven by the expansion of Chinese manufacturers led by Hikvision.

and nobody asking you for advice

You've been reading IPVM for what? 8 years or something? We are not interested in whether Arecont or Avigilon or Axis or Dahua or Hikvision or you (or whomever) wants our advice. There are obviously many people who are interested in this topic. If you are not, we have a new shootout today on Dahua or the only details / analysis on the new JCI deal.

Agree: 3
Disagree
Informative
Unhelpful
Funny

John,

I have witnessed countless of these Hik-bashing vs. Hik-defending sling matches on IPVM. Quite frankly, it's tedious and erodes the value of this site, in my opinion. There is no doubt you should, quite correctly, defend your right to cover the industry but entering into senseless arguments to do so is futile and worthless.

Yes, Hik-Vision is the #1 manufacturer in the world and thus deserves a proportionate amount of coverage but the tone of your reporting about them has become cynical and sarcastic of late. This is below where you should set your own standards and belittles the content you are trying to present. I really can't blame Sean and others for defending them.

I believe the role of journalism is to present the facts in as unbiased a fashion as possible. Failing this, you lose credit and credibility. You may feel that you have no bias, but judging from the number of people criticising you for the way you report anything to do with Hik-Vision, the appearance you present is that you do.

I hope you can overcome whatever bias you appear to have towards Hik-Vision and return to reporting about them with a tone and content that is purely informative.

As for me, I'm afraid I will be cancelling my account.

Agree: 3
Disagree
Informative: 2
Unhelpful
Funny: 1

John:  When I ran a P&L of a larger corporation that was a large security system integrator, when OEM RSM's would offer to wine and dine our team, I'd ask, if instead we could just get an extra 0.5% discount to make the point you are making.  They often understood my point and I believed it helped me and my team to have better conversations about deeper discounts for individual larger enterprise level deals - though that's just my personal opinion, I have no real numbers from that period in my career to substantiate my gut feel.

Also re: the comment "Pelco was the most lavish of all."

My experience there was Pelco was indeed lavish. Lavish in helping to train our staff on their products and would indeed roll out the red carpet to us, when we'd bring large customer prospects to see their factory, etc.  My point is those were Marketing/Sales G&A expenses that mutually helped us and them directly with large potential or existing customers - a clear business purpose. In other words while I found them more than willing to help me help them, they did so in a manner that clearly built brand loyalty from both us as a large integrator and and key customers throughout their focus markets.

That all said re your statement:  "It can be good business to wine and dine but it's not good business if you need to wine and dine and drop your prices at the same time." 

It's also not necessarily foolhardy business to consistently drop your prices, run sales, or deeply discount to further mortally wound your real competitors.  I am clearly seeing Hikvision and other Chinese manufacturers and suppliers win and maintain marketshare now against other large non-Chinese OEMs, including other OEMs in the Asia-Pacific region. So while this may or may not be sustainable they seem to have the margin spreads to be able to afford it and this consistant sales tactic is IMO factored, intelligently into their short term and long term pricing strategies.

As long as their are no regulatory impediments to them in the marketplace, it seems clear to me, other OEMs need to figure out how to compete on closer par to their prices, in particular to the lower and mid-tier capability cameras.

Agree
Disagree
Informative
Unhelpful
Funny

Mark, good comments!

It's also not necessarily foolhardy business to consistently drop your prices, run sales, or deeply discount to further mortally wound your real competitors.

To the extent, they can kill their real competitors, there's benefit for them. And I do think Hikvision can kill more relabellers, like Nuvico and Toshiba, and are likely to kill more in the next few years. However, I am not seeing them killing Axis or Hanwha or Avigilon or a number of other of the real competitors. 

Unless they can kill the top 'real' competitors, I am not sure what they gain long-term. As soon as the sales and parties end, few of these dealers will be loyal to Hikvision (as they have not been loyal to previous suppliers), they will go to whoever is willing to do this next or back to regular 'real' competitors.

 

Agree: 1
Disagree
Informative
Unhelpful
Funny

I haven’t seen anyone pick up a sales team in a private jet, walk them into the company store and say “pick something” except Pelco so far.

That and the parties helped the undecided, the quarterly newsletter helped the rest along with spectacular customer service.

Having Pelco Travel book your stuff certainly made the relationship tighter.

All good ideas and execution. 

Agree
Disagree
Informative: 1
Unhelpful
Funny

Oh for the love of Pete.  A manufacturer took a group of dealers to dinner.  Axis, Panasonic, and countless others have never done the same?  If they took them to McDonald's the aim of the article would be "Look How Much Hik Hates Dealers"

 

Man this site seams like an ex-girlfriend stalking her man's facebook page sometimes.  Sad.

Agree: 4
Disagree
Informative
Unhelpful
Funny: 2