Should The U.S. Government Investigate Hikvision For Predatory Pricing?

or market dumping?

In economics, "dumping" is a kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production. The purpose of this act is sometimes to increase market share in a foreign market or to drive out competition. ...

Under the World Trade Organization (WTO) Agreement, dumping is condemned (but is not prohibited) if it causes or threatens to cause material injury to a domestic industry in the importing country...

Opinions differ as to whether or not such practice constitutes unfair competition, but many governments take action against dumping to protect domestic industry. Wikipedia

Certainly these types of allegations against Hikvision are not in short supply around here.

Considering the length of time from report to relief is often years long, should we at least get the ball rolling and find out if the U.S. government/WTO sees anything unfair or actionable in Hik's U.S. Distribution policies to date?

Anyone with any legal knowledge of how to proceed with a complaint of predatory pricing is encouraged to share.

Maybe a Poll?


In the Canadian market, there are multiple brands that are price-comparable to Hikvision on the lower end: Samsung, FLIR/Dahua and Geovision come to mind immediately. All are available at the three distributors I frequent and one or more of the brands are on sale each month. Digital Watchdog is getting to be price competitive when their products are on sale, but they are not quite as inexpensive ($30 or so more per camera). The ADI and Tri-Ed house brands are also around the same price as Hik or lower, depending on the month. For example, a 1.3MP ADI (Hik OEM) camera cost me $100 two months ago.

I am not sure how much lower the camera prices can go for IP but if we see 2MP for under $100 any time soon, I would almost be inclined to agree with you. What I was told (second hand information, mind you), was that Hikvision's costs are around $40-$50 USD per camera, shipped (not factoring in R&D). I have no proof that this is the cost, so take it as hearsay.

Do you have any information regarding pricing in the US and how much lower the Hik cameras go for at the distributors than other brands? Without a comparison, I only have the prices I see day-to-day to go on, and I do not feel that Hik is acting predatory in our market.

Undisclosed 2 asks:

"price-comparable to Hikvision on the lower end: Samsung, FLIR/Dahua and Geovision"

Which Samsung models? Samsung is generally notably higher on most equivalent spec'd cameras to Hikvision? e.g., the Samsung SNO-L6013R or the SND-L6013R check best matches to Hikvision and Dahua. Samsung is still a lot closer than Axis, Avigilon, Sony, Panasonic, etc.

Btw, "The ADI and Tri-Ed house brands are also around the same price as Hik or lower, depending on the month." That does not disprove dumping, since they are both Hikvision products.

I do think you bring up a good question about price comparisons and we can do more of those specifically. If you have any feedback on specific model comparisons you have seen, let us know.

Hi John,

This is what I see in the Canadian ADI flyer for December currently:

DW DWC-MF21M4TIR - $170
Geovision 84-EDR2100-0010 - $170
Wbox 2.1MP - $100
Wbox 3.1MP - $140
Hikvision DS-2CD2132F-IWS-2.8MM - $170
Samsung SNO-L6013R - $133 (not in flyer)
Samsung SND-L6013R - $135 (not in flyer)

Keep in mind, this pricing is if you just go in and buy a few items. I have been able to negotiate most manufacturers down 20-25% on bulk orders. We tend to go through 250 cameras a year for new installs, so I buy the most commonly used units all at once and get a pretty spectacular price.

If you guys do not mind, what are my American counterparts paying for their cameras?

2, here is the US ADI December flyer. Let me know if that helps or you find anything interesting there.

Thanks for sharing those prices. For the comparisons we need to be careful that they are apples to apples. For example, the Hikvision you list at $170 is 3MP outdoor vandal, while the Samsung ones are 1080p indoor, non-vandal. For a Samsung 1080p outdoor vandal dome, the closest I believe is the SNV-L6083R which is in the $200 range.

Thoughts?

SNV-L6083R is $259, but this is the varifocal. This fixed lens is $230. Two months ago I want to say the fixed lens version was around $150 or $160, but that was on a very good sale.

Canadian Flyer is here, which has a very similar layout/selection to the US.

I still feel that Hikvision is either pricing things to be right around everyone else or everyone else is trying to keep the price low to be competitive - there does not seem to be an issue as far as the WTO defines it. Coupled with the lower pricing in China vs Canada and the US, and I would say there are no grounds for any sanctions.

I want to say that most or all manufacturing happens in China and Taiwan (maybe some in S. Korea?), so manufacturing cost should end up very similar depending on the chips used. That being said, are any cameras manufactured in the US that are meant for the same purposes as the major brands? I have used (at least I think I did) cameras made in the US and EU for specialty applications (Class I Div II, fire detection, etc.), but those applications are few and far between.

"I still feel that Hikvision is either pricing things to be right around everyone else"

So far, though, with the examples we have gone through (also see u1's comment below), like to like, Hikvision is far less expensive.

Do you have any examples where Hikvision is more expensive than anyone else at ADI, for equivalent feature sets? Of course, leaving out W-Box, which is Hikvision too.

"below the price charged in its home market"

This is likely not the case. Hikvision sells direct off its own website in China and you can see their prices. Dividing those prices by 6 for a rough USD conversion makes it clear that they are selling for less in China than what similar products go for in the US.

Of course, one thing that makes this hard to compare is that the selling costs are much higher in the US than in China, since in China their sales, support and marketing can be done at far lower costs than the equivalent in the US or other Western countries.

"or below its cost of production"

This one might be relevant. Later in the Wikipedia article, they phrase it as selling "at a price that does not meet its full cost of production". If it means they are selling at a loss, then this is potentially relevant.

I do not know enough about dumping laws to have an opinion yet.

"In the United States, domestic firms can file an antidumping petition"

Ask FLIR? They likely know what the cost of production is inside China, given their Lorex division and the deals / access to information they have.

I do not know enough about dumping laws to have an opinion yet.

More than you ever want to know here...

Also,

Steel industry is doing it:

Chinese Steel Slapped by 236% U.S. Tariff Plan

Complaints filed with the WTO against China.

P.S. the map is a bit inaccurate in some respects, in reality Africa is about 14 times the size of Greenland. ;)

From the American ADI Flyer:

Lowest priced 2.1 MP IP domes:

  • Everfocus $126
  • Geovision: $112
  • ADI WHik Box: $79

Everfocus and Geo are selling 50% and 40%, respectively, more than OEM Hik.

And the WHik domes are IIR 100M, IP66, IK10 with 5 yr warranty.

Taxed at the border: List of products from China that are currently subject to anti-dumping duty orders.

323 total. Everything from paper clips and pencils to ironing tables and candles.

Each niche complaining about practices that sound identical to the current Hik situation.

I don't see why any Western manufacturers haven't tried getting duties on Chinese subsidized imports?

Maybe they are working on it now?

Are they dumping? Or are they just being super competitive and willing to live on skinny margins? In doing my own unprofessional teardown I don’t see a lot of stuff inside Hik and much of it appears to be commodity anyway. Makes me think the $40-$50 COG estimate may be on the high side, and if so could this portend more room at the bottom? I guess the bigger question is, given today’s commoditization for all comers and the ability of any biz to produce in China, or a lower cost alternative, exactly where is the bottom? This stream of thought leads ultimately to the question; is Hik the villain or are they simply speeding up a process that is going to happen anyway? I’m inclined to believe the latter. And to answer your question, I suspect involvement of the US Government could not happen in time nor would it be terribly effective. All bets are off of course should we get Trumped.

Hikvision has tremendous leverage and overhead absorption, if they can sell at less margin to get market share that's free trade. In reality what is happening to the CCTV market is no different than what took place in motion sensors and alarm panels 10 -15 years ago. Its called survival of the fittest. If were them I would be doing exactly the same thing.

Look at pricing coming out of Wodsee and others from China , 1080P cameras for $19. I think you should complain Hikvision has too much margin!

"Look at pricing coming out of Wodsee and others from China , 1080P cameras for $19. I think you should complain Hikvision has too much margin!"

Wodsee and others are selling from China, with no 'overseas' sales, support, engineers, marketing, A&E services, warranty, etc. Wodsee is a completely different offering than any 'regular' manufacturer, such as Hikvision, Vivotek, Axis, Panasonic, etc., etc. Agree/disagree?

Look at pricing coming out of Wodsee and others from China , 1080P cameras for $19. I think you should complain Hikvision has too much margin!

Larry, can't I complain that they are both being subsidized by their government (if shown to be true) enabling them to sell below actual cost, for the sole purpose of driving out competition thru attrition?

I doubt Wodsee is trying to put people out of business. It is more likely they are more swept up in the race to the bottom, i.e. competitors drop (especially bigger ones like Hikua), Wodsee forced to respond to keep their factory open, etc.

Related: Deflationary Pressures for China

I doubt Wodsee is trying to put people out of business.

I never said they were, I agree they are just doing what they can to keep going.

It's the subsidizers that are trying to put people out of business. Wodsee = pawn. Hik = Rook.

...And I never heard of anyone saying their Wodsee was on the same quality level as Hikvision. With what little I have heard about Wodsee and similar, you get what you pay for..... very little.

Wodsee and Longsee, one hell of a team!

Hi

We have come to use Hikvision in all our designs/systems so we could be biased some. They are freakishly good and that, consistently. I believe what we're seeing is Moore law at work. Think about it this way: How different is the electronics in an IP camera from that of an smartphone? I would venture that the Smartphone has more processing power and complexity, yet we see so many of these below $100 with of course a camera capable of decent pictures to boot! Right now Amazon is selling a more than decent tablet for $49 with , of course, a camera, a very good display and 8 GB of storage .. How much more expensive an IP camera is really for a manufacturer compared to that?

The bigger question is: how we, the integrators who populate this board are going to react to the commodification of hardware? A previously faced similar by those of us with roots in IT who were selling PCs at a premium only to see the ground fall under us (although PC prices have somewhat stabilized). This race to the bottom is not driven by Hik or Dahua. It is driven by the falling price of silicon and of IT hardware. What is left for us to make money of , is integration, system design and consultation. Hardware prices will continue to decrease. I was seriously shocked to see the price of a 6 TB disk, I mean 6 TB!!! to be under $250 ... Our money is in services no longer hardware. We should make a note of that. It is where our survival lay.

Happy Holidays! People!

"This race to the bottom is not driven by Hik or Dahua. It is driven by the falling price of silicon and of IT hardware."

The falling price of silicon and IT hardware has been happening for, well, decades, right? :)

I totally accept that prices of technology products fall. I remember clearly $12,000 2CIF DVRs with 120GB of storage :)

The steep falling prices of surveillance cameras, at the pace we are seeing in the last year or so, is unprecedented, no?

The difference I see here is (1) the rate of price drop and (2) the near universal refrain from manufacturers (including from China) that no one is making money selling cameras at the rock bottom prices they are now selling in the West.

The manufacturers making profits have surrendered the low end and are focusing only on mid to high end projects who have so far restrained from buying super low cost cameras. But I have yet to talk to a manufacturer focused on selling cameras at $50 or $100 each that even claims to be making a profit. Without profits, how is this sustainable?

But I have yet to talk to a manufacturer focused on selling cameras at $50 or $100 each that even claims to be making a profit.

I agree with (1) and (2), but must be missing what you mean here. Hikua seems really focused on selling $100 cameras; I'm pretty sure they sell more for under $100 than over $100. And they claim to be profitable, no?

Do you mean except for them? Or that they are not claiming to be making a profit on U.S. sales? Even Dahua, whose U.S. expenses are far less than big bro?

I am saying that Hikvision and Dahua are printing money inside China but burning it outside of China.

In the former, they have a powerful competitive advantage (both but even more for Hikvision as ownership and net margins show), in the latter, the competitive advantage is weak (selling things for less and less money is a sign of that and a dangerous gamble).

Very well stated and right on the mark.

Hi

The thing we keep on assuming they are losing money. I don't think they are. Lately lenses have become better, DSP more powerful and cheaper. Assembly is not that expensive and software is free or so cheap as to be of no consequence in their final pricing. Meanwhile Chinese factories are producing these components they need by the millions. If you believe a $100 camera is a losing proposition, you need to see the picture taken by the $49 Amazon tablet or its screen or its Quad-core processor.. Is Amazon actually losing on this product?

While I do not claim to understand the intricacies of an IP camera, I fail to see in what ways any of these is more complicated hardware and software-wise than a tablet or a smartphone. That is the point of my argument in my previous post. Do we then automatically assume that a $49 tablet is a losing proposition? So why would a $100 camera be?

So why would a $100 camera be?

Well, there is the cost of creating a real U.S. dealer channel and U.S. brand awareness, like Hik is doing. You can get a smartphone for $49, but can you get a iPhone 6 for anything close to that?

On the other hand is Dahua, who seems to spend far less than Hik in the U.S, but sells at roughly the same price point. I agree with you in the case of Dahua that they are most likely making profit from their U.S. sales.

"you need to see the picture taken by the $49 Amazon tablet or its screen or its Quad-core processor.. Is Amazon actually losing on this product?"

Wait, you are asking if Amazon loses money? Losing money is Amazon's thing :)

And yes, Amazon loses money selling its tablets. It's not a secret, even Amazon has admitted selling it at cost, which means no overhead is covered, ergo loss. The goal of the tablets is to get people to purchase more with Amazon.

And the cost of supporting security dealers is a lot higher than supporting people buying kindles. Security dealers expect (and get) design assistance, troubleshooting help, as well as longer warranties (Kindle is 1 year, Hikvision is 3 years standard, etc.). All of this adds to the cost.

I get your point and agree with you that Hikvision is providing good product and service, I am simply saying that given the cost for what they give, it is unlikely to be sustainable.

having built cameras myself and looking at the vast number of camera spammers (with really low pricing) from China there is no way they are selling below cost.

What is happening to video equipment pricing is no different than what was experienced in the motion detector( security equipment) market 10 years ago. we went from many manufactures down to a few, video will be the same its called the free market.

Somebody needs to define cost here. you got people arguing with each other using different definitions.

cost = the hard cost of parts

or

cost= the cost of parts + R&D + getting them to market + supporting them+replacing them when they fail under warranty.

Also, let's not conflate the price listed in a spam email ($6.23) with the (1) amount the spam emailer gets and (2) how much Hikvision gets.

(1) Spam emailers list crazy prices (sub $10) but those are typically for HD analog and those are typically without shipping and including whatever delays it takes to get it shipped.

(2) Picking up a Hikvision IP camera at your local ADI branch is fundamentally different. No shipping charge, no wait. And most importantly, ADI has to get paid. Hikvision cuts them in, probably also gives them rebates, pays them for marketing, etc.

And really if you look at what Hikvision charges for a lot of HD analog at ADI, deduct for ADI's cut, deduct shipping it to the local branch, factor in warranty / replacement, etc., it's equal or less to what it costs getting it from a Chinese spam provider.

And, of course, Hikvision still has to pay their massive local sales force, SEs, marketing, huge trade show booths, etc., all things the email only Chinese spam providers do not have to pay.