China Threatens Reducing Exports to the USA

By: John Honovich, Published on Aug 23, 2017

The US government has launched a probe into China's alleged theft of US intellectual property.

The Chinese government has fired back, threatening to reduce exports to the US.

In this note, we examine the two government's moves, the impact of cybersecurity, and look at the potential ramifications for the video surveillance market, including Dahua and Hikvision.

USA ***** *****

** ****** **, ****,*** ** ***** ************** launched ** ***************** *****'* ***** *********, following********* ***** ******* * memo********** ****.

"*****’* ************ ******** ***** Must ****", * ** ***** op-ed ****** * ****** of **********:

******* *********, **** *** encouragement ** ******** ******* policy *** ***** *** active ************* ** ********** personnel, **** **** ********* the ************ ******** ** American *********. *** ********, intellectual-property ***** ***** ******* up ** $*** ******* a ****, *** ******** transfer ** ****** ** history. ***** ******** *** most ** **** ****.

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***** *** ***** *** just *****, ** ******** or *********** **** *** been *******.

China ******

*** ******* ********** ** taking **** ************* *********, issuing *** *** ********* on *** "***** ***** ***** ** counter ***** **************'* ***** probe". ** ****, ******** / ******** ******* ******* from *** ** *** unloading ** ******* *** fairly ******** ******** ** trade ************.

*******, *****'* ***** **** is ***********, **** ** "reducing ******* ** *** U.S" ** **** ******** consumers ** *******-**** ********, explaining:

***** *** ******* ****** market ** *****, *** U.S. ****** *** ******** of ****-********* “****-**-*****” ********.

********* ** **** ******** by *** **-***** ******** Council, ***** **** ***** has ***** ******** ******** $850 ** **** ** average.

*********** ****** ****** ** US ********* ***** ***** the **********, ****** ******** Chinese ************* ********* ** the ** ***** ***** those ********* ********.

Cybersecurity ******

*** ** *** ********** issues ** **** ***** dispute *******'* ************* ******* **** **** ****** on **** *, ****. Among ****** ********* ******* companies ** * *********** to **** **** ****** code ** *** ******* government **** *** ** requested. ********** ********** *** ******** this** "******** ** ********* China's ********** ***********, ******** security, ****** ********, ** well ** *** ****** and ********* ** ********". On *** ***** ****, the ********* *** *** Chinese ********** ** ***** this ********* *** *********** reasons (*.*., ******* *****'* own *********) ** *** hacking ***** ******** ***** is * ******* ** many ******* *********.

*****, ** ******, *** any ****** **** ** any ******* ******* ** wants.

Hikvision / ***** *****

***** *** ******* ********** issues, ********* ***** ************* concerns, ***** ********* ********* overseas *** ********** ******* on ********* *** ********* as **** *** ***** technology ******* (****** ** Hikvision's ****, *** **** is ****** ************* ** *** ******* government, * ***** **** they ********* ******* / downplay).

***** ********* ** ****** debates ***** ******* ************* issues (********** ***** ***** and *********'* **** ***** records) ***** ** * negative *** ***** ***** surveillance *************. ** **********, given *** **** **** to **** ** ****** to ******, **** ******** conscious ***-*****, *** **** conflict ***** ***** ** make ****** ******* ******** with **** *****.

*******, *** ******* ********** might ******* **** ******** some ******* ** *** US *** *** ** Chinese ***** ************ ********. Given ***** **** *************, China's ******* **** *********, the ******* **********'* ****** to ****** ****, ***** devices ****** ******** *** actually ** ***** ** China ** *** ****** conflict **** *** **, if *** ******* ********** choose ** ******* ****. Better ** **** **** of **** ******** ** networks, *** *** ************ cloud ******* ** ******* manufacturers (*.*.,***-*******), **** ** ***** their **** ** ** buyers.

Impact - ***** ** ** *****

*** ******* ******* ************* on *** ** *************, and **** *** *********** turnover ** *** ***** administration *** *** ******* volatility ** *** ** political ***********, ** ***** be **** ** ******* what *** ** **** actually ** ** *****, following **** *************.

***********, ******, ******* ************* exporting ** *** **, under ***** *** *****, as **** ************ *** to **, ***** ** hurt ** *** ***** war ** ****** ******* about *** ****** ** legality ** ***** **** country.

Comments (11)

Avatar

Sean Nelson

Nelly's Security
08/23/17 12:55pm

i call China's bluff. Limit trade on your biggest customer? I dont think so. Would it hurt the USA, yes, but I think its more hurtful for China. If China does follow through, this could be a boost for American manufacturing. I dont think it will happen.

John Honovich

IPVM | In reply to Sean Nelson | 08/23/17 02:28pm

If China does follow through, this could be a boost for American manufacturing. 

Or, at least for our industry, Taiwan or South Korea, etc.

Undisclosed End User #1

In reply to Sean Nelson | 08/23/17 07:51pm

It takes billions of dollars and years to create additional modern manufacturing capacity of any scale in the US.  A slowdown in goods coming from China would hurt them too, but as soon as the price of consumer electronics and many other products double (supply and demand) the US population is going to stop supporting it.

There are no winners in a trade war between the worlds two largest economies.

Avatar

Chris Lanier

08/23/17 01:29pm

I concur Sean- IF any move happens it will be to invoke public outcry to portray the opposite country as a bully. The American public at large will complain that Black Friday deals aren't as good or that the price of shrimp per pound is outrageous before they will really ever be concerned over cyberwars.

John Honovich

IPVM | In reply to Chris Lanier | 08/23/17 02:27pm

Chris, I agree with you that the public (i.e. consumers) cares more about pricing than cybersecurity.

However, in dollar terms, a lot, if not most of physical security is spent by larger organizations that are concerned by cybersecurity (either because they see the impact to other businesses or because they are funded / regulated by the US government).

Avatar

Chris Lanier

In reply to John Honovich | 08/23/17 02:45pm

Concur Part 2- It is the constant awareness, ongoing debate and persistent fact checking that industry watchdogs like IPVM do that permit us to stand our ground in the best interest of American businesses and government.

Josh Bylsma

BLUEmark Technologies
08/23/17 05:28pm

Economic Espionage (when one county steals intellectual property “IP” from one country and use it to build their own industrial, technological and economic gain) is not new. France is one of the worst offenders of Economic Espionage, beating out China and Russia, however they are often over looked, partly because they are not as big of a player in the world economy, especially when it comes to technology. In other words, American companies do not compete with French companies, in our own market, as often as we do with Chinese based companies.

Regardless, China is a major offender. Most PhySec manufactures can attest to moments at ISC or ASIS, fending off Chinese based manufactures attempting to steal IP. I recall running off three Hikvision engineers attempting to dis-assemble one of our cameras while taking pictures of the imagers and circuit boards, on the floor at ISC, while the show was going on. As they ran away, they were yelling at me in Mandarin, no doubt casting an ancient Chinese curse.

Going back to the main point of the article, I agree with Sean. The US need China as much as they need the US. Our economies are tightly interconnected and are now interdependent. They have grown only because we have funded them. We have enjoyed the low cost, consumer and commercial products that they supply and they have invested into our economy and government. If one of us fails, the other will follow.

More specifically, I could see increased pressure to balance the trade and economic deficiencies between China and the US. It would make sense that the US would target companies that are run by the Chinese government. I would argue that a move to do so would be more of a show of strength, rather than a move to stop economic espionage. It’s more of a political positioning, intend to support the Trump administration’s position on “America First”.  

Another great example of this is what is happening in the steel industry.

As for the Hikvision and Dahua risk, nominal at best. While for us, in the PhySec industry, Hikvision and Dahua are major players, on a national economic scale, they are small. The US imports $648.2 Billion USD annually from China. Hikvision and Dahua imports are but a fraction of a percent of that amount. 

I believe the Trump administration will focus more on raw goods and natural resources, rather than specific products, industries or technologies. 

John Honovich

IPVM | In reply to Josh Bylsma | 08/24/17 12:06am

As for the Hikvision and Dahua risk, nominal at best. While for us, in the PhySec industry, Hikvision and Dahua are major players, on a national economic scale, they are small. 

I agree that in overall economic terms, China video surveillance imports are a but a fraction of a percent of total US imports.

However, the risk is about bad publicity and related bans / bars from large end users. For example, the US government has long banned China Huawei, the US Army recently barred China DJI. Negative attention from a trade conflict risks putting the spotlight on particularly Hikvision, whose Chinese government ownership is far clearer and more documented than Huawei and DJI. Any such barring by US government entities also risks further barriers and concerns in selling to larger US end users who might see that as a red flag.

Josh Bylsma

BLUEmark Technologies
In reply to John Honovich | 08/24/17 02:47pm

... the risk is about bad publicity and related bans / bars from large end users. 

Good point. Pressure from the US government would have little direct affect, the indirect affect would be the fear from larger end-users because of perceived risk associated with Chinese government owned companies. 

This defiantly would add another hurdle for those selling Hik and Dahua. 

Undisclosed #2

08/24/17 01:00am

Does this not all just seem like non-military saber rattling?  I cannot see this progressing any further than it already has: words and nothing more.  At this point, every search on Amazon for product turns up a half dozen sponsored knock off products before I find the product I am actually looking for.  As dissimilar as our countries are we are so hopelessly intertwined that any further trade dispute is best summarized by this image:

Undisclosed Integrator #3

08/24/17 02:58pm

While $850 is not chump change for most of the population, I am quite surprise that the average savings per year is ONLY $850.  I was expecting more.  It would be quite interesting to see a poll from Americans to see if they would be willing to spend $850 more per year to eliminate our dependency on China imports.  I am lucky enough at this moment to be willing to get on board with that.  But, I know many Americans are not.  However, I also believe that other countries like South Korea would jump at the opportunity to fill that void and possibly offset some of that extra cost.  I'm sure there a many economic issues with doing something like this, and most people don't like to rock the boat.  But, would we be better off in the end?  

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