Hanwha: Chinese Products Damaged Industry

By: John Honovich, Published on Jan 25, 2018

Hanwha Techwin's CEO has come out swinging against the Chinese.

In this note, we examine his statements, the relative positioning of Chinese and Korean manufacturers and how it reflects an increasing conflict between Chinese manufacturers and the rest of the world.

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Comments (68)

Aren’t Hanwha cameras made in China?

Hanwha is just finishing building a ~$100 million facility / factory in Vietnam. So while they do manufacture in Korea and China, the Vietnam facility appears to be the long-term solution. Related, I believe Hanwha's CEO was alluding to the Vietnam facility in this quote:

we are differentiating our products from low-priced Chinese products by way of our manufacturing technologies and facilities

While the facility in Vietnam is being built, all production is being moved to Korea.

Where is this information from? Could you post the link please and that it refers directly to CCTV products.

Interesting. Seemingly HT are taking advantage of the communist regime and the lack of human rights that Vietnam perpetuates currently and historically and yet this seems not to attract any criticism from IPVM? 

https://en.wikipedia.org/wiki/Human_rights_in_Vietnam

I would question if the official Vietnam Government "Friendly Policy" that would most likely be a financial inducement that would differ little to what IPVM accuse Hikvision of in terms of their Government loans.

It appears to me (and I accept I could be totally wrong), but the factory in question is also described as a facility for aircraft parts. The size of the factory and its location suggests the same story is being spread across two entirely different product groups - again I don't see this being challenged?

CCTV Factory?

Aircraft Parts Factory?

Whilst I'm not knocking Hanwha, I believe it is disingenuous to turn turn a blind eye against traits that Hikvision would be, and have been, pilloried for.

It must also be considered that HT are complicit in the "severe damage to the industry’s ecosystem" by having manufactured in China previously (and currently) and that a move to communist, human rights abuses in Vietnam is little different.

With this context, the statement can be read a little differently I believe and perhaps with a little less gusto? I note that the retraction of the statement by HT was also gone unexplained - with little comment, as would not be the case of Hik had made a statement then attempted to bury it. The truth will most likely lie in the fact that Youn Chul Kim dropped a bollock in not realizing that HT depend strongly upon their Chinese neighbours in their other product groups.

Indeed, such was the bollock drop, Youn Chul Kim appears to have overlooked the 28 branch offices of Hanwha Group affiliates across China, which contradicts HT claim they are moving out of China by stating they are actually "On the rise in China.

So saying Vietnam is a long term solution is misleading. Firstly the information on what is actually being produced there is contradictory and there the article overlooks the official statement that also states that China investment is on the rise.

Just to add to this that I am currently quoting a number of jobs using Wisenet - so I have no issues with the company or the product. The issue I have is the imbalance of reporting. 

 

Tim:

I don't see any parallel between HT and HIK other than that they both manufacture products in SE Asia - like much of the CCTV business. Any time a manufacturer moves production into a new facility they try to get incentives from the local government - an that is nowhere close to the scale of the loans that HIK has received from the Chinese Government.

It also struck me that IPVM is reporting on HT's statements and now HT's marketing and industry position is open for discussion. None of that is evidence of biased reporting.

Could you be specific about how running this story shows that IPVM is biased?

The thrust of the story is to portray China in a bad light - supposedly endorsed by the CEO of HT. It suggests that China is responsible for causing "Severe damage to the industry’s ecosystem". Invariably, IPVM has sought to single out China in respect of Government ownership, cybersecurity threats, poor labour conditions and a myriad of other comments.

The article appears to use HT CEO's comment to support a similar theme that China is the route cause of the "severe damage" and why HT are moving to Vietnam. 

Clearly using a withdrawn statement from HT as a veiled attack on China (Dahua/Hikvision) is folly when the factual evidence presented is fundamentally flawed. 

Lets have an anti Vietnam discussion on their appalling human rights abuses, communist government, anti-competitive practices and place that within the context of HT suggesting this is a "better" environment than China that is heavily attacked within the press release. Then place into the mix that the overall HT investment policy heavily leans towards China where their investment is increasing.

The issue to me is the surreptitious use of a dead story to add impetus to the wave of anti-China rhetoric, when the company being discussed is actually an anecdotal advocate of China and clearly has a great deal if faith in the country that a rogue statement seeks to discredit.

if this had been a Hik story the emphasis would have been on the rogue comments, the retraction of the statement, hypocrisy regarding the use the oppressed labor and the fake reporting of a factory that is pulled out of divisions hat when it seeks to say its expanding.

I suppose what i am getting at John is that the same degree of scrutiny that applies to every whisper regarding Hikvision, appears not to have been applied to HT - in common with other negative Hikvision posts.

 

Tim, thanks for the feedback.

Your claims here are incorrect and I did want to clarify:

using a withdrawn statement from HT

use of a dead story

the retraction of the statement

I spoke with Hanwha about this and they confirmed the interview was legitimate and that their CEO made the statements.

Now, as for why it was withdrawn and who did it (IFSEC or HT, etc.), I have not gotten a straight answer. My guess is that someone (whether on IFSEC or HT's side) realized that this would greatly anger the Chinese / Hikvision and it was removed.

As for your points / concern about Vietnam, I think those are fair to raise. On the other hand, the ethical and abuse issues of China are clearly on a far greater / higher level than Vietnam (or as China likes to say are #1 at such things). 

"The thrust of the story is to portray China in a bad light - supposedly endorsed by the CEO of HT. It suggests that China is responsible for causing "Severe damage to the industry’s ecosystem". Invariably, IPVM has sought to single out China in respect of Government ownership, cybersecurity threats, poor labour conditions and a myriad of other comments."

For IPVM's coverage to be biased:

1/ There would have to be other major CCTV manufacturers who are government owned that IPVM chose to ignore.

2/ There would have to be other major CCTV manufacturers who had major cybersecurity issues that IPVM chose to ignore.

from further in the e-mail:

3/ "negative Hikvision posts"... 

Could you provide evidence where IPVM has failed to report in either of these cases or provided a "negative" post that was not newsworthy?

I've followed the Hikvision stories and stories on cyber security regularly and some of the headlines have occasionally bordered on "click bait". Even then, the content of the stories have not contained biased (untrue) statements.

 

 

 

Where to start?

Ok...so IPVM led on this ridiculous story. IPVM's class leading investigative journalistic skills didn't go as far as to check that the installer in question had just been served a winding up notice from the HM Customs that would, in most peoples eyes, have served as a warning not to extend £41k of credit. The piece of paper he was banging on about was a training certificate. In my 35 years of experience, I have never lost a sale because I didn't have a certificate fpor training undertaken. The OP also failed to answer any ones questions as to what the real issue was. But hey - it made for more fake news.

The story that IPVM skewed against Hikvision regarding a camera being installed in a College toilet block beggars belief as to why John would seem fit to include Hikvision in the lead title - hardly unbiased reporting? 

 

Yes JD, some Hanwha is manufactured in China and we are pleased they are owned, designed and managed by a Korean company.

I bet they are loving being in the middle of the spectrum getting all of those Hikvision and Axis sales. 

BS, Korean is the biggest copy cat in the world 

BS, Korean is the biggest copy cat in the world

Examples?  The only slightly relevant one I can think of is Samsung coming out with their touch based smart phone a year or so after Apple.  However, it's pretty clear the industry was shifting that way at the time.

The entire industry’s ecosystem has been severely damaged.

Really?

Where are the massive layoffs?  The missed earnings numbers?  

Aren’t cameras better and less expensive today than 5 years ago?

Is this not basic capitalism?

There's been a lot of downsizing. The Korean and Taiwanese manufacturers have been hard hit. Indeed, many of the Dahua and Hikvision NA employees previously worked for other Asian manufacturers that have cut back. A few examples off the top of my head where we covered specific incidents - Nuvico Shutting Down - The Chinese ConclusionCut in Half, Everfocus Shifts Strategies, Speco is another one where their revenue is way down.

As for the missed earnings number, Axis and Avigilon had missed numbers in the 2015 / 2016 period during the height of the Chinese expansion, e.g., Axis Video Revenue Down (Q3 2016)Avigilon Stock Plunges On Bad Financials (Q2 2016).

Companies in this space tend to keep their problems as private as possible, so literally short of IPVM reports, it would be hidden pretty universally publicly.

As for basic capitalism, that is based on fair trade, not protectionism and losing money for risky overseas expansion, which is what is happening here.

Axis is doing ok despite the heavily damaged ecosystem, no?

5% and 10% growth for Axis in 2015 and 2016 reflects a damaged ecosystem. Also, keep in mind, Axis is strong at the high-end while Dahua and Hikvision are weak at the high-end in developed countries, so Axis performance is an outlier.

Consider Speco, Everfocus or Nuvico's financials (or the myriad other smaller players) where revenue is sharply down.

Speco, Everfocus or Nuvico's financials (or the myriad other smaller players) where revenue is sharply down.

I would argue that this has little to do with the Chinese market and more to do with their reluctance to adapt to changing customer buying trends.

Sean, what were the 'changing customer buying trends' beside the Chinese selling at much lower prices?

Simple: IP

Back when Analog was prevalent, those brands were well known. CNB was the same. I will also add that there were plenty of cheap Chinese analog cameras around to buy during the good ol days when these brands were popular and these name brands still succeeded. This is when Longse & Cantonk came on the scene. 700TVL cameras for $30 out of China, that was unheard of at the time. Nonetheless, the name brands still succeeded regardless of what you could buy on Alibaba.

When IP started becoming popular, these brands didnt pay attention and had tunnel vision with BNC type cameras. Heck, if I remember, i even think they were late to the game on AHD type cameras as well. I dont they ever really took a serious run towards IP, and if/when they did, they were too late to the game. 

 

Simple: IP

No, not simple. I agree that brands that ignored IP were hurt badly. But it's not that Chinese embraced IP and the Taiwanese and Koreans rejected. For example, clearly, the Taiwanese (in particular ACTi, Viviotek, Geovision) were far early in IP than the Chinese. But, regardless of that, they still got streamrolled by Hikvision, since Hikvision was willing to sell at lower costs and spend far more on sales and marketing.

Also, Axis has targeted a broader market over the last few years with their own VMS, IVA, audio products, doorstations and movement sensors. 

Axis has targeted a broader market

And that's been a factor in Axis financials. For example, back in 2013, 'other' / non-video sales represented less than 0.2% of Axis revenue. In 2017, that grew to 6.6%. That still is a distinct minority but, considering how low Axis growth was in 2015 and 2016, the non-video sales were a major factor in what limited growth they had.

IMO, the Honeymoon is over for Hik. Hik will even out and remain a strong, but the educated customer base is returning to what they know and have always been able to trust. 

How much of this is considered growth by aquisition? 

If Hik never existed, we would still pay $300 for 3MP Samsung camera as it's cheaper than $500 Axis or Bosch.

I am an ardent believer in free trade and free market capitalism so i get tired of people complaining (both abroad and in the USA) about how the Chinese are destroying the market. The word "fair trade" is lame IMO and can easily be battled when the correct approach is taken. I believe we are one people, living under one earth, under one God, let the most valued manufacturers win.

I acknowledge that Chinese products are less expensive. I also acknowledge that its difficult to compete in price with the Chinese. I also acknowledge that Chinese companies are highly subsidized and labor costs are low.

But is China to blame or the consumer that is driving the demand of the Chinese products to blame? If consumers keep buying these chinese products, that indicates its a desirable product. You cant use the "low cost" card all the time either, you are wrong if you do. People will only buy low cost for so long, but if the quality isnt there, people will wise up and demand will decrease. This is how it used to be with China, not so much anymore. The thing is that consumers are pleased with the low costs as well as the quality of the product, so they continue buying. Supply and Demand

If you cant compete on price, then focus on making a monumental better quality product and find a way to make it efficiently to where its not substantially higher than Chinese products. Problem is, many companies have not figured out a way to do that.

  • The combination of low-cost pricing and heavy sales and marketing expenditures is unsustainable

 

Completely disagree, this has gone on for too long to say its unsustainable.

i will preface the following with "I actually like most of trumps policies and what he has done so far" but his recent decision to slap a 50% tariff and 20% tarriff on washing machines and solar panel was boneheaded and completely the wrong approach in trying to compete globally. A huge blow to free market capitalism. Manufacturers like Whirlpool are crying because they cant find a way to make a more efficient washing machine than our overseas counterparts, so they cry to trump and trump essentially penalizes the consumer by making it more expensive to find choices to keep our clothes clean. as trump would say "Wrong". A better approach would have been more govt subsidies and monetary rewards for trying to make a more cost efficient washing machine to boost manufacturing innovations. IMO "rewards to affect behaivor" are much better than "penalties to affect behaivor".

Let the frownie faces abound.

Sean, You make some good and interesting points... Do you have a pony in this race?

as consumers we all do. you will find out when you buy your next washing machine

A Bosch washing machine! ;-)

I agree with majority of your opinions above, and appreciate your input. Although you acknowledge the subsidies, I don't think you understand the advantage this gives Hik, on this wonderful planet you feel is an even playing field. 

If the US Govt subsidized Ford so that they could sell F-150's globally, for less than 10k USD a truck, don't you think the entire auto industry would flip out? I know everyone has their opinions on Ford, but this is just an example of a product that is known to have a good repuation. The point here is that the Hik is able to push out low cost, good quality products because of the assistance being given to them from their Owner, which happens to be the Chinese Govt, which I assume has some pretty deep pockets (an tremendous understatement.) Consumers are driven to Hik because of quality/price factors, and Dealers of Hik like yourself love them because of the Profits. I acknowledge that if Hik was similarly priced to Axis, Hanwha, and others, they would still be popular, maybe top 3. But they would also have the same level of scrutiny that say, Arecont has received that would keep them few slots down the list of preferred manufacturers integrators will use, due to their widely recognized, and grossly mishandled security flaws. But still, they would be playing with the big dogs. 

The reason they are popular is their price and price alone. Their quality is good-excellent, but doesn't specifically set them apart from the rest. What sets them apart is Price, to dealers, and to End Users. They get this advantage with subsidies from the 2nd largest economic power in the world, the Chinese Govt. You're not wrong, but this is a huge factor being brushed over. 

there's no evidence that China government subsidize Hik. I'm pretty sure that Hik is a profitable company that doesn't require any subsidies.

Q: Your Annual Report lists “government subsidies” of $216 million (RMB ¥1.49 billion). You have said that Hikvision does not receive government subsidies. Can you explain?

JH: Some have misrepresented our credit facilities (with Export-Import Bank of China for example) as government subsidies, which could not be further from the truth. I have clarified this issue many times. It is true that there is a section in the Annual Report (page 172) under non-operating income that translates into English as “government subsidies.” This section has nothing to do with our credit facilities. Even a cursory examination of the section reveals that the amounts listed in this section, are, in fact: standard VAT tax rebates; local government incentives provided to businesses (including foreign-owned businesses) that promote employment and economic development; standard tax rebates for items such as water conservation and other environmental initiatives; and, amortization of deferred revenue to encourage companies to make high tech investments.

2016 report

that's a loan

Dennis, it's a policy loan, not a typical commercial loan. It's explained in the post I linked to.

The goals of policy loans are to pursue political interests. Given that Hikvision is part of the Chinese government, it is understandable but it is far different than the type of commercial loan than you or I or regular businesses do that simply have to be repaid with interest. Not the case with policy loans.

I would call a $6 Billion gift, I mean loan, "starting halfway down the track."

How many Business Owners on here on IPVM would be leaps ahead if they started out with a $600k Loan? Even $60k? We started from scratch, no $1mil handed from poppa, inheritance, lottery, nothin. 

Are you really so naive? It happens everywhere in that part of the world. Not only governments help their subsidiaries but big banks are used to collect money from a people and give it to the affiliated corporations.

What about "Demonstrably false" subsidies? Is Hik lying or IPVM spreads fakes?

Dennis, first you tried to dismiss it as 'a loan', then when you learned what a policy loan is, now you try to dismiss it as it happening everywhere in that part of the word.

Here are the problems with your argument:

  • You provide no evidence for this 'everywhere'. Impress me. Find evidence of another Chinese video surveillance manufacturer with a loan from a policy bank. You won't but try.
  • Even if it was 'everywhere in that part of the world', it would still be a subsidy, which was the original point you were objecting to.

As for the subsidies, Hikvision's own financials say it's a subsidy. Just like Jeffrey says CETHIK is just one of their diverse shareholders, contradicting their own financials where CETHIK is clearly listed as the controlling shareholder, he's taking the same deceptive tactic for the subsidies.

1. That's a first time when I heard the term "policy loan". English is my third language, so I keep learning every day. I googled and still didn't find anything related to what you were talking about. Sounds like you just made that expression by yourself. Not wondering.

2. That would be strange if Chinese gov supported other CCTV vendors. I understand that a lot of Americans are kind of hothouse flowers and it's hard to believe that world is not fair, competition is not fair, other governments use their financial resources to support businesses, owned by their political leaders, etc. And Chinese government are communists. I thought you had anti-communist hysteria back in 60's but it looks like you're still scared. Modern witch hunt?

3. Below market rates? Yes. Loan? Yes. Fair? From idealist American perspective - no. Is it a unique case? No.

I don't want to support your anti-Hik (anti-communist?) paranoia. If that's just a digital marketing thing I don't want to be a part of the discussion all the more.

Sounds like you just made that expression by yourself

Lol, no. Policy banks / Policy banking is an accepted term of that trade, e.g., explained in the Banking in China wikipedia page.

a lot of Americans are kind of hothouse flowers and it's hard to believe that world is not fair,

Lol, again. It's not that we can't believe it. It's that we strive for fairness. America makes lots of mistakes but the belief that fairness is critical and must be striven for remains.

And 2016 shows $216M

If the US Govt subsidized Ford so that they could sell F-150's globally, for less than 10k USD a truck, don't you think the entire auto industry would flip out? 

I think your comparison is a little severe but I get your point. But my point is that we are complaining that we cant compete with China, and our solution is to tarriff goods to try to level the playing field? Bad solution in my opinion. To make a comparison, its like 2 people running a race. A fast guy and a guy that is 50% slower . The slow guy complains that he should be able to start halfway down the track. So the race administer ok's the notion. Would you really be proud that you can compete in this type of race? That is NOT fair trade as some may say it is.

If we truely want to compete with global competitors, then we atleast have to attempt to try to find ways to play them at their own game. Like i said, either try to up the value more and justify the slightly higher costs. Or let the govt step in and reward manufacturers for innovations in making things more cost effecient with tax credits, subsidies, etc.which would spike a revival in manufacturing.

OR, we can continue to do what we have been doing which is just complain about it.

 

 

Also, I disagree with your assumption that Hik is where they are because of their ownership structure. I dont believe that govt interference in a business will propel them to great heights. Look at solyndra. Also, if the USA govt owned some of Arecont, Im fairly certain they still wouldn't be that great. 

I'm not here to engage in flame war, but your analogy of a race is disingenuous.

In your analogy, Hikvision is the one starting partway down the track. To the tune of hundreds of millions of dollars of documented subsidies, plus $6 billion in "credit" from the government.

If we want to have discussions about free market economics and all that, fine, but at least include the facts.

Moreover, the talk of tariffs is not truly relevant until tariffs on Chinese-made security products become reality. I don't think they're even being seriously considered.

Its not disingenous at all. I assume their are only a few choices that we have to compete:

#1) Compete on the same playing field with subsidies that would inspire a manufacturing revolution
#2) Innovate and try to find a way where the value of the product dictates the slightly higher cost. Manufacturing aside, Apple is a great example of a company who can achieve this, reach the masses, and be a top contender without govt assistance. 
#3) Put Tarriffs on goods to "level" the playing field
#4) Complain about it

If there are any other options to be made I would love to hear them, But I will tell you I hear ALOT of #4 and I can tell you thats probably not going to amount to anything. Disagree?

 

I appreciate the analogies, as its the only I can sometimes get my point across. I agree with Ethan that Tariffs truly dont apply here and I apologize if that was the point you were going for in your post. 

I also agree with Ethan that it Hikvision that has gotten the head start. Its Hikvision that has gotten the HGH shots before the race, or the powered scooter to speed them down the track. Other manufacturers arent asking for the Tariffs in the Security industry, and there hasnt been any since. 

Unless you also specialize in the Solar Industry, I dont know how any of us can debate the pros and cons of the Tariffs being placed on them. These new Tariffs are a drop in the buckets compared to whats already in place with China. Fact is, the Trade Deficit with China and the US is enormous, and needs to be addressed given the substantial rise in economic power China has achieved over the past couple decades. Do I agree that the US needs more innovation and also needs to rethink our R&D priorities so we can compete, absolutely. But the issue with Hik isnt a China vs US problem, its a China vs The Security Industry problem. 

Dealers of Hik like yourself love them because of the Profits.

What profits? There are no profits on cameras any more..

On a axis camera, you can usually do well with 20-30% margin. When the camera costs 100$, you need margins well beyond 100% before it's worth selling it at all. The problem is that there is allways someone who's willing to sell with these margins.. The margins are fine, but there is very little profit left in the end. And if you have to go back and fix something as guarantee...?

Futermore the manufacturer makes it even harder for us to make a decent profit on their products by making it freely available on webshops. 

I imagine this problem might vary slightly around the world.. Keep in mind that here in the nordics a technician costs somewhere between 110-150$ /hour

   I am commenting here because of an experience that I had. We came home from vacation to find our refrigerator/freezer dead. We had the Frigidaire legacy dealer, not a big box, come out to service the 13 year old unit. They said 'cheaper to replace then to repair, repair at least $500 and who knows how long it will last.' So I buy what she wants with no discount ( I am guilty of not haggling over a $100) and they deliver the brand new version of the same Frigidaire Gallery side by side that we loved before but guess what? It is no where near the same quality of manufacturing as the 13 year old unit it replaced. It likely uses much less energy but in our open floor plan, I get to hear it making weird noises at all hours of the day and night, while having morning coffee or late night news reads on the phone. I complain about it and we have service out to fix the ice dispenser. It doesn't come close to the quality and volume of the old gone unit. Maybe I need to complain more forcefully or write a letter to Frigidaire directly. This dealer sold both the new & old!

 

   My point is that name brands are less relevant when they are also sold at every big box retailer at different price points with different warranties & qualities and very few manufacturers take it personally. They don't have relationships with users because users will drive across town for a few hundred dollars at Big Box Inc. Add gray boxes on the internet to this and how is anyone supposed to believe that quality is job one?

What made me angry was that I thought with a two year MFG warranty, someone would care if I no longer considered Frigidaire a quality US brand, just another name from the past like GE, Westinghouse or Zenith. We as a country are paying a price for letting our politicians control the free market and place tariffs to protect US products in a global marketplace. The Carrier story is a great example of unfair business practices although not on the same level as the Hikvision government ownership/subsidies that we all know so much about here...  

 I believe we are one people, living under one earth, under one God, let the most valued manufacturers win.

Thank you very much. This makes three people on Earth that dont 'hate' the Chinese as they are human beings just like US citizens and I dont care to discuss Human Rights, government involvement, etc.

There's a major difference between "hating" the Chinese as a people and disagreeing with things that the Chinese government and its SOEs do. Conflating the two is literally a tactic the Chinese Communist Party uses to deflect criticism. 

Oh really, so many detractors hem and haw over the Human rights violations in China as an excuse not to buy Hikvision but while living in the USA never give a dime to the 10's of thousands of homeless people, sadly many are even Veterans that fought for us and those same folks want to make big headlines about Human rights in China being so horrible. That's a cop-out, people right here in the USA are being violated everyday. I love the USA but we are not perfect nor do we have the right to make decisions for a society that has been around 100's of years longer than the USA.

I find it interesting that its OK for Hanwha to build a 100 million dollar plant in COMMUNIST VIETNAM but COMMUNIST CHINA, (where many companies are partly owned by the government, not just Hikvision) is a no no, right. Did China kill our Veterans in the Vietnam war? 

I would venture to say this will be 're-aligned' in some fashion to blame the Chinese and of course point this at Hikvision as well.

I don't think anyone here on IPVM "hates" the Chinese people, and thats just silly to assume so. "The Chinese" referred to here on IPVM means only The Chinese Manufacturers, and by default The Chinese Govt. Going off your interpretation, this now makes (4) people on Earth that don't hate the Chinese, but (1) one of those (4) sure disagrees with the HikVision/Chinese Govt business practices.  

There is no default, that is the way it is portrayed. Their society is not the USA. They have their way we have our way. That in itself does not make them wrong. Its an opinion thats it. 

dont 'hate' the Chinese as they are human beings just like US citizens

I, for one, feel bad for most of the Chinese people inside of China. Think about the hundreds of millions of them abused and taken advantage via the oppressive hukou system while Hikvision executives and other communist party leaders get incredibly rich.

"A better approach would have been more govt subsidies", spoken like a true Hikvision and Chinese government sympathizer. 

I dont see how anyone could take that as sympathizing with china. I just dont understand what the point of complaining is, its a clear sign of defeat if u ask me and gets u nowhere. I was offering a suggestions to find a way to compete. Do u have a real solution?

Do u have a real solution?

Unfortunately, it seems that tariffs are the best option short of an outright ban.  Tariffs are essentially a tax on the people who would otherwise buy a chinese sourced product so it does have a significant downside.  It does accomplish the goal of leveling the playing field some.

Your suggestion is that other manufacturers governments subsidize security equipment.  The issue most will have with that is that the money to do so does not suddenly appear.  The populace is generally negative towards tax increases, at least in the US.  

Either way, the populace in general who will pay the ultimate price for a subsidy or tariff.  With a subsidy it is spread out amongst the populace, with a tariff it impacts only the consumer who purchase the product.  I believe tariffs are the best immediately apparent option to combat subsidies simply because the reaction is less intense.  Let the product stand on its own merits instead price.

Many Korean companies had setup factories in Mainland China to take advantage (try) of lower manufacturing costs compared to their own.

CNB at one point was the largest in Korea who produced in China, sent back to Korea, and then onto customers as made in Korea.

And yes they also had Chinese R&D which meant some product development was being done in China.

There were and maybe still are many smaller companies doing the same, which I'm sure many IPVM readers with experience will know the names of.

#8, agreed, though there is a trend for Korean manufacturers to move more manufacturing outside of China and into Vietnam, e.g. Samsung to pour $2.5 billion into Vietnamese factories, Samsung picks Vietnam for $3bn smartphone factory

Interesting thing is that Hanwha OEM some cameras from China and the statements were going in another side.

Interesting inputs by many of the colleagues commenting here. In my perspective as a user in the B2B chain, I have a totally different stance to Hanwha. Here is why:

1. Most of you approach the subject from the stance of a big, well developed market in one of the strongest economies in the world. In a small market/poorer region the question is not a dilema whether to buy a Chinese camera system or a brand one from Korea/USA/Canada etc. (given that you can afford both). Here the question is whether to buy chinese or not to buy at all (because you can not afford the latter options). In other words the Chinese manufacturers made possible for us to really create new market and find new customers which had been unable to think about such purchase in the past. We have a solid turnover increase each of the last few years because of this. Thanks to the Chinese companies CCTV became much more affordable and widespread with all the benefits for the overall security of the regular people and the society in general.

2. I have been in the CCTV industry for some 18 years by now and I remember quite a lot of years when the big manufacturers from Japan, USA, Canada, Taiwan, Korea have been making huge profits selling old technology and outdates chips at an abnormally high price, simply by disguising them as "professional equipment". Come on, some 6-7 years ago JVC were offering CRT monitors and VGA IP cameras at high price, claiming as the reason "this is for professional buyers", not to mention their laughable insistence that H.264 is not suitable for security applications. They were unable to explain why the so called professional buyer should spend 3X the price to get a 5-6 years old technology. The same goes for Pelco, DM and others selling analogue technology to the end. Yes, it was a good time for them, and I understand the regret of Hanwha, but sorry, this is over now (fortunately). Now I don't have to wonder how to explain to the customer why I am offering him at a high price a product with 3X lower resolution than his cheap cellphone...

And one more thing - the race to the bottom in terms of pricing is always a hot topic here, but rarely people note the race in the technology improvements which also came along. The Chinese were able to shorten the product cycle dramatically, releasing new features and new technologies relentlessly. The old dinosaurs could have done the same, but they chose to stick to the old technology, high profits and cheasy marketing lines.

3. Regarding the political side of the discussion - it really seems that for some people it is hard to figure out that there can be other socio-political systems in existence than the one they live in. And also, as someone rightfully mentioned, there are some countries in the world that have been in existence for some 1000 years, so there are certain historical reasons and explanations for their development and current situation. Trying to impose your socio-political and economic system to others as the best and only right one is NOT a good thing (if someone has some doubts about that, I can suggest recent examples...cough...hint - Middle East?). The obsession with the goverment ownership is non-productive in my view. Think of it as a shareholder, just as the shareholders of other companies control the company's activity, and personally I don't think the government in this case is mismanaging. I have daily communication with a significant number of Chinese employees - and, no they are not oppressed, zombied or brainwashed. I have been in China various times and no, this is not some dystopian Orwellian country. Someone feels bad for the poor people in China while Hikvision management is getting richer, well I feel bad for the more and more poor people in USA who are dropping out from the middle class, while the rich get richer using the recent tax cuts... So the coin has always two sides :)

I am Made in Hong Kong, HKSAR of China.

As said in title, Chinese products damaged industry, sloppy firmware/software or intentionally breakdown after x-amount of time in use. (not making this up)

Prove the intentionally breakdown statement as you are "not making this up".

Explain why HT are increasing their Chinese manufacturing base if they "damage the industry".

As a VAR for Hanwha Tecwin (now Wisenet) it appears that many of the dialogues above are aimed at the Asian community in general and almost bordering on racist. What a shame.

A couple of references were made regarding Samsung and "the other Samsung" that manufactures commercial products totally distanced from Samsung IP CCTV. That's the reason that Hanwha is stopping using the Samsung name so there is no confusion.

Hanwha does not manufacture TVs, Microwaves, phones etc. If you made a reference to that then you are not doing your homework, a must in this business and quite frankly makes it sound like you are foolish. I can only wonder what your sales pitches are like.

Now let's get down to nuts and bolts shall we?

Over the last 4 years as a Hanwha (Samsung) VAR, out of the thousands of IP Cameras sold and installed, only one failure has occurred, and that was an install error. I don't believe many CCTV Manuf can make that claim. We are also an Avigilon VAR and have experienced the same results. Both are quality with strengths in their own respective products. In addition, we have always received excellent Tech/Customer support from  both. I also don't recall Hanwha having a "backdoor" problem with their cameras.

My last trip to ISC West I asked several Integrators I met if they used the Hikvision product line and those that answered yes all indicated that it was because they were cheap, less expensive, rock bottom pricing etc. Are there now only a handful of Security salespersons that can sell the value rather than the price? That's what this really boils down to here. IMO all of the major manufacturers have come out with a product that was less expensive in the last 3-4 years, and yes, I do believe it was in part to the Hikvision share on the market. But those that did come out with a less expensive product maintained (again IMO) their product quality while dropping the price point.

I've been doing this Security gig for over 40 years now, as an installer, service tech, company owner, Sec. Mgr. and now as an Engineer/Estimator for a large Integrator. I have always maintained that this industry above all others, needs to be constantly vigilant, honest, have well trained people and strive to earn the trust of any and all Customers.

Reading some of the comments above, I'm not too sure that I could do that with all who posted.

Important Update: Hanwha has not only confirmed the interview but they have cited the original source of the interview on their own website.

Our apologies for any confusion about Hanwha's role in this and our assumption that IFSEC actually published its own original work (they just copied parts of it from Hanwha). Why IFSEC deleted it, we are still unclear.

Customer service and technical support is the main problem in Hanwha so don't blame China and of course many issues with HT HW. Axis sold out this year again, how come?..and I am comparing Hanwha vs. Axis, not Hik or Dah. To be honest their decision to raise MSRP prices was a mistake also, now they are more expensive than Axis in some cases. Will see at the end of this year in numbers and market position :) I am curious also

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