Hikvision Becomes the Market Leader in Video Surveillance

On the basis of the figures from market research companies, the Chinese company Hikvision is already the world market leader for security cameras and accessories for video surveillance. This may come as a surprise, even for people who are familiar with the industry. In the months following the Security exhibition in Essen, Hikvision has been aggressively active in Germany, and has set up a team of sales and service staff. In other European countries such as England and Italy, the company has already been successful for some time. In order to give all of the major European security publications the latest information about Hikvision, the company invited press representatives to the company headquarters in Hangzhou in China.

Growth, growth
It is astounding how differently the highly fragmented market for video surveillance is assessed by market players. The spectrum ranges from a complete withdrawal from the European market, as in the case of JVC, through pessimistic market evaluations with reference to the difficult economic situation such as those which are used by former market leaders to explain the poor business results, up to double-figure growth forecasts. For most companies which offer a modern range of products and which have made adequate investments in service and marketing, the truth lies in the middle single-figure range. The published figures for companies which are quoted on the stock exchange, such as Axis, Mobotix and Avigilon and the figures from BHE in Germany confirm this evaluation. According to BHE there were increased sales in all areas relating to security technology. For video surveillance technology there was an increase in sales of 4.2 percent to € 448 million only for the German market.

Even as you approach the company headquarters in Hangzhou, there are no doubts about how this company estimates the market for security technology. Two modern tower blocks in the modern suburb of Binjiang in the 8-million metropolis form the company headquarters and show where the company is heading: rapidly upwards. The impressive 68,000 m² company headquarters provides space for a generously equipped exhibition area, where the entire range of products and the most important application areas can be displayed to visitors. Directly across the road, a new company building is in the course of construction, which will provide much more space for the 11,000 employees.

Growth and change
The press conference started with a portrait of Hikvision, presented by the company chiefs Keen Yao and Yangzhong Hu. Here too it quickly became obvious that the company is in the fast lane. It does not really matter which figures you look at first. All of them clearly show the rapid growth of this company which was only founded in 2001 and which is now on the way to becoming the undisputed number 1 in the market. Over the past ten years, i.e. from 2004 to 2014, Hikvision has had an average annual growth of 53%. This growth is truly enormous for European conditions and is exceptional even for China. This year, growth of more than 60% is expected, as the end of the 3rd quarter, 56% more sales have been achieved than in 2014. The basis for this increase lies in China and in international business, which now accounts for more than a quarter, 26.5% of the total volume. By September 2015, foreign sales amounted to over 700 million US dollars.

In the initial years of the company most of the foreign sales were still OEM production. Nowadays the company’s own brand is in the foreground. The range of products is ultra-modern and meets the very highest demands, which among other things can be seen from the high proportion (75%) of high resolution products in foreign sales. Hikvision has now become a complete supplier of video surveillance products and mainly sells cameras from the Smart IP, Easy IP and Turbo HD series as well as encoders, decoders and all types of storage media and transfer accessories.

Hikvision is especially proud of its enormous research and development department, in which more than 8% of the annual turnover is invested and of the competence of 5,400 engineers who work in the ultra-modern research, development and quality assurance and who have produced more than 600 patents.

Impressive production and quality control
In addition to intensive development work, Hikvision’s enormous growth also requires large investments in production and quality control. With the aid of a fully automated SMT production line and the latest equipment from Germany, Hikvision currently produces up to 160,000 cameras per day (90,000 IP und 65,000 analog cameras) in a 100000 m² factory in Hangzhou and the production capacity is being further expanded. Up to the end of the year, a new production facility with 320,000 m² will start production in Tanglu.

In addition to state-of-the-art production methods with the latest production equipment, a holistic approach, which starts with quality assurance in the design of the product (Design Quality Assurance, DQA) with runs through the entire production process (Manufacturing Quality Assurance MQA) and which also includes Service and Support is decisive for quality. Over 500 DQA engineers are at work, using the latest optical, mechanical and electronic inspection methods. A high priority is placed on inspection of the devices. Before a device is launched on the market, it is tested for its sensitivity to electronic interference, radiation, temperature fluctuations, vibrations, climatic influences, dust and salt water as well as electrostatic charge in the course of an intensive test phase.

Vision for the future: from a complete supplier of video products to a video content service provider
In the presentation by Keen Yao and Yangzhong Hu, the future strategic alignment of the company was discussed. In future, the company intends to develop from being a complete supplier of security products and become a solution provider. The company understands a solution provider as integrating intruder alarm systems, access control and communication technology into offers for solutions. In the next step, the company intends to provide video content services.

Focus on development
For the further expansion of foreign trade and the development towards being a solution provider and a provider of Video Content Service, the company depends on partnerships with global market leaders, for example Intel, Sony, Seagate, WD, Huawei and Apple. The joint activities focus on the megatrends Smart City, Smart Home and HD solutions.

Although video cameras form the focus, at Hikvision there is a strong trend away from cameras as mere instruments for video surveillance towards highly developed sensors for images, speech, alarms, data, temperatures and other external conditions. With the aid of these sensors, intelligent solutions for building management, logistics systems, secure cities, transportation and domestic areas can be developed in the future. Hikvision aims to be at the forefront of such developments. To advance these developments, Hikvision is making massive investments in research and development, including the establishment of an international research center, the Hikvision Research Institute. This institute will have the task of developing intelligent analysis methods and the handling of Big Data. Cloud storage of video data and further development of video transfer technology are further fields of research.

Even now, continuous development of intelligent cameras is a field in which Hikvision is a technological driver. Development of the new 4K cameras and the H 265 network recorder are the latest examples of innovations from Hikvision.

Glocalization
Hikvision is well aware that further expansion of foreign business can only be achieved via strong local activities and has therefore already founded 18 subsidiaries throughout the world and set up six local websites. The local branches employ 65% local staff.

Glocalization is the key word and in the next three years new local branches will be established, local production will be set up and research and development will be internationalized. Glocalization also includes the development of complete products, solutions and services for local markets, such has already been done in Asia and China. This progress can only be developed together with local partners. Hikvision strongly relies on partnerships with distributors, system integrators and installers.

An example of the special adaptation to regional markets is the subject of video management. In China and Asia, the company uses its own video management system VMS and is developing its own solutions for special vertical markets together with customers and system integrators. In contrast, in Europe, the subject of video management relies on close cooperation and deep integration with global suppliers such as Milestone and Genetec and works with local software suppliers such as Xortec.

The future: iVM
At the end of the press conference Yangzhong Hu was asked about the most important trend for the future. He sees great potential in iVM (Intelligent Visual Management), which means analysis and management of visual data, i.e. a further development of video analysis. By the convergence of the technologies under the umbrella of IP technology, increasingly better image resolution and last-no-least IoT and Cloud technologies, the data from video surveillance, access control and fire protection can be combined and utilized. With this, a combination of the entire surveillance is possible and the basis for the next stage of convergence exists: Cooperation on the application level and the combination of security management and business management.