Hikvision Declares No Subsidies But Financials Show $189 Million Subsidies

By: John Honovich, Published 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 run a marketing campaign to counter critical coverage of their company. In a trade magazine interview, a Hikvision General Manager declares:

Hikvision does not receive subsidies from any government or financial institution

It is a definitive statement.

However, Hikvision's 2015 financial report (p.148) clearly lists Hikvision receiving government subsidies:

Indeed, Hikvision's own financials show 2015 China government subsidies of 1,274,249,562.08 RMB, equivalent to ~$189 million USD.

********* ******* **** **** receive ** ********* *** their *** ********* ******* show $*** ******* ** subsidies ** ****.

********* '********' *** *** a ********* ******** ** counter ******** ******** ** their *******. ** * trade ******** *********, * Hikvision ******* ***************:

********* **** *** ******* subsidies **** *** ********** or ********* ***********

** ** * ********** statement.

*******,*********'* **** ********* ****** (p.148)******* ***** ********* ********* government *********:

******, *********'* *** ********** show **** ***** ********** subsidies ** *,***,***,***.** ***, ********** ** ~$189 ******* ***.

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

****** / *** ******* ** ******** ** who ***** *** ******** it ***** ****.

Subsidy ********* 

*** **** ***** ********* Hikvision **** *** **** what ** ******** *** certainly ** *******. *** example, ****, *** *** all, ** *** '********** subsidies' ********* ******* *** for ********* *** *** on *******, ***** **** argue ** *** * subsidy. ** *** ***** hand, **** ***** ********* exist **** ***** *** be ******** ******** ** financials, *.*., ******** ****** payments **** *** ******* government ** ********* *** products / ******** ** loans ******** **** *** government (*.*.,********* $* *******). ********, *** ******** in *** ****** *****, the ***** ********** ****** Hikvision ** *** **** 15% ********* ****** ***** *** ******** **%. **** *** **** **********, we ** *** ***** it ** ********* ** ever ********* ********* *** steep *** ********* ***, but *** **** **** they ******* ********** ********* is ************.

Integrity *****

**** ******* ** ** ********* issue. ********** ** *** much *** ********* ***, it ** ********** **** Hikvision ******** ********** *********, since ***** *** ********* report ********* **. **** ******** contradicts *********'* '********' ***** that **** ** "*** ******* ********* **** any ********** ** ********* institution."

** ****** *********** ********* of *** **** ********* can ** ******* **** they *** ******* ** so ******** *** ********* lie ** ***** *********.

Shaken / *******

********* *** ************ **** well ********* *** *** government ********** **** ********* struggling. *** ******** ** have ************ ***** ***** Hikvision's ******** ***** ** their ************ *** ******* to **** *** ******** and ******** **** ******* controversy *** ******** ******, ****** their ***** ***** ***** who ** ******* ** ******.

*** *** *** ********* has ******* *** ********** criticisms ***** ** ************ that **** *** **** what ** ** **** and, ** ****** ********* false ******, **** ** subsidies, ** ********** **** people **** ***** *** Chinese **********'* ******* ** Hikvision - **** ********* cannot ** *******.

****

Comments (18)

Jon, do you have any factual rebuttal to our analysis? Please share.

Why do all of these articles point the blame at Hikvision corporate (and brand) instead of attacking the few bad apples that are unaware of their corporate dealings? Why not just attack the bad employees, who obviously don't peruse the corporate filings as deeply as you do.

My point is that you haven't found a single shred of evidence of Hikvision doing anything illegal or filing any improper disclosures. All of your articles are about employees who are either unaware of (at best) or trying to spin (at worst) their positions.

Every single disclosure on the Hikvision website seems to be open and transparent.

instead of attacking the few bad apples that are unaware of their corporate dealings? Why not just attack the bad employees

Jon, that quote is from the GM of Hikvision UK and Ireland, who is an authorized representative of the company, in a formal media interview, and the head of Hikvision's second largest overseas market (after the US).

Here is another example of a Hikvision leader denying subsidies in their overseas marketing in the past year:

Jeffrey He is the President of Hikvision North America (the largest overseas market).

The reality is simple, these are statements from authorized senior leaders ultimately coming from corporate / China that the country managers are passing on.

You can feel free to believe there is no single shred of evidence but I am confident that industry people overwhelmingly will see the manipulation that Hikvision is conducting in their overseas marketing as we have examined in Hikvision CEO Admits Hikvision China State-Owned Company and this post.

Jeffery seems like a very nice, genuine guy. My best attempt at defending him is that he must not know every single Hikvision Corporate Chinese filing as well as you do.

My best attempt at defending him is that he must not know every single Hikvision Corporate Chinese filing as well as you do.

This "defense" would make him an idiot. These are not off-the-cuff questions posed by TMZ while walking thru an airport.

These are pre-meditated responses to questions that have been asked before, repeatedly.

If you think that He decided to tackle these questions on his own without any guidance/information from his superiors, he is also immensely brave.

The most likely explanation is that IF you could corner him he would dispute that VAT refeund is truly a subsidy, and that the word 'subsidies' is just used as an accounting 'term-of-art' chosen by auditors and that the others are insignificant and/or internal, not applicable.

In fact look for this type of explanation in his next prepared response addressing 'concerns of some in the media'.

...instead of attacking the few bad apples that are unaware of their corporate dealings.

Jeffery seems like a very nice, genuine guy.

A very nice, genuine bad apple?

Funniest comment heard recently, our Avigilon rep stated that Avigilon will be around longer than Hikvision, who could go out of business any day now.. I feel like I'm living in an alternate reality. When will the Chinese Communist Party go out of business?

When Trump puts America First and Makes America Great Again...as long as we are in alternate realities

Indeed VAT is not falling under "Government Subsidies" from an accounting point of view. Any accountant booking it under this heading should go back to school. Anything filed under this heading should be subsidies, nothing else. Hence, the proof of funding unfair - to say the least - competition is here. A bit like Middle East low-cost carriers and their effect on Western airlines.

Any accountant booking it under this heading should go back to school.

So you are saying Hikvision's 'accountant' is incompetent?

Indeed VAT is not falling under "Government Subsidies" from an accounting point of view

To be clear, this is a VAT refund.

Do you have any Chinese primary sources that counter that this is not a subsidy? Any other explanations of why Hikvision's accountants clearly include this under government subsidies?

John, I do not have this information and cannot judge this from just an amount in the balance sheet.

VAT refund in China is essentially a government subsidy on a massive scale. Here is the VAT mechanism in China:

1. Normally, almost all goods in China are subject to certain VAT rates: 17%, 13%, 6% under different scenario. For Hik, it is 17%.

2. VAT has the input component and the output component. When Hik procures raw materials for making cams, it pays 17% VAT on the invoice price to the suppliers; when Hik sells finished goods to customers, it charges 17% VAT on the finished products.

If raw material for one finished good costs $100, and the finished good is sold at $200, then VAT paid by Hik (VAT input) is $17, VAT charged against the customer by Hik (VAT output) is $34.

Since Hik already paid $17 on VAT input, it will only have to another $17 VAT to the government from the $34 VAT output.

The net effect of VAT on Hik is zero. Essentially, only the end customer will bear the total amount of VAT.

3. When Hik exports its products, it is qualified for VAT refund. It means that Hik can not charge the oversea customers for VAT at 17%, AND for any VAT input Hik paid to the suppliers, the Chinese government will credit the amount.

This tax refund applies to the majority of the Chinese exporters.

Some suggested readings:

http://www.kpmg.com/PL/pl/services/Foreign-Desks/Documents/China-Practice/China-Country-VAT-Business-Tax-Essentials-Guide-2015.pdf

http://www.tradegood.com/en/insights/viewpoints/sourcing-tips/vat-in-china-some-basics.html

The article linked here is from a respected (by me at least) source, and provides some insights into the underpinnings of the HikVision situation.

Geopolitical Futures - Chinese Government Companies

I am not connected with this source except as a reader.

Call the VAT refund what you will but it is

  1. Given for Hik goods sold thru export
  2. Not given for Hik goods sold domestically
  3. Charged to Hik competitors for goods imported into China

See my post above.

Hikvision UK GM did another interview. This time he restrained his comments and offered no specific rebuttal:

That was the only mention in the entire interview on the government topic.

From a PR perspective, this is likely better since it avoids making factual claims that can be debunked from Hikvision's own financials.

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 Football Arena" Lithuania Causes Controversy on Jan 24, 2020
Controversy has arisen in Lithuania over Hikvision becoming a soccer team's top sponsor and gaining naming rights to their arena, with one local MP...
The 2020 Video Surveillance Industry Guide on Dec 20, 2019
The 300-page, 2020 Video Surveillance Industry Guide covers the key events and the future of the video surveillance market, is now available, group...
The Cowardly, Greedy "Leaders" of Video Surveillance - SIA on Nov 19, 2019
The video surveillance industry suffers from cowardly, greedy 'leaders' focused on maximizing easy money while undermining public trust. The...
Senator Vitter Becomes "Proud Member Of The Hikvision Team", Calls Out "Anti-China" Rubio on Oct 29, 2019
Senator turned China lobbyist David Vitter has become a self-proclaimed 'proud member of the Hikvision team', a China (PRC) government-owned...
Dahua Co-Founder Says Human Rights Sanctions Shows Strong Dahua Technology on Oct 29, 2019
Despite Dahua doing nearly a billion dollars of projects in Xinjiang, including building and operating police stations, Dahua not only denies 'any...
Hikvision And Dahua Sanctioned For Human Rights Abuses on Oct 07, 2019
In a groundbreaking move that will have drastic consequences across the video surveillance market, Dahua and Hikvision have been sanctioned by the...
US - China Review Commission Cites IPVM on Foreign Provider Threat on Oct 01, 2019
A bipartisan congressional commission cited IPVM twice in its analysis of how the PRC government protects its surveillance firms from foreign...
IFSEC Report: US Ban Hurting Hikvision In Europe on Sep 04, 2019
Prominent UK publication IFSEC Global has issued a new report finding that US bans are impacting the purchase of 'Chinese' products, most notably...
Dahua USA Celebrates 5 Years of Errors on May 22, 2019
Dahua USA is, in their own words, 'celebrating' 5 years in North America or as trade magazine SSN declared: Dahua Technology finds success in...
Hikvision VP On Muslim Oppression on May 14, 2019
Hikvision has won tens of millions of dollars, at least, in direct contracts with the Chinese government that oppresses Muslims, including a forced...

Most Recent Industry Reports

Proxy Presents Mobile Credentials For BLE Devices and Access on May 29, 2020
Proxy presented Mobile Credentials For BLE Devices and Access at the May 2020 IPVM Startups show. Inside this report: A 30-minute video...
ISC West 2020 Moves To The Basement on May 29, 2020
The twice cancelled/postponed show will now not only be held in a different month (October) but on a different floor, moving down to the...
Integrators Avoiding Coronavirus Air Travel on May 29, 2020
IPVM asked integrators if air travel is part of their 2020 plans to see how significantly Coronavirus will impact future...
Viakoo Presents Cyber Hygiene for Cameras on May 28, 2020
Viakoo presented its 'Cyber Hygiene' and 'Service Assurance' products at the April 2020 IPVM New Products show. Inside this report: A...
Seek Scan Thermal Temperature Screening System ReTested on May 28, 2020
Now that IPVM has tested Dahua, Hikvision, and Sunell, we are returning to Seek, the first blackbody system we tested and retested it with our...
Directory of 110 "Fever" Camera Suppliers on May 28, 2020
This directory provides a list of "Fever" scanning thermal camera providers to help you see and research what options are available. There are...
Fever Cameras Are Medical Devices, Per The FDA, Dahua, Feevr, Hikvision, InVid Contrary Claims Are False on May 28, 2020
Fever cameras are medical devices, despite what euphemisms various sellers use. The US FDA clearly categorizes them as medical devices and...
Wyze Raises $10 Million And Seeks Services Expansion on May 27, 2020
Wyze has raised $10 million, the company's first disclosed raise since the $20 million announced at the beginning of 2019. Inside this note,...
"Fever Camera" Show June 2020 Next Tuesday on May 27, 2020
IPVM is excited for the world's first "Fever Camera" show, to be held next Tuesday June 2nd and Wednesday the 3rd from 11am to 3pm EDT, giving you...
Startup Videoloft Presents Cloud Storage on May 27, 2020
Videoloft presented offsite cloud storage at the May 2020 IPVM Startups show. A 30-minute video from Videoloft including IPVM...