Hikvision $6 Billion: Doubles Chinese Government Funding

Author: John Honovich, Published on Aug 18, 2016

Hikvision has announced a new $3+ billion line of credit, in addition to the previous $3+ billion one from December 2015.

This new one is from the Export-Import Bank of China (Exim). In this note, we examine Exim's central role within the Chinese government, how Exim funds various China government interests, including in Iran and Africa, and how Hikvision benefits from the government backing

China Exim Overview

Exim is, by their own admission, owned and run by the Chinese government as they declare on their about page:

The Export-Import Bank of China is a state bank solely owned by the Chinese government and under the direct leadership of the State Council.

Their goal is to help Chinese state owned manufacturers like Hikvision, as they note:

The Bank's main mandate is to facilitate the export and import of Chinese mechanical and electronic products

And as the official Chinese government website notes:

The China Exim Bank must play its role in stabilizing growth, restructuring, boosting exports and implementing the “going-out” strategy

The 'Going-out' strategy is important to understand Hikvision's fit here. The Chinese government had made it a priority to subsidize and underwrite the global expansion of their companies across the world.

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

Bank Focus is Policy, Not Making Money

China Exim is a 'policy' bank, not a 'regular' commercial bank. It pursues the policies of the Chinese government.

Here are some examples:

Unlike a regular bank, making profits on loans is not the key factor of success for Exim. China Exim is one of three China policy banks, including the CDB who had already authorized ~$3 Billion USD to Hikvision in December 2015.

Quasi Subsidy for Hikvision

As a China economic expert noted to us:

Because they are a "policy" bank, they are not viewed as a profit center like ICBC or other commercial lenders. This essentially allows them to transfer the profits to their customers. It is a quasi subsidy.

Hikvision / Exim Agreement Overview

The official Chinese announcement declares it a 'strategic cooperation announcement' between the Chinese government bank and the Chinese government owned company, Hikvision. The key financial component is providing a comprehensive line of credit up to 20 billion RMB (~$3 billion USD) to Hikvision over the next 5 years.

While the announcement lacks details, China Exim commonly provides concessional loans at below market rates and more lenient terms to support the policies they are backing.

Hikvision USA wrongly claims that this deal is a "testament to the fact that the financial markets recognize Hikvision" but, given that China Exim is a key part of the Chinese government, what it really is, even more powerfully, an endorsement of the Chinese government in Hikvision's future expansion.

Chinese Government Benefits

Beyond the 'soft power' benefits that China desires and gets when its subsidiaries expand globally, the China government also generates hard currency from underwriting Hikvision exports, as a China economic expert noted to us:

They maybe incurring local currency losses on the subsidies but they get hard currency inflows.

Currency outflows are a major political and economic problem for the Chinese government (see China's Exodus of Capital) so driving Hikvision exports helps counteract that.

Hikvision Benefits / Industry Danger

Not only is the Chinese government giving massive money to help Hikvision's expansion, they are clearly signaling that Hikvision's global expansion is an important political goal for the country.

How they will use the new money and how much of it remains to be seen, but given their track record of aggressive price cuts and significant spending this indicates another wave of global expansion that many video surveillance companies are unlikely to survive.

Vote - Fair?

Is it fair that the Chinese government is funding billions to Hikvision?

16 reports cite this report:

Morten Tor Nielsen Defends Hikvision on Jun 12, 2017
Morten Tor Nielsen, veteran software developer for Prescienta working for OnSSI, has posted "In Defence of Hikvision". As Nielsen explains...
Hikvision Gives IPVM An 'F' on Jun 06, 2017
Two weeks after Hikvision called IPVM 'absolutely unethical' and 'anti-everything', Hikvision has given IPVM, in their words, an 'F'. Hikvision...
Hikvision Attacks IPVM on Mar 20, 2017
Hikvision has attacked IPVM repeatedly over the last month, both in the international press and in its dealer communications. Attacks Listed On...
'Dirty': Hikvision Attacks Genetec on Feb 20, 2017
Hikvision is angry at the growing public awareness that Hikvision is owned by the Chinese government. They took aim at Genetec,...
Hikvision Launches Kits, Slashing Prices 40% on Feb 02, 2017
In an unprecedented move, even for Hikvision, the China government owned and funded manufacturer has slashed their existing prices by 40% as part...
Hikvision Discontinuing Online Service on Dec 12, 2016
Hikvision has declared it will discontinue its Hikvision online service, just days after IPVM's Hikvision Cloud Security Vulnerability...
Hikvision CEO Declares 'We Do Not Cut Rates" on Dec 02, 2016
Hikvision has led another press trip to China, and this time Hikvision's CEO is sharing insights into their competitive strategy, including...
Hikvision Removed From US Embassy on Nov 22, 2016
Hikvision cameras have been removed from the US Embassy Afghanistan and a procurement for more Hikvision cameras has been cancelled, after IPVM's...
China "Unswerving Leadership Over State-Owned Enterprises" Like Hikvision on Oct 18, 2016
The PR agency of the Chinese government declared: President Xi Jinping stressed the Communist Party of China's (CPC) unswerving leadership over...
Hikvision Declares No Subsidies But Financials Show $189 Million Subsidies on Oct 13, 2016
Hikvision alleges that they receive no subsidies but their own financial records show $189 million of subsidies in 2015. Hikvision 'overseas' has...
Hikvision Chairman Tours With Chinese Government Boss on Sep 28, 2016
Two China Communist senior officials toured Europe this summer, one was Hikvision's Chairman and the other was his boss, SASAC Director. In this...
US Embassy Requires Hikvision Cameras on Aug 29, 2016
The US Embassy in Kabul Afghanistan has required only Hikvision cameras in a new US federal government bid. However: Hikvision was founded...
Hikvision Chinese Government Origin And Control on Aug 29, 2016
Hikvision originated from a Chinese government research institute. This is uncommon in the West but frequent in China. Hikvision was founded...
Hikvision 20% Price Cut Twice In A Month on Aug 23, 2016
Days after celebrating the Chinese government's commitment of up to $3 billion USD more in funding, Hikvision USA is now launching up to 20% across...
FLIR Expands Enterprise Distribution Through ADI on Aug 22, 2016
FLIR and Hikvision have been the two top-stocked video brands at ADI, according IPVM analysis and ADI Awarded FLIR "Vendor Of The Year" in January...
Hikvision And The Chinese Government on Dec 07, 2015
Here are the facts about Hikvision's China government ownership. #1 Fact - Hikvision CEO Admits China Government Ownership In the China...
Comments (93): PRO Members only. Login. or Join.

Related Reports

The Race To The Bottom Is Over on Nov 28, 2017
The race to the bottom in video surveillance is over. After 3 years of aggressive price cuts and heavy sales and marketing expenditures, the...
Hikvision Chinese Government Owner CETHIK Exposed on Nov 20, 2017
Hikvision deceives about its Chinese government ownership. Contrary to their claims about 'independence' and simply having 'shareholders' that are...
Dahua Hard-Coded Credentials Vulnerability on Nov 20, 2017
A newly discovered Dahua backdoor is described by the researcher discovering it as: not the result of an accidental logic error or poor...
Hikvision China Criticizes The WSJ on Nov 15, 2017
Hikvision, through the Chinese government's authoritative news service, has criticized the WSJ investigation into Hikvision. In this...
Dahua Launches Electric Cars on Nov 13, 2017
Embattled mega video surveillance manufacturer Dahua is now electric car manufacturer Dahua. Let the jokes begin: But is the joke on Dahua's...
WSJ Investigates Hikvision on Nov 13, 2017
The Wall Street Journal (WSJ) has released a detailed investigation into Hikvision's government ownership and cybersecurity problems, hitting the...
Honeywell Crowdfunding Bombs on Nov 08, 2017
100,000+ employees and $40,000,000,000 in annual revenue. That's Honeywell. ~200 backers and ~$67,000 in funding in a week. That's Honeywell...
Bubble: Dahua Doubles Market Capitalization on Nov 07, 2017
Dahua's stock is in a bubble. Those of you in the industry know how bad of a year Dahua has had - the zero-day backdoor, the massive hacking...
Dahua USA Removes Head of Marketing on Nov 06, 2017
Dahua USA's marketing and just their overall business organization has been a mess. These guys could not sell life jackets on the Titanic. But,...
CPSE 2017 Highlights on Nov 01, 2017
CPSE 2017, the largest security-oriented exhibition, held in China, has wrapped up. Inside we cover some top trends from the show,...

Most Recent Industry Reports

Hiring Camera Calculator Product Manager on Dec 12, 2017
We are working on making the Camera Calculator even better and hoping you can help us find the right person to join our team. IPVM is hiring a...
Testing $20 WyzeCam, The Money Losing Amazon Vet Startup on Dec 12, 2017
This startup is perfecting the old adage: We lose money on every sale, but make it up on volume But it is no joke. The company, Wyze Labs, is...
Xiongmai New Critical Vulnerability - Same Manufacturer Whose Products Drove Mirai Botnet Attacks on Dec 12, 2017
The Chinese manufacturer whose products were primarily responsible for the 2016 Mirai botnet attack has a new critical vulnerability, confirmed by...
Robot Vandalism on Dec 11, 2017
Vandalism of security systems is a common concern. It is so common that camera vandalism statistics show that designers routinely sacrifice camera...
Access Controller Software Guide on Dec 11, 2017
Properly configuring access controllers software is key to a professional access system. These devices have fundamental settings that must be...
2018 Video Surveillance Cameras Overview on Dec 11, 2017
This report concisely explains the developments for surveillance cameras offered in 2017 and the state of offerings going into 2018, including...
Imperial Capital Security Investor Conference Review on Dec 08, 2017
Investment bank Imperial Capital holds an annual Security Investor Conference where 60+ companies present, including this year: IPVM bought a...
Integrator GPS Vehicle Tracking Statistics and Success Examined on Dec 08, 2017
GPS vehicle tracking is a growing but somewhat controversial topic. On the plus side, tracking may increases productivity by providing greater...
Hikvision NA Biggest Sale of 2017 on Dec 07, 2017
Hikvision North America has been relatively disciplined the past 5 months, reducing the number of sales and the breadth of what is on sale. No...
Security Integrator IT Expertise Statistics on Dec 07, 2017
20 years ago, putting physical security systems on IP networks was just emerging. Today, almost every system is networked in some way, IP cameras...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact