Dahua Co-Founder Says Human Rights Sanctions Shows Strong Dahua Technology

Despite Dahua doing nearly a billion dollars of projects in Xinjiang, including building and operating police stations, Dahua not only denies 'any factual basis' of human rights abuses but their Vice Chairman contends these sanctions are a point of pride for the company as it shows it has strong technology.

Remarks

On October 15, less than a week after the US sanctioned Dahua and Hikvision for human rights abuses, Dahua VP Zhu Jiangming told the PRC's National Business Daily newspaper that:

The fact that we are under the US control list shows that we indeed have a strong technological capability

能够进入美方的管控，说明我们确实有技术实力

Dahua Exec Background

Zhu Jiangming is executive VP of Dahua and a co-founder of the firm, Dahua's financial disclosures show. Zhu is also the executive director of Leap Motor, a PRC electric car startup founded and run by Dahua executives. Zhu made the remarks in an interview about Leap Motor, which is unaffected by the sanctions.

(Jiangming presenting Leap Motor's flagship S01 model.)

Jiangming is also Dahua's second-largest shareholder, with a 6.22% stake currently worth about $430 million, per its Q3 disclosure:

Sanctions Are For Human Rights

The recent US sanctions were made specifically due to "human rights violations" against "Muslim minority groups" in Xinjiang:

This is why all of Xinjiang's police departments (i.e. public security bureaus) were also sanctioned along with Dahua:

PRC state media has made similar implications, with Global Times quoting one analyst that:

Behind the political purpose, the US also hopes to suppress the technological advantages of these Chinese companies

Dahua's Huge Xinjiang Projects

Dahua has by far the largest documented presence of any surveillance provider in Xinjiang, having directly won almost $1 billion of surveillance projects with authorities there - significantly higher than Hikvision's ~$300m.

All these massive projects began as the PRC government began building up a "total surveillance state" in the region while detaining one million minorities in re-education camps. IPVM found that:

• A single Dahua project in Yarkant County is worth $686 million, a fifth of Dahua's total 2018 revenue. This project included the construction and operation of Xinjiang's "convenience police stations", a system of ubiquitous police outposts which The Economist has cited as evidence of "apartheid with Chinese characteristics"
• The tender for one Dahua project mandated the installation of the 'WiFi sniffers' , a system called out by Human Rights Watch that covertly tracks MAC addresses
• In 2017 Dahua began building a large R&D and manufacturing hub in Xinjiang's Changji city with the goal of "ensuring stability in Xinjiang"
• Dahua's founder Fu Liquan travelled to Xinjiang in 2015 for a conference where he said that Dahua is "one of the most important security products and solutions providers in the Xinjiang market"; he traveled to the province at least two more times in 2016 and 2017

Dahua CEO Fu Liquan in Xinjiang in 2017 for the groundbreaking of Dahua's new Changji hub.

Dahua Denies 'Any Factual Basis'

Despite the significant factual basis for Dahua's human rights abusing projects, Dahua published an official statement declaring the contrary:

With regard to U.S. Department of Commerce’s decision on adding Dahua Technology to the Entity List, we express our strong protest to such decision, which is in lack of any factual basis [emphasis added]

Technology Modest

Dahua's technology is modest, by global standards, based on dozens of IPVM tests of Dahua products over the years. Their reliable hardware and low-cost have made them a significant player in the SMB but their cameras, software and analytics are generally not good enough for demanding Western enterprise buyers.

This makes Dahua's chairman's comment odder, though the more fundamental issue of them pretending there is no factual basis to the US govenment's sanctions is more troubling.

Compared to Hikvision

By contrast, at least Hikvision has publicly said it takes such human rights concerns "seriously" and is conducting an investigation. What comes of that remains to be seen but it is minimally more prudent than Dahua's Vice-Chairman transforming the sanctions into an effective award for their technology.