Hikvision Massive China vs Overseas Sales Growth

By: John Honovich, Published on Oct 19, 2015

Hikision's ~$2.6 billion USD revenue was 4 times as large as Axis for 2014, which is absolutely astounding considering how big Axis is and how both companies both focus on video surveillance.

But:

  • How much of Hikvision's revenue is from inside China vs 'overseas'?
  • How much is Hikvision growing?
  • Which is growing faster? Domestic or overseas growth?
  • Compared to Dahua, how is Hikvision doing?
  • What does this tell us about Hikvision's future impact on the world?

Inside, we answer these questions.

********'* ~$*.* ******* *** revenue *** * ***** as ***** ** **** for ****, ***** ** absolutely ********** *********** *** big **** ** *** how **** ********* **** focus ** ***** ************.

***:

  • *** **** ** *********'* revenue ** **** ****** China ** '********'?
  • *** **** ** ********* growing?
  • ***** ** ******* ******? Domestic ** ******** ******?
  • ******** ** *****, *** is ********* *****?
  • **** **** **** **** us ***** *********'* ****** impact ** *** *****?

******, ** ****** ***** questions.

[***************]

China ** **** ** ********

******** ***** **** ***** accounted *** $~* ******* USD (**% ** ***** revenue) ***** ******** / International ***** **** ~$*** million *** (**%). *********'* non-China **** ***** **** comparable to **** ********. ** terms ** ***** **** outside ** *****, ********* easily **** ***** (** more) ** ****, ***** Hikvision's ***** ***** *** comparable ******** *** ******** to **** ***** *** products ********.

Growth ***** - **** *** ****** ****** *****

*** ** **** (******* June), *********'* ***** **** up ** ****** ************ 62.8% *** ** *** already **** **** ****.

******, **** **** **********, domestic ******* ********* ***** *** growing ****** **** ************* sales, **** ******** ****** lagging * *** ****** behind ******** ****** ** 'just' **.*%.

***** *** ******** ********* is ****** ** ***** (3x **** ** **** globally), ** ** *** understand *** **** *** continue ** **** **** fast, ****** ** **** a **** ****, ** implies **** **** *** suffocating ***** ******** ******.

*************

**********'* *** ******* *** ~25%, ***** ** *** above *** ******** ****** video ************ ************ (*** better **** **** ******'* and *****'*). * '****' net ****** *** * video ************ ************ ** generally ** *** **-**%. In ********* *****, ********* generated ~$*** ******* *** in ******* ** ****.

*******, *********'* ***** ******* are ** *** **-**% range, ***** ** ********** low. ********* **** **** and ******** ********* *** in *** **-**% *****. The ********** *** ** attributed ** *****. ** ~4x ****' **** *** ~8x ********'* ****, **** can ****** ***** ******** over * **** ****** base.

** *** ***** ****, since *** ************** ******** of ******* ***** **** China, ** *** *** the *******. ******, ***** the ********* *** ***** expenses Hikvision ** ********* ******** and *** *** ****** extended, ** ** **** to *** *** **** are ********** ******* ** China, *** ********* ******* near *** ****** **** have ************.

Dahua **********

** ********, *****, ***** main ******** *****, ** growing ******* **** ** fast. ** *** ******** side, ***** ******* ~$* billion *** ******* ** 2014. *******, ** **** revenue *** ** **%, which ** ****** ******** to *** ***** *** only * ******** ** Hikvision's.

Future ******

*********'* ********** ******* **** their ******** ******* ********** is ******* ********** **** to ****** ******* ****** expansion *** ** ******** losses ** ******* *******. If **** *********, ** could ******* *** ************ to ******* *** ****** global ******.

Update: **** ********

**** *****'* ******** ******* slowing, *** ******** ****** is *** ******* ****** than ********. ********* ** Moody's [**** ** ****** available], "******** ***** **** ** 43% ****** ** *** company's ********* ** *** small- *** ******-***** ********** segment *** *** ***-**-*** end ******. ************* ***** grew ** **%"

******* ************* ***** *** growing ******, ******** ***** are ***** **.*% ** Hikvision's ***** *******. **** might / ******** **** change ** **** ** domestic ***** ****** ********* to ****.

Comments (22)

On the other hand, since the overwhelmingly majority of revenue comes from China, so too are the profits.

Its amazing what a little thing like being 50% owned by the state of a totalitarian govenment can do for ones bottom line.

Actually I formally asked the question to Hikvision on Friday about what their position is on the relationship / control / influence of the Chinese government on their company. I am curious what they say and will add if / when I receive.

We really have no way to know the impact on their bottom line.

The government could be a passive silent investor, just hoping for some good returns on a company in a growth market. This would yield no influence on the bottom line.

The government could supply labor by forcing prisoners to do some work in the factory, a positive impact on the bottom line.

The investment might come with strings attached that any products purchased for government use must be sold at cost, leaving a negative impact on the bottom line.

In the end, I'm not sure that it really matters.

Or the Chinese government could be favoring Hikvision in awarding projects for huge projects. Not sure how that would not really matter.

I think that would mostly be true anyways.

Just as US companies tend to prefer to buy US products, and Axis/Milestone were the de facto standard in most of Sweden.

Due to import and other reasons I think any Chinese company has a massive advantage in China compared to their peers in most industries.

"Just as US companies tend to prefer to buy US products"

Really? To the same extent that the Chinese government prefer to buy Hikvision? US video surveillance buyers have little country loyalty as the results for Arecont and Pelco show.

"Axis/Milestone were the de facto standard in most of Sweden."

Even if true (though Milestone is from Denmark), these are relatively tiny countries.

Being the preferred video surveillance manufacturer for China is a huge difference maker.

Pelco isn't really a US company though.

And Arecont, is, well Arecont.

US companies prefer to buy US, but they will not buy a US product that is inferior to other alternatives most of the time. You do see a lot of US and city government jobs that give clear preference to Made in USA suppliers.

I do not see 'a lot of US and city government' jobs do that. However, I see 'lots' of US government users buying Axis cameras, for example.

Let's return to the original topic. Is your contention that either (1) Hikvision gets no meaningful preferential treatment for Chinese government jobs or (2) that they do, but it is not big enough to have a material impact on their competitive posiiton?

If I had to speculate, I would say the Chinese government would very strongly prefer to use Chinese products as much as possible. I would also speculate they would want those products to come from a relatively stable and established company, so they're not going to be ordering from Longse, but from Hik or Dahua.

Given the size of China, and their governments seeming desire to keep an eye on people and track people everywhere (and I'm basing this on some first hand conversations I've had with Chinese government employees about CCTV) it stands to reason they are deploying cameras at a steady clip. If they do in fact use a lot of Hikvision product it would likely give Hik a competitive advantage overall. Imagine if you are a manufacturer where 1 large customer subsidizes the majority of your R&D or production costs by ordering enough gear to make the company viable even without any other customers. That would give you a massive ability to do "cost leadership" selling.

The government could be a passive silent investor, just hoping for some good returns on a company in a growth market.

What force would restrain them from being active? I actually agree with you that Hik probably gets the short end of the stick occasionally, i.e. "sell below cost on job X", but I see no reason to assume the government would not manipulate the market to their advantage in other cases.

The bar for corruption is set much lower than in the West, wouldn't you agree?

"I actually agree with you that Hik probably gets the short end of the stick occasionally, i.e. "sell below cost on job X"

If that is true, explain their massive net margins.

Occasionally.

What force would restrain them from being active?

IMO it would be a pretty large force that would prevent them from being active. I think the "silent investor" option is the least likely, I was just listing it as a possibility to point out that we really can't be sure what net impact the government ownership really has on the company.

"I think the "silent investor" option is the least likely"

Since you are just throwing things out, maybe the Chinese government is determined to destroy Hikvision as they want Arecont to win and be the world's dominant manufacturer. It's theoretically possible, right?

"we really can't be sure what net impact the government ownership really has on the company."

Yes, but we can look for what it is more likely and do investigations to gain more facts.

Since you are just throwing things out, maybe the Chinese government is determined to destroy Hikvision as they want Arecont to win and be the world's dominant manufacturer.

I thought it was clear in my original post that I was trying to break it down into the three likely scenarios.

1)The government has an investment, but is passive about it.

2) The government has an investment and uses their governing power in a shady way to positively impact the company

3) The government has an investment and uses it to gain favorable terms for themselves.

There are other potentially less likely scenarios:

4) The government has an investment and uses their position to hold the company to strict ethics and manufacturing standards

5) The government has an investment and encourages the corporate officers to seek counsel and guidance on growing the company.

And so on.

I don't see any logical scenario where the government would invest in Hikvision and then seek to destroy them. I also don't see how you make that leap from my initial post or followup posts.

Yes, but we can look for what it is more likely and do investigations to gain more facts.

Please do. Until you gather additional facts, I stand behind the point of my original response to Undisclosed 1: we can't fully determine the impact of "being 50% owned by the state of a totalitarian govenment" in regards to Hik's bottom line.

I stand behind the point of my original response to Undisclosed 1: we can't fully determine the impact of "being 50% owned by the state of a totalitarian govenment" in regards to Hik's bottom line.

I will stand behind your point as well. We can't fully know.

And we won't likely ever 'fully' know as Hik is unlikely to add a line on their P/L for "Net Favoritism".

Since they won't say, it's natural to consider the possibilities, much as you did. You and me, we're both doing the same thing. Only difference is you seem content to weight your first three scenarios equally and throw-up your hands at that point.

But I feel there is still some 'meat on the bone' there. First there is the control case, Dahua. Although many reasons that have nothing to do with state ownership could be given to explain Dahua not keeping up with Hik, the fact is that they haven't. Or is anyone else in the industry, AFAIK, keeping up with HIK's margin. Not conclusive, but certainly supportive to the Hik favoritism argument.

Also, I think your second scenario 'poisons the well' a bit with your 'shady' description. What is considered shady here may not be there.

IMHO, the main reason that the Chinese government would not be helping Hik is because they're working on bigger things, not because of some fear of being accused of manipulation.

Finally, I ask you to consider why a government would even be allowed to own a controlling share of a private, profitable corporation in the first place.

That is a big indicator that they play by different rules over there, no?

As we've seen a huge drop in average market prices for IP cameras/NVRS/HD Analog in the last year, and I would propose that HIK is a major/if not the major force behind that drop, does anyone believe that the domestic Chinese profits are allowing US/Global prices to be artifically low? Basically HIK is selling close to or below cost to gain market share?

My comparsion would be the semiconductor chip dumping scandal of the late 90's. Hynix/Samsung selling memory below cost to force Micron/Texas Instruments out of the market.

Thoughts John and everyone else?

3, we had a discussion on that topic here: Hikvision 'Flooding The Market'

I would not say it is 'dumping' (not enough evidence for that strong a claim) but it's pretty clearly a focus on growth first, profit maximization later. Given how big they already are in China, I could easily see them doing this for a few years, which could knock a lot of Western manufacturers out. I do not know if that is their plan is but it would be, from a competitive standout, an effective one.

John,

I'll be there for CPSE too.

"IPVM will be sending Ethan to China next week to further investigat the Chinese market and Hikvision's role."

Feel free to pass my contact info in case if he would like to grap a cup of tea with me at the show.

So when will the headlines read that HikVision cameras, all over the planet, have a chipset that lets the Chinese government take a peek at any image they want?

OK, OK, I'll put away my tinfoil hat now and go back to work now.....

:-) Greg

...HikVision cameras, all over the planet, have a chipset that lets the Chinese government take a peek at any image they want...

A bit alarmist maybe, since without a Huawei Router they will be unable to access it behind your firewall.

Update: 2015 Complete

With China's domestic economy slowing, the overseas market is now growing faster than domestic. According to Moody's, "Domestic sales grew by 43% helped by the company's expansion in the small- and medium-sized enterprise segment and the mid-to-low end market. International sales grew by 57%"

Despite international sales now growing faster, domestic sales are still 73.7% of Hikvision's total revenue. This might / probably will change in 2016 if domestic sales growth continues to slow.

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports

Hikvision 2018 Revenue Tops $7 Billion USD But Growth Slows To Low on Feb 15, 2019
Hikvision's annual revenue topped $7 billion for the first time in 2018, although growth slowed sharply. In this post, we analyze the latest...
Dahua Posts Slowing But Strong Revenue Growth 2018 on Mar 04, 2019
Despite significant job cuts in China, Dahua's revenues grew more than 25% last year hitting a total of ~$3.5 billion USD, according to its latest...
Hikvision Admits USA Sales Falling on Apr 22, 2019
Hikvision, in a new Chinese financial filing, has admitted that its USA sales are now falling. Less than a year after the US government passed a...
RaySharp Revealed - Major China OEM For Western Consumer Video Surveillance on Jul 02, 2019
RaySharp is mostly unknown, even among people in the video surveillance industry, though it is a major supplier of OEM surveillance equipment such...
Hikvision USA Giving Free Cameras In Biggest Flash Sale on Jun 26, 2019
Hikvision redefined sales promotions in the US video surveillance market, starting at the end of 2015, with across the board discounts. Now,...
Vivotek Revenue Soars on Aug 05, 2019
Vivotek's revenue has soared so far in 2019, growing 45%. Inside this note, we examine import records and see who is driving Vivotek's growth...
Stanley Makes "Multi-Million Dollar Investment" Into Banned Hikvision Products on Aug 09, 2019
Just days from the US government ban going into effect, US mega-corporation Stanley has dramatically increased its imports of banned Hikvision...
In China, Foreign AI Companies Banned or Disadvantaged, Says Top China AI Company on Aug 28, 2019
Non-China (PRC) companies are prejudiced and unfairly targeted inside of the PRC's booming AI market, which not only denies them revenue inside of...
Crisis At China's Largest VMS Provider, Netposa, Now State-Controlled on Oct 07, 2019
NetPosa, which bills itself as the PRC's largest VMS provider, is in a crisis. The firm is pursuing huge unpaid bills from clients, and its...
NetPosa Revenue Plunges 90% on Nov 04, 2019
Revenue for China's long-time largest VMS provider NetPosa plunged 90% in the latest quarter, adding to the firm's serious financial...

Most Recent Industry Reports

Intersec 2020 Show Report on Jan 20, 2020
IPVM is in Dubai for Intersec, the Middle East's largest security conference. In this report, we cover the main booths and issues out of the...
Clearview AI Alarm - NY Times Report Says "Might End Privacy" on Jan 20, 2020
Over the weekend, the NY Times released a report titled "The Secretive Company That Might End Privacy as We Know It" about a company named...
Favorite Camera Manufacturer 2020 on Jan 20, 2020
The past 2 years of US bans and sanctions have shaken the video surveillance industry but what impact would this have on integrators' favorite...
Severely Impacted Mercury Security 2020 Leap Year Firmware Issue on Jan 17, 2020
One of the largest access controller manufacturers has a big problem: February 29th. Mercury Security, owned by HID, is alerting partners of the...
Apple Acquires XNOR.ai, Loss For The Industry on Jan 16, 2020
Apple has acquired XNOR.ai for $200 million, reports GeekWire. This is a loss for the video surveillance industry. XNOR.ai stunned the industry...
Installation Course January 2020 - Last Chance on Jan 16, 2020
Thursday, January 16th is your last chance to register for the Winter 2020 Video Surveillance Installation Course. This is a unique installation...
Halo Smart Vape Detector Tested on Jan 16, 2020
The Halo Smart Sensor claims to detect vaping, including popular brand Juul and even THC vapes. But how well does it work in real world...
PRC Government Entity Now Controlling Shareholder of Infinova / March Networks on Jan 16, 2020
A PRC government entity is now the controlling shareholder of US security manufacturer Infinova as well as its wholly-owned subsidiary March...
Network Cabling for Video Surveillance on Jan 15, 2020
In this guide, we explain the fundamentals of network cabling for video surveillance networks, how they should be installed, and the differences in...
ONVIF [Un]Trashed Statement, Confirms Dahua and Hikvision Still Suspended on Jan 15, 2020
ONVIF has 'trashed' the suspension statement for Dahua, Hikvision, Huawei, etc. but confirms to IPVM that those companies are all still...