'Dirty': Hikvision Attacks Genetec

Author: John Honovich, Published 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, declaring:

Genetec is playing dirty politics

We’ve seen the Genetec leader perform a lot of ostentatious hand-wringing and engage in a lot of inflammatory rhetoric

What comes around goes around... When a CEO of a company tries to play dirty politics the unfortunate consequence is that business and employees suffer as a result.

Whatever his twisted motive, Genetec’s leadership is running fast in the wrong direction.

The scale and complexity of what we’ve done in China cannot be matched by a software such as Genetec.

This comes after Genetec expelled Hikvision, quarantining Hikvision products to a new 'restricted' category, causing an industry uproar when IPVM broke the story.

Hikvision also expressed their displeasure with IPVM whose reporting has lead to Hikvision being removed from a US embassy and removed from US GSA sales, saying:

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an online blogger site seek to vilify the intentions of a commercial Chinese business [see Hikvision Chinese Government Origin and Control]

an apparent attempt to win blogger clicks and financial gain.

Online bloggers seek to instill fear with talk of SOEs [see Hikvision CEO Admits Hikvision China State-Owned Company]

President Jeffrey He

The Hikvision executive speaking here is Jeffrey He, President of Hikvision North America.

I respect Jeffrey. In my interactions with him over the years, he has been calm, level headed, and thoughtful. In our conversations with Hikvision employees and partners, we hear similarly good things. Moreover, I take no offense to his comments about IPVM and still respect him.

Risky Tactic

Hikvision is best served by people forgetting about the Chinese government ownership, not generating more controversy and 'clicks' by feeding into it.

This interview's approach is far out of character for how Hikvision operates and how Jeffrey historically conducts himself. Letting one's emotions fuel one comments is risky and typically counterproductive.

Pressure

However, this interview underscores the amount of pressure that Hikvision and their executives are under. Hikvision corporate has set extremely aggressive / unrealistic growth targets that Hikvision North America has missed, despite the monthly price cuts and large scale hiring. That alone has been a challenge for Jeffrey.

The China government ownership reporting has made things more difficult for Hikvision as a growing number of industry people ask or object. Certainly, IPVM has written the most about this but it has also made international news with the Voice of America covering Hikvision's ownership, the Times of London investigating Hikvision's ownership and the UK Daily Mail conducting an undercover investigation of Hikvision. All of this combined has undermined Hikvision's ambitious growth efforts as they try to do damage control.

Genetec's move against Hikvision was especially damaging to Hikvision as, to many, it served as validation to the news reporting. Moreover, since Genetec stood to lose significantly financially by opposing a company with more than 20x their revenue and with $6 billion in fresh Chinese government funding, it was hard to spin or explain by Hikvision.

Government Criticism Off Limits

When Jeffrey cut off all communications with IPVM, he explained to us that 'politics' were off limits. We made it clear that the only reason politics are discussed is because Hikvision is owned by the Chinese government.

The Chinese government / Communist party is extremely sensitive to criticisms. Indeed, Jeffrey's Hikvision's superiors include Chinese government officials so they would be particularly motivated to stop this.

In China, a simple solution exists to critics of the Chinese government - abduct and torture them (e.g., 1, 2, 3, 4, 5). Given that authoritarian power, it is understandable that they would be frustrated by the free actions and resistance of North Americans.

Here are the facts.

#1 Fact - Hikvision CEO Admits China Government Ownership

In the China government's official website, Hikvsision's CEO admitted this (in English), saying:

“President XI’s visited means a full appreciation and support for CETC group and HIKVISION. As a state- owned company, we understand that reform and transformation cannot be accomplished in one day and should continue. In the future, we will still do our best to fulfill our mission and take responsibilities for our society and government.” [Emphasis Added]

This is a fact. IPVM first reported this 4 months ago. Hikvision has never attempted to rebut this.

#2 Fact - Hikvision Financials Confirm Government Control

Contrary to their marketing claim of just having government shareholders, Hikvision's own financial report (p. 56) confirms that they are still, to this day, controlled by the Chinese government through CETC:

This is a fact. IPVM first reported this 7 months ago. Hikvision has never attempted to rebut this.

#3 Fact - Hikvision's VP R&D Works For The Chinese Government

Hikvision's EVP of R&D simultaneously works for the Chinese government, specifically the police ministry infamous for torturing. Here is how Hikvision describes their executive:

This is a fact. IPVM first reported this 10 months ago. Hikvision has never attempted to rebut this.

#4 Fact - Hikvision's Chairman Is A Communist Party Secretary

Hikvision's chairman is a Chinese government official, a Communist Party secretary, as described in the Hikvision 2015 annual report (p. 62):

Chen currently serves as the head of 52nd Institute, the chairman and the Communist Party secretary of China Electronics Technology HIK Group Co., Ltd. (中电海康集团, CETHIK) and chairman of the Company [Hikvision] [Emphasis Added]

This is a fact. IPVM first reported this 7 months ago. Hikvision has never attempted to rebut this.

#5 Fact - Hikvision Pledges Accepting Communist Party Leadership

Contrary to their marketing claim of just being a commercial entity, Hikvision's Chairman / Communist Party Secretary declared:

"Every party member must consciously accept the [Communist] party's leadership, effectively strengthening the party's leadership, strengthen the Party's vitality, comply with party discipline.... All Party members united as one, as "personal dream", "Hikvision Dream", "China Dream" and efforts!" [IPVM emphasis added]

This is a fact. IPVM first reported this 1 year ago. Hikvision has never attempted to rebut this.

Vote on Government Ownership

Hikvision vs Genetec

Hikvision's China government ownership makes them a powerful threat against Genetec. Hikvision has shown they are happy to cut hardware prices and give software away for free to win deals. Genetec, as a private business that sells limited hardware, cannot match that. And Jeffrey's statement here clearly shows they intend to teach Genetec a lesson.

Genetec's core strength is their software, especially for large scale / enterprise accounts. Hikvision claims they have their own more powerful software inside China. They will certainly need to bring it, assuming it is that good and ready for the Western market, to compete with Genetec at the enterprise.

The battle will be challenging. Hikvision can always beat Genetec on price and price should help on some deals but price does not matter as much in the Enterprise as it has to the small dealers Hikvision has done best with in North America. Plus, it will be challenging for Hikvision to explain to Fortune 500 executives and US government officials why their government ownership is no big deal.

Unprecedented

This type of public battle between two of the industry's largest players is unprecedented, primarily because everyone tends to lose in such affairs. Of course, as the Chinese government's video surveillance division, Hikvision has unprecedented power and will surely use its might to put down this resistance.

Update: Another Attack

Now, Hikvision Europe has attacked Genetec, so this is evidently not a one off but Hikvision's planned strategy, quote:

it seems that Genetecs adm. Director Pierre Racz want to emulate some American blogger (John Honovich, IPVM.com, editorial comment), whose sole purpose seems to be to instill fear, uncertainty and doubt Hikvision, simply because it is a Chinese company.

Genetec leader's interpretations of war, espionage and treason are taken from a Hollywood magazine, but I am sure that security personnel and integrators can figure out Pierre Racz attempt to spread fear through vague accusations and absurd postulates.

3 reports cite this report:

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