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Pandemic Helps Chinese Security Camera Manufacturers Recover From US Sanctions
03.12.2021 [09:32],
Alexey Razin

It is not the first year in a row that the leading Chinese manufacturers of video surveillance systems, Hikvision and Dahua, have been subject to a consistent increase in sanctions pressure from the United States. The results of the third quarter allow us to say that they managed to offset the impact of the sanctions by increasing sales of products in the domestic market of the PRC.

Image source: Reuters

As a result of US sanctions, the Chinese manufacturers of CCTV cameras Hikvision and Dahua lost not only access to the market of US government contracts, but also access to the individual components necessary for the production of cameras. American investors are also prohibited from investing in the capital of these Chinese companies.

According to Nikkei Asian Review, in the third quarter, Hikvision was able to generate $ 2.7 billion – 12% more than in the same period last year. Dahua’s revenue at the same time increased by 13% to $ 960 million, and its net profit increased 2.2 times. In the first quarter, both companies faced a drop in revenues, but in the first nine months of this year, they managed to offset revenues to a level that corresponded to the period before the imposition of US sanctions.

China’s domestic consumption helped to achieve this, not only due to quantitative indicators, but also qualitative. According to Comparitech, Chinese cities rank first in the world in terms of the number of CCTV cameras installed per thousand citizens. The pandemic has accelerated the transition to smart cameras that can not only recognize faces, but also measure body temperature remotely.

Now only 10% of the cameras sold are endowed with such sensors, but in 2024 their share will increase to 60%, as experts expect. At the end of this year, the Chinese market for video surveillance systems will grow by 4%, but by 2024 its capacity will increase by 60% compared to the level of 2021. According to the results of the first half of the year, Hikvision received 30% of all revenue from the sale of cameras outside of China, in the case of Dahua this figure reached 40%. Chinese manufacturers note that sales are poorly recovering in regions where sanctions are in force, or strict quarantine restrictions remain. In particular, things are bad with the sale of cameras in India.

Manufacturers of video surveillance systems from other countries also note a revival in the market. Canon managed to outperform Q3 financial results from the prior year. Cameras with infrared sensors were in special demand, allowing remote measurement of the temperature of the human body.

According to Hikvision, restrictions on the use of individual components due to US sanctions did not have a significant impact on the company’s business, since it can choose from several suppliers. In the near future, the company is going to develop areas of robotics (including autopilot) and home smart devices. At the end of the third quarter, these activities provided revenue growth of 50% YoY. Dahua to focus on integrating video surveillance systems into the 5G ecosystem.

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