Hikvision doubles component stockpile amid fears of a US ban

2 min read
Surveillance cameras watch closely as visitors walk around the Bund in Shanghai, China on April 4, 2019. (Image Credit: TechNode/Eugene Tang)
Surveillance cameras watch closely as visitors walk around the Bund in Shanghai, China on April 4, 2019. (Image credit: TechNode/Eugene Tang)

Surveillance camera manufacturer Hikvision dramatically increased its stockpile of components in the first half of the year, the South China Morning Post reports, drawing attention to the uncertainty the Hangzhou-based company faces amid increased US government scrutiny.

Why it matters: The Trump administration has reportedly been considering putting Hikvision on a trade blacklist, barring it from doing business with American companies.

  • The Chinese firm is the world’s largest surveillance camera manufacturer and is already barred from supplying US federal agencies with its products over national security concerns.

“The [increased] inventory is a safe approach, as there’s no sanction today but it may drop in all of sudden tomorrow.”

—Huang Fanghong, Hikvision board secretary, to investors on Saturday

Details: Hikvision has nearly doubled its inventory of components and increased its holding of finished goods by a third over the past six months.

  • The company is taking precautions in case the US steps up its offensive, saying that it takes time to switch from one supplier to another.
  • The company made the decision to stockpile components following sanctions on Chinese telecommunications giants Huawei and ZTE, Huang said, adding that it enables Hikvision to “maintain supply chain security.”
  • Apart from possible trouble in the US, Hikvision predicts it will see dwindling orders from Pakistan and Turkey due to a drop in the countries’ currencies, and from Argentina as a result of political issues.

Context: Earlier this year, Huawei was placed on the Entity List by the US commerce department, preventing it from doing business with American firms. The US government has been looking at expanding the ban to Chinese surveillance equipment manufacturers.

  • Huawei rival ZTE was brought to the brink of ruin last year after it was found to have violated US sanctions on Iran and North Korea. The company was forced to pay a record fine and undergo a management reshuffle in order to regain access to American components.
  • Hikvision was founded in the wake of the New York September 11 attacks in 2001. Since then, the company has grown on the back Chinese government’s ambitions to create a omnipresent surveillance system within its borders.
  • At the same time, demand for surveillance equipment around the globe has exploded.