Given the high prices of this project and the Dahua direct $9 million one, it raises the question of whether and perhaps how substantially the PRC government is overpaying for video surveillance.
The PRC ironically suffers from a lack of competition. There are only a few PRC companies really big enough to regularly compete for these deals (e.g., Dahua, Hikvision, Huawei, and Uniview) and the largest foreign companies like Axis, Avigilon, Hanwha, Genetec, and Milestone are effectively blocked.
Ethics aside, based on the prices charged, foreign companies could easily make a lot of money on these deals while delivering higher quality.
But they won't and these deals are quite a boon for Dahua and Hikvision to generate massive profits that can be used for overseas expansion and price cuts.
This is interesting but not surprising. Given the relationship between Hik and the Chinese government, it's likely difficult to find out the real pricing and "profit." But then again, what difference does it make?
I will never understand the balance sheet of communist owned business. The PRC prints money and gives a grant to a company to produce a product. They then award a project to the company. How does this add anything to the bottom line? The only way a PRC owned company makes money is to sell product to a non PRC entity, right?
The only way a PRC owned company makes money is to sell product to a non PRC entity, right?
No, Hikvision has made the money, even if it is a PRC controlled entity. Once Hikvision takes the money in, they can do with it as they want. The profits can be used for R&D, for bonuses to management, for building new facilities, for expanding internationally, etc.
Think of it this way if Dad gives Junior $100, the family is no more wealthy but Junior can now spend that on dating, comic books, bitcoin, etc.