Hikvision USA Fights LTS

By John Honovich, Published Nov 04, 2019, 01:16pm EST

Hikvision's USA subsidiary is fighting with LTS, having recently quietly dropped LTS as an authorized distributor amidst ongoing face-offs between Hikision's USA and LTS salespeople.

** **** ****, ** examine *** ******** ******* the *** ************* ** the *** *** ********* increase ******** ***** *********'* USA ******* ******** *** there, ** ***, *** largest *** *** ******* LTS.

VS - ********* / ***

*** *** ************* **** built **** ******** **********:

  • ********* *** *** ******** to ** * ***** organization **** *********** ******** professionals ********** ***** *** and ******* **** *********** and **-**** ** ****.
  • *** *** ******** ** be ** ****** *****, low-cost, ***-****, ** ********** sales ************ ******** ******* of ******* ******* *** phone, ***** ** *** visits ** ***** ******** branches.

*** ******* ** **** sell *** **** ******** (down ** *** **** firmware) **** **** ********** USA ***** *** ********* brand *** *** ***** the *** *****. ***** Hikvision *** *** **** exclusive ******-*** ******* ********, ~95% ** *** ***** actually **** ****** ****** side **** *** ****.

*** ***** *** **** For ****

** **********, *** ***** the **** ******** *** ~20% **** **** *********. Buying *** ***** *** did *** *** ********* USA ***** *********** ** support ** *** ***** Parties. *******, *** **** buyers *** ******* **** sufficient.

Largest ** *** - ***, ** ***

*** *** ****** *** largest ********* *** ** the **, ** ***. By ******, ** *** past ****, *** *** roughly ****:

  • *** ** **** ** Ezviz
  • ** ** **** ** Supercircuits
  • ** ** **** ** UTC / ********** (***)
  • ** ** **** ** SnapAV

******, ** ******, *** has ******** **% ** more ** **** ********* USA ****, ***** ** quite *********** ***** *** much ******* ********** **** Hikvision *** *** **** into ***** ***********, *********, being *** **** ********** and ********** ******* ** ADI *** ******* ***** combined **** ~*** *** locations ** ***, ***.

Made *** * ********* ********** *********** - ****

**** ** ****** ****,********* **** *** ** authorized ***********, ***** *** ***** LTS ***** **** ********* products * **** - under *** *** ** Hikvision *****. ** **** time, ********* ****** *** partnership *********** **** ***** goal *** ** '**** the ********* ***** ** North *******', ** *** video ***** *****:

*********, * *** *** changed ***** **** **** - ****** ***** *** backdoor ***** ** *********, the **** **** *** US ********** *** ***** be *** **** ***** and **** *****, *** sanctions (********, *** ********* spokesperson ** *** *****,**** ************* *** ** *** at *********).

*** **** ** ******* 2017, ********* ********** ******* they ***** ****** *** largest ***** ** ***** America *** ************* * ********** *** employees** *** ******. ***** was **** *********** ******* that *** ***** ** forced ** ********** **** sell ********* ******* ********.

Problem - *** ***** **** ********* ******* *********

*******, *** *********** **** pretty ****** *** *** approach **** ********* **** this:

********* ****** - "*'* like ** *** **** Hikvision ********."

*** ***** *** - "Sure, ****'* *****. ***** to ****. ***, **** is * ***** *** the **** ********, *** for **% **** *** all *** ****** **** up ** *** ********* logo".

*** **-********* ****** - "Ok, *****, ***'* ** it!"

*** **** ******* ************ figured *** **** ** they **** **** ****** products *** ********* **** cared ****** ***** ***** rather **** ***** ** specs, **** ***** *** LTS *** **** **** money.

**** *** **** *** years, ** *** ******* Hikvision *** ****** ********* salespeople ******** ***** ****, as **** ***** **** deals *** **** ** effectively ******* ******* **********.

Joke ***** *** / *********

** ******** ****** **** us **** ****:

** **** ****** ******** from ********* ** *** and ** ** ***** that *** ******** ** sells ** ** ****** banned.

***, *** ** ****** covered ** *** ** government *** *** **** person **** ** *** probably **** ****** ***** it ***. *******, * sensible ***** *******. *** average ***** ************ ******** knows ********* ******* ***** LTS *** **** ******** them **** ****** ******. But ****** **** * minutes *** *** * long **** ** ************ ******* ***** *********, ********* *** ***, sanctions, ***.

** **** **** * years, ********* *** **** from ******** ** **** the ********* ************ ***** in ***** ******* ** minimally *** **** *************, if *** *** *****.

SMB ******* ********* ******** ******* ********* *** *** ***

*** *********** ******* *** two ************* *** *********** over *** **** **** as ********* *** *** firmly ******* **** ***** an *** ******* ******** (e.g., ********* **** ********* **** *************** *** **** ***-****). For ********* ***, **** is ******** ***** *** ban *** ********* **** most ********** ***** ******* or **********. *** ******* is *** **** ********* USA *** *** *** focused ** *** **** segment - ***.

Dropped ** ********** ***********

****** *** ****, ** the **** *** ******, LTS *** **** ******* as ** ********** ********* USA ***********, ********* ** various *** ********* ** IPVM ***** *****.

*** *** ***** *** switching ********* ******* ********* to *** (*** *** example *** **** **** each **** **** ****** inquiring ***** ********* ******* products) *** ********* *** dealers **** ** ****** be **** ** ** to *** ** *** Hikvision ******* ********. *******, they **** **** ** go ** ***** ************ like *** ** ******* that ** *** ***** aggressively *** ** ****** buyers ** ********* *********.

LTS ******* *** *********** - ********** ** ***

** ******** **** ***** between *** *** *********, LTS *** ******* ***** to ********* ****** *** be **** ********* ** Hikvision, *.*.,******* ***** *** *********** ************ *****.

***** *** ********** **** been * *** **** bizarre, ****, *.*.,*** ********* * ******* *** *** ** June *** ****** ********* as * ******* *** a ****** ** ** other ********* ** ***** below:

**** ** ***** * few ** ***** ********* listed, *** ******** *** roughly "****?", "***?", "***?".

***, *** ** ******** to **** ** ******** partnership **** *******:

*******, *** ************, ********* that **** *** "** contact **** **** *** no **** ** **** with ****."

*** ****** **** ** most ********* **** *** is ******** ** ******** is **** **** ******* Hikvision ******* *** *********, by *** ** *** OEMing *********, ***** ******* LTS ********.

***********, *** *** ******* claim ** ************ *******. A *********** ** ~$** cameras **** * *** that ***** * *** hundred *** ******* **** a *** ******* ***** per ******* ************* ****-**** ******** **** a ******* ********* ********* * ******* **** Genetec ** *** **** is * **** *** idea **** *** ****** us ** * ******* partnership.

Standoff ******* ********* *** ***

**** ** * *** of * ******* ******** between ********* *** ***. If ********* ***** ******** LTS ** *** ** all, ********* ***** *** flipping *** ********* ** Hikvision ******. ** *** drops ********* ********, **** will ***** * *** of *********, ******** *** lost ***** ** **** a ***** ******.

**** ** ********* *** salespeople **** *** ********* with ****, ** ***** some ********* ***** ****** are ***** ** **** LTS *****, ********** **** such *********** ********* ** Western *******.

Advantage *** ** ********** ********

** ******* ********** ******** in *** ** *** Hikvision, *** ****** *** an ********* *** *** reasons: (*) ** *** a ***-**** ************ ****** focused ** *** *** and (*) **********, ** benefits **** *** ***** Hikvision *******, ********** ********* backlash *** **********.

** *** ** ********** continues ** ** **** 'anti-Hikvision' ********, ** ******* Vitter **********, *** *** represent *********'* **** ***** to ******* ******** ****** the ****** ******. ***, if **, ** *** very **** '***' ******* Hikvision ***.

**** / ****

Comments (19)

I voted LTS to win. Hik should just quit the USA. The endless negative publicity in the states is not worth endless countermeasures. Drop all the marketing, usa costs, and dominate the rest of the world. Let LTS dominate the USA and reap the dollars.

Then come back in 7-8 years after things have quieted down and relaunch.

Agree: 4
Disagree
Informative: 3
Unhelpful
Funny: 1

#1, I think your approach is prudent though who knows how long all of this will last and what will happen in between (for China, Hikvision, the USA, etc.).

For Hikvision, I think there are 2 issues in withdrawing:

  • Saving 'face' - 'Face' is important for Chinese companies and it's something people close to Hikvision repeat regularly to us. For Hikvision, withdrawing means admitting defeat and losing face.
  • Restarting costs - If they withdraw and then try to re-enter later, they will have to re-build things and the time and cost of doing so can be quite significant. I think their thinking here may be that it's better to lose some now and hope that things turn around soon rather than have to spend more later to restart.

Maybe the 2020 election will change things and that's just a year away. Perhaps they want to see what happens there. If Biden was elected, etc.

Agree: 2
Disagree
Informative: 2
Unhelpful
Funny

LTS has become the largest Hikvision OEM in the US, by far. By weight, in the past year, LTS has roughly done

16x as much as Ezviz 6x as much as Supercircuits 4x as much as UTC / Interlogix (RIP) 2x as much as SnapAV

are import manifests reliable/inclusive enough to make comparisons like that? what about third-party shipments?

Agree
Disagree
Informative: 1
Unhelpful
Funny

While import records are always at least somewhat incomplete (since some customers hide or re-route shipments), LTS positioning here is consistent with what various industry people say about LTS, i.e., LTS has become the biggest US OEM for Hikvision, by far.

Let me put it this way, who do you think would be close to LTS in terms of US importers of Hikvision?

Agree
Disagree
Informative: 1
Unhelpful
Funny

i might have said Wbox or Swann, but i see they’ve moved on.

what about this Annke company, don’t know them but they’re listed in the OEM directory and they seem to be doing well on amazon.

also should give a shout out for local favorite Nelly’s :)

Agree
Disagree
Informative: 1
Unhelpful: 1
Funny

Wbox or Swann, but i see they’ve moved on

I don't think Wbox was ever anywhere close but that's just a guess. Swann used to definitely move more volume but that ended around 2 years ago. Though, LTS is still strategically important since Swann is consumer and LTS is dealer focused.

Agree
Disagree
Informative: 1
Unhelpful
Funny

do these numbers look right?

have we seen the last of the 25% end-of-month blowouts?

Agree
Disagree
Informative
Unhelpful
Funny

Those numbers are consistent with the import numbers we have seen. However, November is just 6 days old and historically December has been a big volume month for Hikvision. I would not hazard any guesses on trends from Hikvision USA imports until after December 31st.

seen the last of the 25% end-of-month blowouts?

Never bet against Hikvision blowout sales!

Agree
Disagree
Informative: 1
Unhelpful
Funny

Hik USA is fighting a losing battle and its 100% Hikvision HQ's fault. They simply aren't choosing to make a serious strategy to solve issues such as this. Dahua is exactly the same.

If they really want to protect Hik USA, this is what they have to do:

IMO, Hikvision should rethink their pricing strategy to be more consistent between OEM and Branded Hikvision.

They should come up with a MAP policy that both OEM and Branded Hik have to follow and make them the exact same.

Here's the deal: EVERYONE knows who Hikvision is now and EVERYONE knows that LTS is a Hikvision product. EVERYONE knows our H-series is Hikvision. The housings are the same, the firmware is essentially the same, the OEM products work in all Hik software. Noone is being fooled here. Hikvision is so popular that you can look at a housing and say "Yep, thats Hikvision". Even end users can.

As much as I would not really like it for the pricing strategy for our business, it only makes sense for Hikvision to begin a pricing policy that is the same between Hik branded and Hik OEM. Otherwise, Hikvision will continue to see this.

Also, hire a small team (maybe 2-3 guys) pay them $10 an hour to have them surf the net all day and actively search for offending companies who are not following the MAP policy, track serial number back to the distributor and ask them who they are selling to that is offending the MAP policy.

LTS is not the only company that Hik USA has to worry about. Their are more blatent offenders.
I could name 2-3 chinese based distribution companies who account for what my guess is 90% of the Hikvision that is being sold on Amazon and Ebay.
Some of these Chinese distribution companies now have warehouses setup in the USA so they can better easily sell their Hikvision branded equipment. The freakin products they are selling look exactly like a Hikvision USA product.

Bottom Line: Hikvision needs a team solely dedicated to monitoring their ecommerce sales channels here in the USA, both OEM and Branded.

Agree: 2
Disagree
Informative: 2
Unhelpful
Funny

it only makes sense for Hikvision to begin a pricing policy that is the same between Hik branded and Hik OEM. Otherwise, Hikvision will continue to see this.

Hikvision USA pays RSMs in the ~$150,000 per year range. Hikvision USA cost structure cannot compete with LTS or Nelly's. So what do you propose Hikvision do with their RSMs and other various much high-cost elements?

Hikvision needs a team solely dedicated to monitoring their ecommerce sales channels here in the USA

What has been explained to me by various people close to Hikvision management is that this conflict is by design. They let these various channels or outlets compete against each other to capture more market rather than restrict themselves to simply one approach.

To play devil's advocate, if Hikvision adopts their plan and thereby effectively raises prices, they will lose share to Longse, Reolink, and various other South China players, yes/no?

Agree
Disagree
Informative
Unhelpful
Funny

Hikvision USA pays RSMs in the ~$150,000 per year range. Hikvision USA cost structure cannot compete with LTS or Nelly's. So what do you propose Hikvision do with their RSMs and other various much high-cost elements?

Raise prices of OEM to the same level as Hik Branded. OR, Lower prices of Hik USA to OEM. Or meet somewhere in the middle.

BTW, the prices I have seen for Hik Branded nowadays are nearly as low as OEM. Its not like it used to be.

What has been explained to me by various people close to Hikvision management is that this conflict is by design. They let these various channels or outlets compete against each other to capture more market rather than restrict themselves to simply one approach.

I was simply trying to be empathetic from Hik USA's point of view. If this is indeed their strategy as you said, they are shooting theirselves in their USA branches foot.

To play devil's advocate, if Hikvision adopts their plan and thereby effectively raises prices, they will lose share to Longse, Reolink, and various other South China players, yes/no?

Longse and many other south china players already are cheaper than Hik and most generally always have. The thing the smaller players dont have is the stability and features of a more developed product. For example, if Longse could figure out how to make a stable interface that wasnt so Chinese-ish, they could do real well. If they could figure out how to make a web interface with no plugins, they would dominate.

Agree: 1
Disagree
Informative: 1
Unhelpful
Funny

the prices I have seen for Hik Branded nowadays are nearly as low as OEM. Its not like it used to be.

I've seen that too. That helps to compete with OEM but of course paying for the premium Hikvision cost structure.

If this is indeed their strategy as you said, they are shooting theirselves in their USA branches foot

There's 2 ways I think about this - If they want Hikvision USA (or UK or Canada) to win, then yes they are shooting themselves in the foot. They should close down or handicap the OEMs. But Hikvision HQ (from what I can tell) wants to maximize revenue overall - so if it comes from Hikvision USA fighting against LTS which competes against Nelly's which competes against a guy in warehouse flipping it on Amazon, so much the better. Anyone with any insights or thoughts on Hikvision HQ mentality here?

Agree
Disagree
Informative: 1
Unhelpful
Funny

But Hikvision HQ (from what I can tell) wants to maximize revenue overall - so if it comes from Hikvision USA fighting against LTS which competes against Nelly's which competes against a guy in warehouse flipping it on Amazon, so much the better. Anyone with any insights or thoughts on Hikvision HQ mentality here?

Interesting take. If this is the case, I think Axis should sell to Amazon Warehouse Flippers so they can maximize revenue. They are going backwards now controlling their sales channel!!

In all seriousness though, I cant say for certain if that strategy is good long term or not. Maybe it is. But if it is their strategy, then as I said, Hik USA doesnt stand a chance.

Agree
Disagree
Informative: 1
Unhelpful
Funny

I think China Hikvision management likes to pit one division against the other and see who wins market share. Ask yourself “why not do this”?

What if LTS is owns by Hikvision or it’s major shareholders?

I believe LTS major reason to exist is a counter balance to ADI, not as important today as a year or so ago, but never the less important way to control market share outside the traditional distributor/OEM

Anyone notice LTS is heading toward being a full line distributor?

NOTICE: This comment has been moved to its own discussion: I Think China Hikvision Management Likes To Pit One Division Against The Other And See Who Wins Market Share. Ask Yourself “Why Not Do This”?

Agree
Disagree
Informative
Unhelpful
Funny

The world of security will soon forget this so called “Manufacturer number 1”. Security distributor and installers have nothing in common with PRC people because they have no whatsoEver respect for the human being.

We need security manufacturer with brilliant ideas and not barbarians engaged all day with cheating, gambling and betraying.

Thanks IPVM for their precious news.

Agree: 2
Disagree: 1
Informative
Unhelpful: 2
Funny: 2

Add a "Who doesn't care?" to the list because I was looking for that one.

Agree
Disagree
Informative
Unhelpful
Funny: 2

The best thing Hik can do is ship the component camera parts to the US. boards, Leads, cases and do final assembly in the US.

Agree
Disagree: 1
Informative
Unhelpful
Funny: 2

I am pretty positive Hikvision has already thought this through and decided against it because it probably would not meet the 'substantive transformation' requirement. Otherwise, it's likely the simplest / least expensive route.

Hikvision has repeatedly talked about India manufacturing which could address the tariffs. In India, they do have a 'real' manufacturing plant, from what we have seen, which might qualify.

Agree: 2
Disagree
Informative: 1
Unhelpful
Funny

Based on previous investigation into this, that would be unlikely to work.

At VideoIQ, we had a lot of requests to be able to (legitimately) label units as "Made in USA", even if it would come with a slight price premium. Upon looking into this, it did not appear that taking components manufactured at our contract supplier in Taiwan and assembling them in the US would be enough to legally qualify.

In Hikvision's case, I think the ban is much more centered around the Huawei chips, and the firmware in general, than just on the country where the components were plugged together.

I see two things that Hikvision would need to do at a minimum to reverse the current ban and backlash against their products in the US for government use:

1) Discontinue all use of Huawei chips and switch to a non-Chinese SoC

2) Open source firmware and software (for real, not some location in CA where access is only granted under special circumstances)

Even with the above, you'd still have the Chinese government shareholder/ownership concerns, but it would be much much more difficult for them to hide any kind of trojan horse in the software, and would make the product more or less on par with any other random manufacturer in that sense (eg: not 110% trustable, but low apparent threat to network security).

Also, I do not think it is practical for Hikvsion to really do either of the above, much less both of those items, so the bans and cyber security concerns are unlikely to fade away unless there is a significant political shift.

Agree: 1
Disagree
Informative: 1
Unhelpful
Funny
Read this IPVM report for free.

This article is part of IPVM's 7,338 reports and 973 tests and is only available to subscribers. To get a one-time preview of our work, enter your work email to access the full article.

Already a subscriber? Login here | Join now
Loading Related Reports