Forget The Backdoor, "ALL HIKVISION PRODUCTS" On Sale

Man if it wasn't because of the dollar exchange rate in my country, I swear I would buy at least some. It's as if they are forcing you to do it =P

It's like a fighter jet deploying flares trying to avoid the missile locked in on it...

This is more of a call to arms for our preferred MANUFACTURERS:

SHOW ME THE MONEYYYYYY!

Jokes aside, HIK is certainly forcing me to reconsider them.  With 15-18% on top of our 60% off, we must.  You need products that keep you competitive or help you win in certain projects.  

I voted neutral on the poll as I don't believe anyone really cares 6 months from now that a manufacturer was spewing sales consistently.  Banana Republic has 30-40% off sales every week (with no signs of stopping) and they remain a reputable company at least IMHO.

I get that not having repeated sales keeps the perception of a "premium brand" but come on manufacturers.  Step your game up or get to steppin.  Need you guys to maybe not to match the same sales as HIK is offering but show that you have the grit to get close.  No action means you are scratching by.  Partner up strong together, because HIK's reach is at our doors.

With this additional discount does it make it cheaper than the OEM Hik "w" box adi brand?

Just curious how that dynamic works internally.

Trunkslammer specials, for those who neither care about nor understand the backdoor issue. 

John is spot on that it will increase loyalty for their loyal trunkslammers. I'd be curious to know how many of their dealers have even hurt about it. 

Sure other manufacturers can't (and probably don't want to) emulate the Hik bargain basement approach as it would decimate margins and the quarterly figures would be that bad that John would have another field day on IPVM ;-)

Hik can only do this because of who they are and what is behind them. Until such time however that what is behind them needs to deal with a spiraling debt issue and realize they can no longer sustain these tactics of Sales and bullying.

The trunk slammers will thrive for another little while longer as they have a short term mentality, although there is always a life after Hik as there are plenty other Chinese manufacturers just waiting to step in. It's just a matter of time until alibaba.com starts offering an install service.

As an SI it's what you stand for and what you believe in and what helps you build a sustainable business for you and your employees. Thank god many still have minimal values and do not want to be associated with Hik because of all the reasons discussed on IPVM many times over.

Well that did not take long.

Pricing strategy is an often over looked and miss-understood by many organizations. I am considering doing a research project on this, specific to the PhySec industry. 

Price and pricing sales are a key part to any one’s core market strategy, as it should be. How one sells into a market will greatly reveal how they perceive themselves and their customers. I just recently sat in a meeting where a manager stated, “sell for as low as we can until people buy it, than jack up the price” (true story).

To my point. As some have already stated, the great pricing concessions “forces” them to buy HIK products. The HIK strategy has always been to boast sales (i.e. topline review) by flooding the market through a sale. In the next 3 months, there will be another ‘flash sales’ as dealers and distributors stock up because of this sale. They will slowly work through their low cost inventory, hopefully adding some margin dollars for themselves, which will decrease HIK run-rate, thus driving the need for another sale.

If I was a HIK dealer, I would start to map this out and coordinate my buys accordingly.

What I can’t seem to get my head around is why, why does HIK do this? This is not A-typical of this industry. Sure, companies will provide “project pricing” but not flash sales to divert attention from something bad. HIK should ride it out, keep the perception of the value of your own product high. Do not gut the price. Price gutting is a dead-mans, last ditch effort to stay afloat. How soon we forget 2008-2010? How many dealers started selling jobs at less than cost… how many of those are still around?

IMHO this is a very bad and unsustainable pricing strategy. At some point this will collapse.

If I was new to the market and saw a manufacturer that was always discounting their products, I would think one of two things:

They are cheap for a reason

They are selling off their stock

Years ago after my brother passed away, I had to sell his house.  We came in at a reasonable price and no offers were made.  The real estate agent said that we should try a different approach and raised the price by $10,000.  We had 5 offers by the end of the week.  It's not always the value of what you have but also the perceived value of what you have to offer.

This is like Ford slashing prices on the Explorer when all those rollovers happened

Just another reason why Hik dominates the industry. They think and do thing differently than anyone else and everyone else scratches their head wondering what they are doing.

They continually offer sales to entice people to buy. Their are already a couple noted in this thread contemplating the fact. I.E, the sales are working.

Other manufacturers are setting around thinking "we shall never offer discounts, thats prepostorous"  

Meanwhike hik continues to persuade new customers to try them out, and the sad part for the other manufacturers is they are losing business to Hik.

I dont think Hik is trying to be the lamborghini of security. I think they are trying to be ford. Having sales are great.

+1 for Hik. If you havent tried Hik, i dare you to try it now. You wont be let down.

Just another reason why Hik dominates the industry. They think and do thing differently than anyone else and everyone else scratches their head wondering what they are doing.

What is Hikvision doing differently? They have the same basic approach as many other manufacturers: sell through distributors, build a field sales force, etc. There is no head scratching their strategy is obvious (and desperate): try to "buy" market share through constant sales and low prices, and hope that can pivot into a profitable business in time.

Other manufacturers are setting around thinking "we shall never offer discounts, thats prepostorous"

What? Plenty of other manufacturers offer discounts, they just do it more strategically through things like project registrations instead of monthly free for all's (e.g.: Arecont Claims Best Project Registration Program).

Hikvision did not invent the concept of stuff always on sale. Furniture stores, mattress outlets, low-end car dealers, carpet stores, etc. all use this strategy. Even large retailers like J.C.Penney use it. It is generally perceived as a low-end approach and one that trains customers to view "normal" prices as too-high, and to only buy on sale. It becomes very difficult to get out of this cycle and move your brand upstream (as J.C. Penney learned the hard way).

I am not sure if the Chinese Strategy will work in the USA and other Western countries but in Asia, the strategy of "low price - High volume strategy" works. They wanted to attract end user to try their products keeping a minimal margins, consequently increase the installed base. Then if the product has a good quality and local support, end user will labelled it as preferred brand.

If you want to open your network to the People's Liberation Army, now you can do it for almost free !

Maybe you use a closed security network now, but what if your Customer wants you to provide remote access at a later time?

"Just another reason why Hik dominates the industry. They think and do thing differently than anyone else and everyone else scratches their head wondering what they are doing."

Sean,

I have seen you post for years here at IPVM - and invariably, I have agreed with most everything you have ever posted relating to how to support customers efficiently, effectively and with the understanding that these people will grow your business if you do all those things that you do for them.

But your quoted comment above is one of the most obtuse things I've ever seen you post.

NOBODY is wondering anything at all.  Your premise that Hik is performing some kind of economic magic is a straw man.

Everyone understands exactly how Hik is doing what they are doing... and all those things have been documented ad nauseam (including both BRK and JHs comments above)- yet you continue to ignore the obvious and float some kind of Ancient Chinese Secret that Hik is employing that everyone else can't figure out.

Ride the Hik Express all you like.... but please stop with the condescending approach to everyone that Hik knows something that everyone else doesn't.

That argument is beneath you.

To add to what Undisclosed #8 and what John Honovich have replied, all of which I agree with 100%, you have to consider the state of the Chinese economy. When HikVision first got traction in this industry as an OEM supplier of Analog DVRs to GE back in 2004, a typical Chinese engineer cost 1/10 that of a U.S. engineer and 1/5 that of a Taiwanese engineer. Similar ratios existed for factory workers building the DVRs.

Then the Chinese economy started growing at double-digit rates, and with that inflation skyrocketed. Flash forward to 2017, and a Chinese engineer now is 1/4 that of a U.S. engineer, and 4/5 that of a Taiwanese engineer. For some engineering disciplines, Chinese engineers are on par in cost with Taiwan.

What does this mean? It means HikVision's window to continue to offer below-market pricing to grab market share while still holding on to any kind of reasonable profitibility are dwindling rapidly.

HikVision has a lot of smart people, they know all of this already.

So if you are a company like this and you know your ability to rapidly gain market share is finite while still remaining profitable, or at least losing money at a controllable rate, then you start the fire sales.

That's all this is.

This is not a stab at HikVision's loyal dealers. If you're profitable and hitting it out of the park, congratulations to you. Just realize the gravy train WILL end, and that HikVision's recent activities are accellerating how quickly it will end. In other words, they're not just gaining market share at the cost of profits, they're gaining it at the eventual end to YOUR profits.

How many industries have we sacrificed in the U.S. and Europe in favor of lower-priced Chinese goods? More than I care to count.

The video surveillance industry, as stated a few times already, is simply next on the list.

- is their any evidence these sales are not profitable?

~400 local employees plus all the events, marketing, etc. means NA annual costs of $50 - $100 million. You then have have the double dip and ADI's cut (you better believe that ADI is not giving up its cut here). You combine that and there's not a lot of contribution margin for the significant local expenses they have.

Sean, you run your own business. You tell us. Factoring in both the heavy local expenses and steep double discounts plus ADI cut, do you think they could make that profitable?

For the Hik’ US company if they are profitable or not.i also do some homework.share the following information：

1.The whole overseas annual revenue of Hik in 2016 is $1.3Billion. The whole overseas Operating costs is  $0.7Billion.

So the gross profit for the whole overseas would be around  $0.6Billion=600 million

2.The HIK US would be around 20%~30% of the whole overseas annual revenue.(you can buy some custom data or ask other resouces to double confirm, but this number should be right)

So we count the HiK US' gross profit would be around $120-$180 million

3.I do not know the sales&marketing&human cost of Hik US,but if the above number is right,$50 - $100 million.

That means Hik US should still profitable,from $20~180 million.

Also Heard rumors before.since 2013,Hik US should already earn the money,but before 2013,Hik US maybe not profitable.

Hot off the presses, another one:

I am genuinely confused if ADI is trying to embarrass Hikvision with these ALL CAP frantic sale emails or if Hikvision things this is a good idea.

When you're truly "#1" you don't need to resort to "NEW LOWER PRICE alert!" week after week.

The question does not specify what type of impact on their business. So I say positive only because their numbers will go through the roof. In terms of the brand, likely a negative impact but guess what folks; Its all about this quarter.... Until next quarter.