IPVM Potentially Affecting The Hundreds Of Hikvision US Employees And Their Families

JH
John Honovich
•May 27, 2018
IPVM

The LinkedIn post for our US House Passes Bill Banning Gov Use of Dahua and Hikvision article has received 168 likes and 17 comments so far, with the most heated being this one:

'Austin Anderson' was evidently created just to post that as 'he' has no connections nor any other activity:

[Update: The profile and comment have now been removed from LinkedIn, though not clear how or why that occurred.]

Considering that 'Austin' went through all that trouble to post that and since Hikvision USA people have repeatedly said similarly to us, I'd like to address this publicly.

First, to any industry people who are genuinely having employment or family problems, I sincerely extend my best wishes and volunteer to help out in your job search (email me john ipvm.com).

That noted, US unemployment is the lowest it has been in nearly 20 years, so job loss is not a major structural problem.

To the extent that this industry is not hiring as much as it did 5 years ago, the main culprit is obvious. Hikvision's aggressive price cuts (backed by the Chinese government) have made it less attractive for other manufacturers to expand. It's hard for most to compete against a company whose products are literally always on sale at ADI and spends far more than anyone else in marketing, events, dinners, parties, etc.

As for Austin's claim about these Hikvision employees 'taken a risk' and 'want to provide a better life for their families'. Is that not your risk you take working for the Chinese government? If that is the way you have chosen to 'provide a better life' for your family, maybe you should reconsider?

The real issue is how much more Hikvision USA is paying many of its employees than they could make elsewhere. Hikvision employees, have you thought about this? How does a company price its products less than every other mainstream product, spend more on marketing and pay their employees more? I get that most of you are just happy to get that money but have you ever realized that it must be too good to be true? Perhaps that they are run by the Chinese government plays a factor in your personal financial gain?

I certainly do not wish people lose their job. On the other hand, Hikvision employees need to be realistic. You work for an entity controlled by the Chinese government, an authoritarian regime at heads with your own country. And with the House ban bill and increasing government recognition of the risks of Hikvision, this is no longer an industry issue but a national political one.

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U
Undisclosed #1
•May 27, 2018

JH, ? for you

Do you think HIK is selling below their cost?

If you do,what info/proof do you have?

Thanks

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JH
John Honovich
•May 27, 2018
IPVM
In reply to Undisclosed #1

Hikvision USA claims 400 or 450 employees now. Add salaries, benefits, expenses, overhead, offices, warehouses, shows, etc. and their overhead is approaching $100 million. I don't think it's remotely possible for them to be profitable with that (made worse by the low pricing and the never-ending price cuts).

And I know you and other Hikvision proponents like to talk about how cheap things are in China, but all of this is local US dollar expenses, and it is extremely expensive to run such a large operation.

Now, let me ask you - Did you at least enjoy Tao Beach?

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U
Undisclosed #1
•May 27, 2018
In reply to John Honovich

I did not visit Tao

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UI
Undisclosed Integrator #6
•May 28, 2018
In reply to John Honovich

How much does  1 camera or any NVR cost Hikvision to manufacture and ship to the US? No one in IPVM has that answer, so from that point alone it's all a guessing game as to their profitability and sustainability......right?

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JH
John Honovich
•May 28, 2018
IPVM
In reply to Undisclosed Integrator #6

Any financial estimation (of Google or Tesla or Hikvision) is at some level a 'guessing game' since companies don't disclose all details. 

But let me recap the counter you are getting at. It goes something like:

"Hikvision sells cameras for $100 in the US and those cameras cost [pick some extremely low number like $10, $20, etc.]. That means huge profit margins!"

The key factors not generally considered are discounts and distribution costs, which are sizeable. Even if Hikvision's street price for a model is, say, $100, after taking in discounts (dealer discounts, project registration discounts, ADI everything on sale discounts, ADI hot sale discounts, plus volume discounts - i.e., end users who are buying 1,000 cameras at once) and then distribution cut (e.g., ADI markup, year-end 'rebates' that manufacturers make to ADI, etc.), what a manufacturer actually receives is far less than the street price, in Hikvision's case half or less.

How much does 1 camera or any NVR cost Hikvision to manufacture and ship to the US?

It depends on the model. The more fundamental point you want to get at is what is the gross margins? i.e., maybe their cost of production is so low that the gross margins are high. Hikvision's 2017 financials list overseas GM% at 48.79%.

The third component is total revenue. For example, Walmart's gross margins are low but their revenue is huge, ergo profits.

The problem for Hikvision USA is that their revenue is not huge but their overhead is. Hikvision USA has way higher overhead than Axis USA but way lower revenue. That is the structural problem. Hikvision USA dreamed of growing fast and large enough that it would cover their overhead. It has not happened and with the US government's increasing 'recognition' of Hikvision, that will only get harder.

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UI
Undisclosed Integrator #2
•May 27, 2018

Keep the good work up IPVM. Keep it factual and keep the industry honest.

 

If you work for a company with potentially deceptive business practices isn't it better to know? Would you rather just pretend it isn't so?

 

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JH
John Honovich
•May 27, 2018
IPVM
In reply to Undisclosed Integrator #2

Would you rather just pretend it isn't so?

I think what makes it tough for Hikvision employees is that the people they work with are telling them adamantly that they are totally ethical and totally unrelated to the Chinese government. And the people saying the opposite are people they don't know and people their company has said are absolutely unethical.

Add to that, for a lot of Hikvision USA employees, if they leave, are looking at a pay cut and reduced title, that's hard for most people to accept.

On the other hand, the more of a national political issue this becomes, the harder it is to avoid. 

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U
Undisclosed #3
•May 28, 2018
IPVMU Certified

Looking on the bright side, credit is rightly assigned to both HIK and JH for any additional cyber-security industry hires resulting from the events of the former and the revelations of the latter ;)

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JH
John Honovich
•May 28, 2018
IPVM
In reply to Undisclosed #3

In fairness, they have significantly increased their marketing and PR spending in response to all this.

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U
Undisclosed #3
•May 28, 2018
IPVMU Certified
In reply to John Honovich

...they have significantly increased their marketing and PR spending in response to all this.

And in response to their partner’s requests...

 

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U
Undisclosed #4
•May 28, 2018

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UM
Undisclosed Manufacturer #5
•May 28, 2018

To all of the brilliant sales people and tech savvy individuals who now find themselves “stuck” at Hikvision or Dahua - continuing to work for the Chinese government run companies is ruining your reputation - get out. Run. I know it will be hard - we all have bills to pay, mortgages to repay, kids and families to support - but make the decision to do it and work out your exit stategy.

I was fortunate after a second redundancy in my early 40’s that I didn’t have to take the first job that came along (an old colleague who was now at HikVision in my country gave me a call when I became available on the market) and I landed a job with a reputable Westen brand a few weeks later - right place, right time. It’s not too late to do that same for you. 

The Chinese brands do not value or regard your expertise in high esteem. The longer you work for them, the less esteem you will be held by your peers. It’s time to choose - for your sake. After you leave you can “stick it” to Hikvision, Dahua and all that other cheap rubbish in the market place, by taking many of their customers/projects and providing trusted solutions. 

Make these lyrics/song your battle cry:

http://www.megalyrics.net/quiet-riot/we-re-not-gonna-take-it

Good luck and don’t be “Austin Anderson”.

Sorry - company policy restricts me from posting my name/details. 

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U
Undisclosed #3
•May 28, 2018
IPVMU Certified
In reply to Undisclosed Manufacturer #5

http://www.megalyrics.net/quiet-riot/we-re-not-gonna-take-it

I’m not familiar with the Quiet Riot cover of the Twisted Sister hit ;)

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UM
Undisclosed Manufacturer #5
•May 28, 2018
In reply to Undisclosed #3

You are quite correct - Twisted Sister is the band - not Quiet Riot. How could "Google" not have given me the correct reference...

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U
Undisclosed #3
•May 28, 2018
IPVMU Certified
In reply to Undisclosed Manufacturer #5

You are quite correct...

Score one for the nit pickers!

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UM
Undisclosed Manufacturer #7
•May 28, 2018

"How dare you call us on our shady business practices! Don't you know that screwing over our end users and destroying the domestic surveillance equipment industry is our livelihood?" 

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CK
Carl Kristoffersen
•May 29, 2018

Which is it John.  Are you "not going to put a dent in these multi billion dollar companies" or "one by one be responsible for someone losing their job"?

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JH
John Honovich
•May 29, 2018
IPVM
In reply to Carl Kristoffersen

Carl, what I think 'Austin' is getting at is that given how huge Hikvision is, and how relatively small their US sales are, even if Hikvision shut down US operations, it would not 'put a dent' in their overall business.

Hikvision did $4.7 billion revenue inside of China in 2017. Their revenue inside of China is growing faster than outside. Plus, no China Communist Party member is going to read IPVM and conclude "Let's stop using Hikvision". The reality is, as long as the PRC is backing Hikvison and the PRC can avoid crisis, Hikvision will be the biggest video surveillance provider in the world, driven by its massive Chinese sales.

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CK
Carl Kristoffersen
•May 29, 2018
In reply to John Honovich

That may be true, but the sky still will not fall.  Hikvision will continue to grow in this country even with your long reach and incredible stature.  They may not hire that one extra person this year, but they won't lose anyone.

JH
John Honovich
•May 29, 2018
IPVM
In reply to Carl Kristoffersen

Hikvision will continue to grow in this country even with your long reach and incredible stature

The real threat to Hikvision is the US government. It is a major barrier to have the US government effectively declare one's company a security risk.

Can Hikvision continue to 'grow', if by grow we mean top line revenue? Sure. They can continue to cut prices and hire more sales and marketing people.

But Hikvision needs to find some way to run a sustainable business and the US government red flagging a company will make that extremely hard to do.

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UE
Undisclosed End User #8
•May 29, 2018

Let's see, how do I, as a security professional, justify using a product banned from being used by my own government? I don't. So for those who believe this will not affect Hikvision, you are delusional. Perception is they are a security risk, a perception supported by the US Government. Any Security Professional worth a salt will NOT use these products. And any security professional who has a decent relationship with their InfoSec team will not try to defend a decision to use their equipment. Not worth the reputation. Of course, this is only an opinion.

NOTICE: This comment has been moved to its own discussion: How Do I, As A Security Professional, Justify Using A Product Banned From Being Used By My Own Government? I Don't.

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UM
Undisclosed Manufacturer #9
•May 29, 2018
In reply to Undisclosed End User #8

Or, put more simply, you cannot simultaneously call yourself a "security professional" and recommend/sell these wares.

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UM
Undisclosed Manufacturer #10
•May 29, 2018
In reply to Undisclosed End User #8

"Let's see, how do I, as a security professional, justify using a product banned from being used by my own government?"

That's just it...there's a difference between being a true security professional and a product peddler.  For the many that only see cheap prices (despite other low cost lines available) and can sleep at night without worrying about directly supporting a political adversary to our county or putting their own customers at risk, peddling products is a great way to make a living.  That's NOT the behavior of a true security professional, though.

For those of you reading this thinking, "How dare this anonymous person (required) claim that I am not a real professional??!??", think about it.  Mountains of evidence have been uncovered with regard to company ties and security vulnerabilities.  YOUR OWN government has now agreed and stated that this is an unacceptable security risk.  We are attacked multiple times every day from a cyber perspective from within the borders of China.  And somehow, you question how continuing to sell that product justifies bringing your professionalism into question?

If this is you and you're committed to staying the course, that's fine -- we are a free country and that is your prerogative.  But you can't have it both ways -- real professionals don't make those kinds of compromises.  I really question how many people really take the time to even explain to their customers what's going on...I only hear things like, "They're just a gas station...they don't care is someone is watching their store from China."  While that might be true, I highly doubt that risk is often explained, or the risk of those devices being used as DDoS attack bots due to backdoor vulnerabilities, or the risk of their network being exploited.  That's not professional behavior.

Peddle products and support your family...fine.  But don't be offended when others call you on it because they actually take their job more seriously than just a paycheck.    

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Avatar
Mark Jones
•May 30, 2018

Some (maybe many for all I know) of you are too young to remember but I am at least tangentially reminded that several years ago news organizations in the US reported that big tobacco was a serious health risk to our population.  Many of the same arguments were made about their products that are made here, although the details may be different.  

Here we are on the other end of that saga and it seems ridiculous that anyone would attempt to defend the position of those companies.  Their product presented a direct negative impact on the health and safety of millions and they very shamefully lied to the public almost every step of the way.  

I am not labeling IPVM as CBS and JH is not Mike Wallace, but this topic has legs and it won't go away because there are legitimate concerns and there are some potential misdeeds going on here be they intentional or not.   I stand in amazement why the companies being accused don't just work a tiny bit harder to fix what is obviously broken and improve their image themselves.  

The entire purpose of a corporation is to maximize shareholder wealth.  That is Business 101.  While that is the entire point, a Corporation has a duty to act responsibly and ethically.  If you don't you will lose market share which will have a corresponding affect the bottom line.  That will not make your investors very happy.  

This, despite the flat-earther's assertions otherwise, is not China.  If you are going to conduct business here, you will play by our rules. 

 

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Avatar
Stephen Neckers
•May 30, 2018
IPVMU Certified

I think also stating that Chinese products in the US is nothing new, is a simplification of the issue. In this case we are talking about security cameras that can be hacked easily and allow anyone globally to then view the feed. Couple that with Software based analytics that can reside on a server, and the fact that there are stories all over about how China is now tracking their own people with analytics and scoring them on their activities from those analytics, and you have an issue. Add to that the company is owned and controlled by the Chinese government, and you have even more red flags. IPVM  is correct, that the market is flooded with these cameras and they are ridiculously cheap in comparison to the rest of the market. Part of that is because the Chinese government, is backing it, and part of it is because it is a Communist government where they dictate what will be done, dictate wages, and have very minimal safety standards for their employees. there is certainly enough reason for concern on this matter to continue reporting on it so business owners can make an informed decision.

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UI
Undisclosed Integrator #11
•May 30, 2018

Ladies and Gents there is no debating this topic.  All you can do is make a note on your Outlook a few weeks before your membership auto renews with a little note such as "Cancel IPVM Subscription."  

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JH
John Honovich
•May 30, 2018
IPVM
In reply to Undisclosed Integrator #11

#11, you are welcome to debate it. You are a vocal detractor of IPVM and that's welcome. Indeed, I am especially interested to hear the pro-Hikvision case post the US House Bill.

Btw, as a point of fact, canceling your subscription can be done at any time, it just cancels the auto-renewal, you still get access for your remaining time and can always reactivate or extend your membership anyway.

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Undisclosed Integrator #11
•May 30, 2018
In reply to John Honovich

Thanks and done

 

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U
Undisclosed #1
•May 30, 2018
In reply to Undisclosed Integrator #11

Wish I can give you "Agree" 100 times:)

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U
Undisclosed #3
•May 30, 2018
IPVMU Certified
In reply to Undisclosed #1

Wish I can give you "Agree" 100 times:)

You might be able to get 10 “Unhelpfuls” though:)

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U
Undisclosed #1
•May 30, 2018
In reply to Undisclosed #3

Ask me if I care

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JH
John Honovich
•May 30, 2018
IPVM
In reply to Undisclosed #1

Wish I can give you "Agree" 100 times:)

What? And force him to have another 2 months of IPVM? :)

But, in all seriousness, the best way for you to help Hikvision is to make lucid, strong points in their favor.

Btw, I gave both of you funny votes!

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U
Undisclosed #1
•May 30, 2018
In reply to John Honovich

Thanks JH

You wouldn't mind if I buy and create website "ipvmpolitics.com":)

JH
John Honovich
•May 30, 2018
IPVM
In reply to Undisclosed #1

Sure, also please buy itjohnsfaulthathikvisionisownedbythechinesegovernment.com

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UD
Undisclosed Distributor #12
•May 30, 2018
In reply to John Honovich

Oh John, please don't feed the sad little troll.  We should all just remember him in all his glory when his sub runs out, oh wait, he really wasn't even any good at trolling.  Oh well, there's no debating it, please don't forget to unsubscribe sir.

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UI
Undisclosed Integrator #14
•May 31, 2018
In reply to John Honovich

Good thing I jumped ahead and bought militarybaseswithbannedproduct.com

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CK
Carl Kristoffersen
•May 30, 2018
In reply to Undisclosed Integrator #11

Felicia, I'm confused.  Are you saying that employees jobs with a questionable company are more important than people's security?

I installed Outlook, made the note, then deleted Outlook.

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UM
Undisclosed Manufacturer #7
•May 30, 2018
In reply to Carl Kristoffersen

Damn.

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U
Undisclosed #3
•May 30, 2018
IPVMU Certified
In reply to Undisclosed Integrator #11

All you can do is make a note on your Outlook a few weeks before your membership auto renews with a little note such as "Cancel IPVM Subscription."

Or at least:

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UI
Undisclosed Integrator #13
•May 30, 2018

Pardon the fact that I didn't bother to read the rest of the comments that were made however I do want to point out one thing that seems to be lost at the beginning of this thread.  And that one thing is, if Hikvision was not prudent/judicious enough to ensure their products were secure, then how is it anyone else's fault?  Does it not fall on the manufacturer to ensure their product is safe and secure?  Why not do the right thing? Quite frankly, I question their intent based on the nature of the exploit. 

Personally I have nothing against the Chinese, but we're talking about a country's government having access to potentially sensitive areas in other countries. 

As for job losses, etc., if I were employed by this manufacturer, I would focus my sales elsewhere.  Surely the US government is not the only fat cat source for you.

U
Undisclosed #3
•May 30, 2018
IPVMU Certified
In reply to Undisclosed Integrator #13

...if I were employed by this manufacturer, I would focus my sales elsewhere. Surely the US government is not the only fat cat source for you.

What self-respecting authoritarian government is going to spend 6 billion dollars just to get a video feed from Kwiky-Mart? ;)

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CK
Carl Kristoffersen
•May 30, 2018
In reply to Undisclosed #3

The same one that spends billions on cities that no one lives in.

And those feeds are probably very entertaining...  Have you seen the antics that happen at Kwiky Mart?

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UD
Undisclosed Distributor #12
•May 31, 2018
In reply to Undisclosed #3

I personally consider it more of a threat that there are millions of these devices out there that are just waiting to be taken over by someone because of their lack of security.  Whether that someone is a hacker for profit or a foreign power using it as a means to stage an assault on another nations electronic presence, the ability to do so has been made very very clear in the past few years.  One of the first things done in warfare is to destabilize the opponents ability to communicate.  In this modern age wouldn't this be achieved most effectively by massive attacks using compromised devices that they already have easy access to???  They don't care about using that camera to watch a video feed from the Kwiky-Mart, but those cameras are warriors in their electronic assault plan.

 

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UM
Undisclosed Manufacturer #15
•Jun 01, 2018
In reply to Undisclosed #3

Do you, seriously, still think that they are after video footage?  The camera is/can be the gateway into the rest of the network (ie:  credit card machine info, medical records, personnel data, etc).  Come on people, it’s 2018!  

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JH
John Honovich
•Jun 01, 2018
IPVM
In reply to Undisclosed Manufacturer #15

Hikvision's Chuck Davis agrees with you:

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U
Undisclosed #3
•Jun 03, 2018
IPVMU Certified
In reply to Undisclosed Manufacturer #15

Do you, seriously, still think that they are after video footage?

Not from Kwiky-Mart, no.  

But why would you not think that having access to video feeds from inside a military base or embassy or other secure sensitive facility would not be a prime foreign government’s intelligence goal?

Piece of cake compared to rigging Xerox machines in the pre-internet days.

UM
Undisclosed Manufacturer #16
•Jun 04, 2018

This is a test. I am new here and wish to learn from the vets. I cant disclose who I am or where I work but value tough honest discussion no matter what companies feelings get hurt (including my company) Ultimately it should make them better as they solve where they are exposed.

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U
Undisclosed #4
•Jun 04, 2018
In reply to Undisclosed Manufacturer #16

UM
Undisclosed Manufacturer #16
•Jun 04, 2018
In reply to Undisclosed #4

I prefer this one:

 

 

CK
Carl Kristoffersen
•Jun 05, 2018
In reply to Undisclosed Manufacturer #16

Just remember, the case is never closed until you see....

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UM
Undisclosed Manufacturer #16
•Jun 05, 2018

I have many years of experience with Hikvision both at their HQ and in regions.

The opinions being discussed here are a very healthy and many a vendor and politician are too afraid to take a public position.

Well played IPVM!

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