In a groundbreaking move that will have drastic consequences across the video surveillance market, Dahua and Hikvision have been sanctioned by the US government for human rights abuses.
Dahua and Hikvision are two of 28 entities added to the US ‘entity list’ (see the official US government announcement), as the screencap from the announcement below shows:
Human Rights Abuses – Dahua and Hikvision
The announcement calls out ‘human rights violations and abuses’ as shown below:
IPVM led the way in exposing Dahua and Hikvision’s participation including:
In retaliation, the Chinese government blocked IPVM.
Direct Impact – Selling to Dahua and Hikvision
The direct impact of sanctions is effectively banning US companies or those with US technology to sell to Dahua and Hikvision. Companies like Intel, NVIDIA, Western Digital, and Seagate will likely be blocked from selling to Dahua and Hikvision.
How much of an impact to Dahua and Hikvision here is debatable. It should, at least for the near future, impact AI and hard drives, which those US companies are large global providers.
On the other hand, Hikvision has known the sanctions were likely coming and have stocked up significantly, which should mitigate the immediate direct impact.
Indirect Impact – Severe – ‘Red Flag’
The indirect impact is likely to be severe.
While US companies can sell and work for entity list companies, the US government considers such transactions to carry a ‘red flag’ as shown below:
While many industry executives have tried to minimize the meaning of the NDAA US government ban, nearly every industry executive we have spoken with in the past year has been very concerned about human rights issues.
We expect this will create severe issues for US citizens working for Dahua and Hikvision and US companies ‘partnering’ with the US government declared human rights-violating companies.
Moreover, this will trigger further scrutiny against Dahua and Hikvision, who has faced sales challenges throughout the Western world, since the ban and faces scrutiny across Europe, e.g. 9 UK MPs Call Out Hikvision Over Human Rights Violations and e.g., the video below:
UPDATE – Hikvision Response
Hikvision has issued a response, according to the Reuters reporter who broke the sanctions story, claiming this will “negatively impact the US economy”:
Hikvision strongly opposes today’s decision by the U.S. Government and it will hamper efforts by global companies to improve human rights around the world. Hikvision, as the security industry’s global leader, respects human rights and takes our responsibility to protect people in the U.S. and the world seriously. Hikvision has been engaging with Administration officials over the past 12 months to clarify misunderstandings about the company and address their concerns. In January 2019, Hikvision retained human rights expert and former U.S Ambassador Pierre-Richard Prosper to advise the company on human rights compliance. Punishing Hikvision, despite these engagements, will deter global companies from communicating with the U.S. Government, hurt Hikvision’s U.S. businesses partners and negatively impact the U.S. economy
Despite Hikvision stating it would conduct an internal review of its Xinjiang operations by Prosper and the lobbying firm he works for (Arent Fox), this report has not been released 8 months later.
Hikvision very well knows its projects inside Xinjiang that it won directly with the government, e.g., Hikvision Won a Chinese Government Forced Facial Recognition Project Across 967 Mosques.
China (PRC) Ban and Bars Against Foreign Companies Normal
While this is an unprecedented move for the US, the PRC has discriminated, banned and barred foreign companies for many years.
Even back in 2012, PRC state media declared ‘foreign surveillance equipment’ a risk to national security:
And while the PRC video surveillance market boomed, even the leading Western companies were effectively shut out.
This summer, Megvii, who ironically is another PRC company that was sanctioned today, admitted that foreign companies were discriminated against in China:
Foreign-owned entities are prohibited or disadvantaged in the relevant City IoT project bidding process in practice. In practice, when selecting service providers, many end users, as well as many direct customers (which are our system integrators) engaged by such end users to assist them in the supplier selection process, would set implicit requirements that the service provider must not have any foreign shareholder, or at least consider foreign ownership as a disadvantage in their decision making process. Some government agencies even explicitly set forth such requirements in their project bidding invitation documents [emphasis added]
Let me tell you what I think of the US banning Chinese companies or Chinese government restricting US companies: political and economical balance. That’s quite common in all times in human history. [emphasis added]
Dahua’s Director also added an eye-opening perspective on slavery:
Maybe this fact can help you understand my point better: the political system and social system is changing continuously from millions of years ago until now. I don’t think slavery is right or wrong, I don’t think feudalism is right or wrong, they appear for a reason they are suitable for that time, now it’s not suitable anymore because it’s restricting the productive forces of the society. [emphasis added]
For companies like Dahua and Hikvision that have made at least a billion dollars from this, slavery, human rights abuses, etc., are neither ‘right or wrong’, just ‘suitable’ for profit.