Failing at Marketing, "ALL HIKVISION PRODUCTS" On Sale

By John Honovich, Published Apr 18, 2017, 02:26pm EDT

The ballerinas are out.

The price cuts are back.

Hikvision is struggling to build a premium brand (i.e., 'The Art of Video Surveillance') so they have reverted to what has worked best - putting "ALL HIKVISION PRODUCTS" on sale.

In this note, we contrast Hikvision's failing marketing campaign vs the tactic of further across the board price cuts.

Sale *** ********

** ****, ********* *** numerous ****** *** ***** price ****, * *** sampled *****:

*** **** *** ********* of **** *** ************* for *** ***** ************ industry. ******* *** *** of ****, ********* ******* them *** ** *** past *** ******, ********* ramped ** ***** *** their **********'* ******* ********, started ** ***** (*.*.,*,*).

***, **** **** * weeks ***** ***** *** ISC **** ****** *** marketing, ********* ** ****, alone **** ****, **** an ****** *** ***** sale:

Double *******For *******

**** ****, *** ***** step **** *** ********* taking ** ****** *** sales ** ** ******** to ******** ****** *********. So ** *** *** a ********* ****** ******* getting **% ** **% off ****, ***., *** get ** ********** **% beyond ****.

Great *** ********* *******

** *** *** * loyal, ***** ********* ******, this ** *****. ** is **** ***** *********** those ******* *** ***** to ** ****** **** or ******* ***** *********. This ** *********** * cash ******** **** *** Chinese ********** ** ******** security ***********.

*** ** *** *** not * ***** ********* dealer (*** ** *********** ** *** ****** migration** ***** ***** ************* or ********** *********), ** extra **% **** * long *** ** **** it **** *********.

Failing ** *********

********* *** **** ****** really **** ** ******* their ***** **********, ************* unsuccessfully. **** **** ** 'The *** ** ***** Surveillance', **** ****** **** it ****** ** *** dancers / ********** ***:

** **** **** ** replace *** ********** ** insecure, ***** ******** **** authoritarian ********** ***** ******* with *** ************** ** dance *** ***.

**** ***** **** ** thousands *********** ** ****** all ** *** ***** magazines, **** **** ******* front **** / ******* ads:

**** ** ********* **** on * *** ****** at *** ****:

******** ** ********* ** dollars *** * *** hours ** *** ***** club:

*** ******* ** **** it ** **** ** change ********** ** *************, especially ** *******. *** example, **** **% ** 450+ *********** ***** *** dancer ********, *** *** integrator ******* ********** *** lower ***** ** **%.

Price **** ** ******* ******

******* ****** *** ********* to ******** *** ***** of ***** ******** *** justify ****** ******. ********, premium ****** ******, ** ever, ** ****** *** board ***** ****.

**** ** *** **** time **** *** ** across *** ***** **** on *** ********? *****?

**** ** *** **** time ******** *** ** across *** ***** **** on *** ****? *****?

**** ** *** **** time ****** ****** *** an ****** *** ***** sale ** *** *******? Never?

******, **** ***** **** that ********* ****, *** actually ***** ********, ** they ****** * **** of ******* ** ****** for *** ******** ***** slashed.

Hikvision's ******* / ******

*** ******* ** *** profits. ******** **** **** anyone ** ********* *** then ******** ****** ***** be ****** *** *** truly ******* *********** *** Hikvision, **** ***** ********** backing, **** *** **** that **********.

*** ******* ** ******** a ******* *****. ** is ********* ************** **** they **** * ******* brand (*** ********* **** ** ***** the #* *****) *** ******** ** marketing (**** ****** ***) helps *** *****. *** immediate ****** *** ***** price **** ***** *********** messages *** ******* **** of ********** / *******.

*** ****** ***** *******. Even ** ********* ****** develop * ******* *****, their ******* ********** ********* allows **** ** ***** spend **** **** ****** in *************** ****** **** **** any ***** **********, ********* them * ****** *** potentially ********** *** ** knocking **** ** ***** competitors ***.

Comments (54)

Undisclosed Manufacturer #1

04/19/17 02:37pm

I think a great poll to align with this article would be "Did you find out about Hikvision's latest 'dropping our pants again' sale as a result of this article, Yes / No ?"

John Honovich

IPVM | In reply to Undisclosed Manufacturer #1 | 04/19/17 02:42pm

Sigh...

Here you go:

Btw, there are some who claim that our articles on their across the board sales are actually positive for Hikvision. Indeed, last year one Hikvision employee actually thanked me for such an article.

While I am sure this article will marginally help during this week's sales, the long term damage of what they are doing to their brand with this approach is far more significant.

Eddie Perry

In reply to John Honovich | 04/19/17 03:27pm

I voted No I just assume they are always on "sale"

sort of like if its a day that ends in "Y" Hikvision is on Sale

Undisclosed #2

IPVMU Certified | In reply to Eddie Perry | 04/19/17 05:39pm

Like the jewelry store round the corner from me:

50% off Everything, Everyday!

John Honovich

IPVM | In reply to Undisclosed #2 | 04/19/17 05:44pm

Credit to Ari, who posted this a while back on another thread:

Undisclosed #2

IPVMU Certified | In reply to John Honovich | 04/19/17 06:20pm

That's funny because many years ago I also literally lived 'round the corner' from those type of shops in Times Square.  

They would have prices tags on VCR's that said MSRP: $350.00 Your Price: $3500.  

To spring on unsuspecting rich Asians with limited English language skills and because the law required MSRP be shown whenever you charge over it, as a warning.  But they used it to their advantage.

Undisclosed Integrator #7

In reply to John Honovich | 04/20/17 08:49pm

I actually received a call yesterday from a Hikvision rep out east..(I'm on the westcoast) He left a voicemail "personally notifying" me of the sale... 

Avatar

Brandon Knutson

IPVMU Certified | 04/19/17 02:46pm

I wonder if Hikvision will do what most Japanese car manufacture's have done... Create a second premium brand name (Lexus, Acura, Infiniti) to differentiate their Value and Smart series product lines. Yep, OEM their own premium product line with a new westernized name.

Undisclosed Manufacturer #1

In reply to Brandon Knutson | 04/19/17 02:48pm

Agreed, and there is a lot of evidence to support this is already happening in other capacities.

John Honovich

IPVM | In reply to Brandon Knutson | 04/19/17 02:49pm

I wonder if Hikvision will do what most Japanese car manufacture's have done... Create a second premium brand name

I think that's a good idea.

Fastest way to do that would be buy Avigilon... if they can get Avigilon to accept, etc.

Avatar

Brian Karas

IPVM | In reply to John Honovich | 04/19/17 02:58pm

But if they bought Avigilon that would look more like a failure, buying your way into a top spot (even moreso than the current approach of spending lots of money on marketing). Plus, Avigilon is not Chinese, which I think would make that approach even less palatable to Hikvision.

Also, luxury cars generally fall into that category because they have technically unnecessary upgrades (more leather, more wood grain, better stereo/entertainment system, more powerful engine, suspension upgrades). Cameras have become very commoditized, making it harder to create any kind of a true luxury brand, unless they did something like a technology trickle-down, where all new stuff comes to the luxury line first, and then the budget line 2 years later.

Either way, I do not think it would help Hikvision to dilute their focus and branding efforts across two brands that way.

Undisclosed #3

In reply to Brian Karas | 04/19/17 10:10pm

"Cameras have become very commoditized, making it harder to create any kind of a true luxury brand, unless they did something like a technology trickle-down, where all new stuff comes to the luxury line first, and then the budget line 2 years later."

 

Two year old 30 MP H4 Pro Cameras $90 at ADI counter

Avatar

Brian Karas

IPVM | In reply to Undisclosed #3 | 04/19/17 10:28pm

The Avigilon Pro cameras are both a good and bad example.

In the OP post for this thread, the idea of a luxury car style product was mentioned. Luxury cars, for almost all manufacturers that offer lux and non-lux versions, have a high percentage of component re-use from the non-luxury versions. Many of the "luxury" upgrades are superficial, and the model works because they do not have to do a lot of re-engineering on things like chassis, glass, etc.

The H4 Pro cameras do not have a lot in common with the non-Pro cameras. They use larger sensors, different lenses, different internal architecture, they are more than just "dressed up" non-Pro cameras. This is why I think the H4 Pro is a bad example here.

On the flipside, the H4 Pro is a good example to support my argument that this would not be a good move for Hikvision. The H4 Pro is close to a "luxury camera", but is marketed under the same brand as the regular cameras. If Avigilon tried to market the Pro series cameras under a completely separate brand, I do not think it would be financially viable.

Marty Calhoun

IPVMU Certified | 04/19/17 05:43pm

Price cuts vs premium brands

Does IPVM assume that there are "industry guidelines" as far as when a manufacturer offers a sale and the percentages they are allowed to offer that must be followed? Or is it because Axis, Mercedes or Nieman Marcus never did it so it must not be the proper way to operate? 

One must consider HIKVISION is a leading company not a follower of others, many things may not follow the 'unwritten rules' but you cannot argue with SALES.

The problem is that it is hard to change perception so significantly, especially so quickly. For example, only 18% of 450+ respondents liked the dancer campaign, and the integrator segment percentage was lower still at 17%.

The above may be true If and only IF the Integrator segment you are speaking of was of the opinion of every Integrator, this 17% you have offered is only in the view of IPVM members, correct? Which in reality is not a fair or even close to equal assessment taking into account there are 1000's of Hikvision Integrator's across the globe that have not been questioned or the opportunity to offer a response, correct? So in reality the 'respondent group' is too small to make a honest judgment as to the merits of the "dancer" marketing ploy? Agree?

I am curious as to the comment, no private company could spend heavy on marketing and slash prices and Hikvision only does it because of Government backing? Do you have information that would lend credibility to exactly how much (if any) of the 6 Billion LOAN by the way, not gift but LOAN, has been spent? If not then this whole line is based on assumptions with no factual content regarding the LOAN versus HIKVISION actually making the money by selling product and that they choose to spent the money as they please and it certainly is possible that they have not even touched the 6 Billion? Right? Or do you have FACTS that show otherwise? 

So in reality, without factual information to the contrary it is clear that HIKVISION is making lots of money, a WHOLE lot of money and is spending it on marketing, nightclubs, salaries and building more product, right? What other FACTS (not political viewpoints) are there besides the FACT they are the #1 World-wide Manufacturer and treat their dealers well, period.

John Honovich

IPVM | In reply to Marty Calhoun | 04/19/17 05:53pm

Marty,

First, congrats on getting yet another discount! What are you at now? 90%? 95% off MSRP? Soon they may pay you for the privilege of letting you install Hikvision cameras on US government facilities!

One must consider HIKVISION is a leading company not a follower of others

For sure, this may be a revolutionary business tactic. Spend more on sales and marketing than every major player, charge less than every major player.

Enjoy it while it lasts.

Btw, the $6 billion 'loan' is from the Chinese government, specifically their 'policy' banks, whose objective is not getting interest payments like a commercial bank but furthering the Chinese government goals. Think how proud the Chinese government is to get American dealers to install Chinese government network video surveillance products inside of US military bases.

Undisclosed #2

IPVMU Certified | In reply to John Honovich | 04/19/17 09:09pm

Although I agree that Hikvision appears to be subsidized in a way which is absent the West, (as far as the security industry is concerned at least), and so may be operating under a cost structure that would not be profitable if adopted by Western companies, I'm not sure of what that implies for long-term strategy.

The typical motive for selling at a loss (when you are a leading manufacturer) is to drive out competitors thru drastically reduced prices only then to drastically raise prices later to a higher point  than what they were before you started.  Otherwise, even if you destroy much of the competition but cannot raise prices you are not better off.

Do you believe that Hik's endgame has them selling cameras in 2 years at higher prices than Axis did 2 years ago?  Or even at higher prices than Axis would have charged, absent Hik, two years from now.

I don't believe that the price of cameras is likely to go up, much.  Certainly I don't think they are going up enough to make back what ever they lost.

So they are giving free money away to consumers or just a good deal, but either way, from a financial perspective, there is little risk of monopolization and gouging from corner the market to the consumer.

Of course, the damage to the Western/Japanese brands is severe, but this is not uncommon in the electronics industry as a whole.

Also, these price cuts, IMHO, are no longer intended primarily at Axis et al, but rather to prevent themselves from being undercut by other up and coming Chinese brands.

tl;dr

The question is though, do you think this is a corner the market/gouge strategy by Hik, and if so do you think it could really succeed?

 

John Honovich

IPVM | In reply to Undisclosed #2 | 04/19/17 10:43pm

The question is though, do you think this is a corner the market/gouge strategy by Hik, and if so do you think it could really succeed?

It's a good question.

I am most confident in saying Hikvision USA is pursuing a top line focused business strategy - i.e., get total revenue as high as possible with minimal consideration to profits / costs.

The problem for Hikvision is that there are no network effects / economies of scale that would create a natural monopoly in video surveillance cameras, even putting aside the growing opposition to their Chinese government ownership and cybersecurity issues. To that end, based on both of those facts, I do not see them succeeding at cornering the market. How big of a player they ultimately become depends on (1) the state of the Chinese economy which is effectively underwriting this and (2) how important the Chinese government sees being able to control video surveillance devices in foreign countries.

 

Undisclosed #2

IPVMU Certified | In reply to John Honovich | 04/20/17 04:03am

(1) the state of the Chinese economy which is effectively underwriting this and (2) how important the Chinese government sees being able to control video surveillance devices in foreign countries.

Yet only (2) could considered a reason to post huge losses for years on end.

Is it a compelling one?

Marty Calhoun

IPVMU Certified | In reply to John Honovich | 04/20/17 10:26am

Thank you John for the warm comment. The US Military has outposts all over the world as I am sure you are aware. There are Hikvision cameras in Military establishments, government offices, etc. world-wide. I am a low-key (very Low-key) bit player and whatever I have or have not done is minuscule in comparison to the larger picture. It is not the end of the world that HIKVISION has manufactured a product that obviously many (as in 10's of thousands) people in the Video Industry happen to LIKE. Not end users, although many do, I mean Integrator and dealers. This is not a bitter pill to sallow, the Chinese are not stupid, they have a different way of life and if they keep making better and better products all I can say is too bad so sad for everyone that has a silly ass hang-up and cannot see that and attempts to assert political 'Razzle-Dazzle' into the discussion at every corner. I dont see anyone bitching about the damn light bulbs they are burning that come from CHINA.

Undisclosed #2

IPVMU Certified | In reply to Marty Calhoun | 04/20/17 09:35pm

Pick a number any number, please

...there are 1000's of Hikvision Integrator's across the globe...

...(as in 10's of thousands)... Integrators and Dealers...

...the 100's of thousands of dealers...

Undisclosed #3

In reply to Marty Calhoun | 04/20/17 11:38pm

the Chinese are not stupid, they have a different way of life

They certainly do.  Suicide nets aren't necessary to prevent repeated suicides in any other countries I am aware of.

I dont see anyone bitching about the damn light bulbs they are burning that come from CHINA

IPVM isn't a lightbulb forum.

Undisclosed #3

In reply to Marty Calhoun | 04/19/17 10:21pm

Marty, this link might be worth a read.  The term sounds harsh but it really has been used by communist countries.

Undisclosed #2

IPVMU Certified | In reply to Undisclosed #3 | 04/19/17 10:30pm

Sometimes they're not even 'useful'...

Undisclosed #5

In reply to Undisclosed #3 | 04/20/17 02:21am

I'd bet a pallet of Hik cameras he owns a MAGA hat too.

Undisclosed #3

In reply to Undisclosed #5 | 04/22/17 05:26am

That's not a fair bet, the hat  probably cost more than the Hikvision cam pallet.

Undisclosed Manufacturer #4

In reply to Marty Calhoun | 04/20/17 12:05am

Marty, I enjoy your loyalty and I think you really should be invited to HIK Corporate in China.  You have earned it.  Let us know what you think once you have done the trip. 

Marty Calhoun

IPVMU Certified | In reply to Undisclosed Manufacturer #4 | 04/20/17 10:06am

Thank you UM # 4 I am humbled by your comment.

Undisclosed Manufacturer #4

In reply to Marty Calhoun | 04/20/17 10:48am

I see Jeffrey He often, I'll put in a good word for you and let you know. 

Marty Calhoun

IPVMU Certified | In reply to Undisclosed Manufacturer #4 | 04/20/17 09:59pm

Thank you UM #4 and please give him my regards.

Undisclosed #5

04/20/17 03:50am

Seriously, how much more can HikVision grow? They have already saturated the market in my area. If the integrator isn't using HikVision now or one of their OEMs, they never will. It seems like it's reverse course and some HikVision dealers are now looking for alternatives post HikVision alienation. Cheap will only get you so far. I don't see their premium cameras or varifocals anywhere, I see the same $79 turret that is on eternal sale.

John Honovich

IPVM | In reply to Undisclosed #5 | 04/20/17 01:36pm

#5, good points all around, thanks!

Hikvision recognizes this risk (i.e., saturating the low end), ergo their focus on enterprise expansion (both for sales people and products).

The low end is costly to serve. $79 turrets do not leave many dollars to cover the support, training, marketing and sales costs to service these typically smaller, less technical dealers.

But on the enterprise side, less of them care primarily about price and more about cybersecurity risks and the brand quality of the products they carry, etc.

 

Undisclosed #10

In reply to John Honovich | 04/21/17 06:20pm

But on the enterprise side, less of them care primarily about price and more about cybersecurity risks and the brand quality of the products they carry, etc.

In my experience, the enterprise and government customers have a pattern:

A. Some started buying top brand. Use it until EOL (and far beyond). Renew. When renewing, there are many many many factors around going again with the same brand or, at least, another top brand: such as overall experience, COSTs, the security and IT personal involved, etc.

B. If started with auto-served devices (cheap or buyed at a PC or Home-stuff store), they go rapidly with a top brand. And then enter in the pattern A.

Again, in my experience.

However, it is not all about the brand. Once they try a system backed up properly by an integrator and already experienced the other option, they try to keep working with that INTEGRATOR. But if the integrator is failing (because itself or because the products being used, i.e., the brand), the customer blames sometimes the brand, sometimes the integrator, sometimes both.

 

Additionally, I prefer those brands that meets higher standars in their whole operation (environmental, human rights, cyber security, economy, ethics) and not only in their products. And (again, in my experience), some enterpise/gov customers also do.

John Honovich

IPVM | 04/20/17 01:12pm

ADI sent an email this morning imploring people:

Give credit to ADI, they are definitely benefiting from the race to the bottom.

Related, this is exactly what premium brands don't want to happen, creating the perception of urgency to buy on across the board price cuts.

Michael Miller

In reply to John Honovich | 04/20/17 01:30pm

I received a call yesterday from Hikvision telling about that sale..  That was I first. 

John Honovich

IPVM | In reply to Michael Miller | 04/20/17 01:33pm

I received a call yesterday from Hikvision telling about that sale.. That was I first.

That's fascinating and also somewhat desperate to call people up to tell them about an across the board sale.

Michael Miller

In reply to John Honovich | 04/20/17 01:47pm

Wow and just got another call from TRIED.

 

Undisclosed Integrator #9

In reply to John Honovich | 04/21/17 03:38pm

We got a call yesterday from one of their inside sales people which is a first. I had a feeling there was going to be a discount coming up. KOA (disrubtor) sent out an email at the end of last week advertising a 15% off sale. Hikvision is following Macy's/JCPenny sale pattern of sales everyday 24/7 for 365 days a year. Can't complain about that aspect. 

The discounts give us an extra of padding so when things hit a bump during a project, it helps our bottom line. I'm riding the Hikvision train and we are going full steam ahead.

FYI for any federal projects we do, Hikvision has and will never ever be quoted.  

NOTICE: This comment has been moved to its own discussion: I'm Riding The Hikvision Train And We Are Going Full Steam Ahead.

Shannon Davis

In reply to John Honovich | 04/20/17 04:52pm

ADI corporate is benefiting but not the branches. Every month they sell more more more of the continually discounted cameras but the problem is the branches keep having to sell more than the last month. We all know how sales quotas go in business. As said in another post within a couple of years you will get a Hikvision camera in your cereal box if the prices keep dropping. 

Undisclosed #5

In reply to Shannon Davis | 04/20/17 05:04pm

Also, can't hit quota when you spent last 4 years convincing customers buying $250 cameras to switch to $25 cameras.

Undisclosed Manufacturer #8

In reply to John Honovich | 04/20/17 09:46pm

Can't fault ADI for this at all...their aggressive "get the word out" tactic here will help them win more of the HIK fire sale biz than the other distributors, I'm sure.  

I just wish it meant more to them that every product means another sensor on the network for our "allies" than it does to sell a few more cheap cameras.

John Honovich

IPVM | 04/20/17 01:38pm

123Security is on it too, but only today and 10% but evidently no minimum purchase:

I would presume other distributors have variants of this going on today.

Again, good for a short term bump, terrible for building a premium brand.

Undisclosed Integrator #6

04/20/17 01:49pm

Ok so maybe I am looking at this a little different. Not everyone shops at Neiman Marcus or the "high dollar" clothes store. Many people are living life by shopping at Walmart. They are almost everywhere you go and are way cheaper. I am not spending $100-200 on a pair of jeans that could be bought less than $20. They are still jeans. If their cameras work as good as an Axis why wouldn't you at least try it if it is "on sale".Probably not a bad marketing thing since most of the furniture stores do it year round. You may try 1 to see how it works and end up buying more. Secondly am I missing something about the dancers? Should they have them being held up by a stripper hanging on a pole? Yeah cause that shows class and attracts everyone. The ad didn't have a lot of info, but it was tasteful and different. I find it interesting that so much of the content is about HIK on IPVM trying to bash them. You are giving them more publicity than they could ever want about their products. That's just my 2cents.

John Honovich

IPVM | In reply to Undisclosed Integrator #6 | 04/20/17 02:11pm

Not everyone shops at Neiman Marcus or the "high dollar" clothes store. Many people are living life by shopping at Walmart.

#6, for sure, I agree with you. There is definitely room and big business in providing low cost offerings. Even in technology, for example, look at Ubiquiti, they are like the Walmart for wireless networking.

My point is that if you want to pursue a Wal-Mart business model you need to be cost focused and cannot combine it with an 'arts' marketing campaign and expensive events (like Vegas nightclubs). From a branding standpoint, it's conflicting. From an economic standpoint, it's not sustainable.

You are giving them more publicity than they could ever want about their products.

I agree there as well but Hikvision clearly does not appreciate the publicity. That's why Hikvision is running a press campaign attacking IPVM as nefarious.

Undisclosed #5

In reply to John Honovich | 04/20/17 03:02pm

Or only staff 3 of the 50 registers at peak times....

Marty Calhoun

IPVMU Certified | In reply to John Honovich | 04/20/17 10:16pm

John I am curious about some of the content in the HIKVISION conversations. Do you have any information that one could use to determine exactly (or damn close) what one camera costs HIKVISION to produce AND put out to market thru distribution? I know there are many styles and so forth of course, but a general idea of a 3mp mini-dome for example? From your perspective? $5 Bucks, $15 Bucks?

I would think that knowing that cost would be important before stating a company is selling at near cost, or even "desperate" (which is laughable) as has been stated so often. It would not surprise me if many of the cameras cost <5 dollars USD for materials. You cannot ascertain that a manufacturer is not making money without factual figures before you. Politics aside, Bank Loans aside. 

John Honovich

IPVM | In reply to Marty Calhoun | 04/20/17 11:58pm

"desperate" (which is laughable)

Marty, I obviously don't mean 'desperate' as in they are going out of business. Obviously, the Chinese government is there to ensure they stay well funded. I mean 'desperate' as in it comes off as a desperate move. 

If you are the "leader", the "#1", the "top dog", the "alpha male" you don't call every dealer in the industry asking them to please buy during your 'flash sale".

Marty Calhoun

IPVMU Certified | In reply to John Honovich | 04/21/17 12:37am

John- Do you really believe that HIKVISION has asked anyone to call every dealer in their territory and request they come to a sale and buy product? Are you kidding me?

Many reputable folks at HIKVISION have my phone number and I have NEVER received any type of marketing or phony Sales call whatsoever at any time, ever. 

Avatar

Greg Cortina

In reply to Marty Calhoun | 04/21/17 12:40am

I was in 4 HIK dealers offices today in Canada.....all recieved the call and one company had several people get the call. 

Undisclosed #5

In reply to Marty Calhoun | 04/21/17 12:45pm

They know that they don't need to. They are reading your comments on this thread.

John Honovich

IPVM | In reply to Marty Calhoun | 04/21/17 12:07am

It would not surprise me if many of the cameras cost <5 dollars USD for materials. You cannot ascertain that a manufacturer is not making money without factual figures before you.

In terms of facts, their financials say gross margins of ~40% domestic, ~50% international. If they are accurate, that implies the cameras cost far more than 5 dollars total. Materials are one thing, there's labor, shipping, other direct costs.

Hikvision has huge US sales, marketing and support costs. The 300 - 400 people they report having; all the shows (big ones, every ADI expo, dozens of tiny shows, etc.), all the trade magazine advertisements, the parties, sending you and the other top dealers to China, travel and entertainment expenses for their sales people, the multiple offices and warehouse costs. These are local, expensive US costs, easily looking at the $50 to $100 million range annual.

Hikvision sells a lot of units but their average sales price is so low that it is very hard to cover these local expensive US costs, especially when they run these across the board flash sales.

And we both know these sales have gotten worse. Hikvision USA was fairly disciplined in 2015 and its gotten now worse and worse, 2016 with lots of sales and now 2017 with double dipping sales every month. It cuts into gross margins hard and makes it more challenging with the continuously increasing local sales marketing and support expenses.

Undisclosed #3

In reply to John Honovich | 04/24/17 01:50am

Here  are some questions that might be worth knowing the answer to:

1.  If you are a Hikvision employed sales rep do these sales severely hamper your commission?  Imagine that one day a deal is about to closed for $200k of your product and the sale hits right as the customer is about to place an order.

2. Same question for distributors.  At what point does it become too damaging?

 

NOTICE: This comment has been moved to its own discussion: How Does Hikvision Sales Impact Their Sales Reps And Distributor's Commissions?

Undisclosed #2

IPVMU Certified | In reply to Undisclosed #3 | 04/24/17 04:59am

Imagine that one day a deal is about to closed for $200k of your product and the sale hits right as the customer is about to place an order.

Management will point out that they didn't actually order until the sale.

Undisclosed #5

In reply to Undisclosed #3 | 04/24/17 12:23pm

Or price drops right after...

Josh Bylsma

BLUEmark Technologies
04/24/17 02:00pm

New tag line: Dancing our way to lower and lower prices. 

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