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Mr. Hu, Founder and CEO of Hangzhou Hikvision Digital Technology Co Ltd, shares his thoughts with U.S. journalists
By Adrian Courtenay
Managing Partner, Government Security News
On October 21, a group of five American journalists embarked on a nine day journey to China, courtesy of Hikvision USA and parent company Hangzhou Hikvision Digital Technology Co Ltd. The trip was designed to include visits to Shanghai, the financial capital of China; Hangzhou, where the headquarters of Hikvision are located; and Beijing, the capital of the People’s Republic of China and the nation’s political, cultural and educational center.
The Beijing visit in particular was of special interest to Government Security News because Beijing is a major hub for the country’s very sophisticated transportation systems of national highways, expressways, railways and high-speed rail networks. The Beijing Capital Airport is not only the second busiest in the world in passenger traffic, but also an architectural masterpiece. And as we learned when visiting the Hikvision headquarters, transportation is a core market for Hikvision, which also deals with Safe Cities, Education, Healthcare, Energy and Power Grids, Cybersecurity, Law Enforcement and Public Safety, Sports, and of course Video Surveillance.
Founded in 2001 with 49% foreign capital, Hikvision had a market capitalization of more than $20 billion USD by September 16, 2016, more than 18,000 employees and 40 wholly-owned subsidiaries and shareholding companies worldwide.
According to yearly independent data from the IHS Market, Hikvision accounted for 19.5% of market share in the global video surveillance industry in 2015, up from 4.6% in 2010, and has been ranked the number one market share leaders for video surveillance equipment for five consecutive years. In 2015, Hikvision was ranked first in the Emen market with 12.2% market share, and was ranked second in the Americas market with 7.3% market share.
In addition to their meetings with Hikvision, the American journalists were also treated to visits to some of the great accomplishments of ancient China, including the Great Wall of China, the Forbidden City, and Ancient gardens dating back to the 1500’s, along with visits to the country’s awesome present day building accomplishments, such as the gorgeous towers in Shanghai that dwarf the Empire State Building and the magnificent Intercontinental Hotel and Conference Center, where U.S. President Barack Obama recently met with Chinese President Xi Jinping. Not surprising to anyone, all the cameras in the Conference Center were installed by Hikvision, many of them with 3D system patrollers that open remotely at hotel checkpoints.
But despite the tours and the best of Chinese cuisine, it seemed obvious to this observer that some of the most interesting moments of the trip in the eyes of the visiting American journalists took place in the meeting with Mr. Hu, Founder and CEO of Hangzou Hikvision Digital Technology Co. Ltd, who admitted to having read over a hundred books on U.S. business and culture, and who revealed the deep knowledge and insight of a consummate entrepreneur. Here are some samples of the back and forth between the American journalists and Mr. Hu:
When Ralph Jensen, Editor of Security Products Magazine, asked the question, “Have you run into any ‘push-back’ from companies in Europe, U.S. etc.,” Mr. Hu responded:
“I’m a big fan of Adam Smith. I’ve read his books and respect his theories a lot. I think more about users than competitors. Hikvision respects competitors. We do not use aggressive tactics with competitors. It’s a public company. Everything is public. We have a price system, but we do not cut rates. We provide more services to customers. When you compete in a market, you learn different sentiments. Some competitors will come and some will go. China is the most free market in the world. Investors have benefits. They do have privilege.”
In a surprising answer to a question from Mark Tarallo of Security Management Magazine regarding his personal style and philosophy, Mr. Hu responded, “When we started, we were not prepared, but we had passion and learned a lot from the U.S. A lot of thoughts, passion and interpretation in a lot of areas.”
He then expanded on his theme in answer to a question from Clare Meyer of Security Magazine, who had asked how citizenship fits in with Hikvision’s goals:
“Hikvision is a commercial company,” said Mr. Hu, “and we focus on business success with four criteria, in this order:
“The First Partnership is with the customers, and how do we create competitive products for them;
“The Second Partnership is the employees’ performance in fulfilling the mission of creating value for competitive products;
“The Third Partnership is that the company gives respect to the employees and develops everyone into an international company. There are different laws and cultures that are different from country to country,” Mr. Hu pointed out. “But we have to make sure, he adds, that all employees are offered the same rewards and respect, while still following the laws and cultures of their countries.
“The Shareholders are the Fourth Partner, and Hikvision has been paying dividends for shareholders for years, often as high as 48% of profits,” according to Mr Hu. But he still feels that the most important requisite to healthy dividends is when the employees and customers are happy. Corporate growth is the health of the company.
Paul Ragusa, Editor of Security Systems News, asked Mr. Hu: “What excites you about the company and its future,” to which Mr. Hu responded, “We’re excited about the next ten years. We’re full of hope about this industry. Video – but not just in security – in many other areas, Robots for example. We’re developing automation, so there a lots of things to do. 50% of our brain is about new.”
In a follow-up question from Ragusa about new products in the works, Mr. Hu answered, “The traditional way was to compress. Now we upgrade. We recognize different algorithms. We use data. We have a new product ‘Black Light’ and we’re also demonstrating new developments in video. We’re learning artificial intelligence and its applications, using retail and learning a lot of about who is who.
Since our publication Government Security News has a strong focus on transportation, as well as an annual Awards Program on Airport, Seaport, Border Security and Immigration, all of which are also core markets for Hikvision, our question to Mr. Hu was simply, “What new products and technologies is Hikvision expecting to deliver in 2017 in the Airport/Aviation, Maritime/Seaport, Railroad, Border Security and Immigration markets and as well as national Energy, Water, Gas and Oil Grids, and how are you dealing with Cybersecurity, which pertains to all of the technologies in which Hikvision is involved.”
As expected, the response from Mr. Hu was very interesting and informative, starting off with Cybersecurity, which he agrees is a big challenge, not only for manufacturers, but also for integrators. “In 2014 we established network security and cybersecurity to minimize impact of relation with companies working with integrators, not only in design, but also in firewalls if needed. We try to think from a user perspective. We need to understand the customer. We believe that success is 30% produced by technology and 70% by good management.”
Mr. Hu continued: “We’ve created improvements in airports, seaports and borders by adding facial recognition in airports and seaports and thermal products in borders, and our power grids are getting more secure because we’re now moving power lines underground. Hikvision is also using drones and providing training to integrators in dealing with forest fires and high towers set up long range, as strong drones may be needed to deal high voltage grids and natural disasters.”
Paul Ragusa asked, “Are there new products being shown here today?” to which Mr. Hu responded, “The traditional way was to compress. New we upgrade. We recognize different algorithms. We also demonstrate new directions in video surveillance, and we are learning artificial intelligence application, etc. – using retain, learning about who is who.
“When we deal with customers, we need to think if we can do it. All requirements go to the R&D department, which collects and sorts out. We also have a customization department to build a technology base and then get feedback. Some products need changes in technology. Some changes are not in the present. We respond very quickly with our R&D.”
“How about the engineers,” asked Ralph Jensen. “Are they smarter today?”
“They are more energetic and more imaginative today. That’s an influence from American culture, said Mr. Hu. “With all our own ideas and opinions, international economics brings common conclusions. We keep some traditions. But a lot of things will stay. Globalization is still here.”
And then Ralph asked, “What do you think about the American Election?” Several of us later agreed that Mr. Hu’s answers to this question were a good example of his extraordinary ability to make his point very politely, sometimes so politely that you might not even understand the underlying meeting of what he had said. “Thoughts about the American election,” said Mr. Hu, “This election was different from what we thought it would be. The most developed county is showing a lack of confidence. The U.S. should be the one leading globalization. The U.S. has the best technology. The U.S. should be more confident.
“How is security developing in China?” he asked himself. “In earlier days people were inclined to obey. Now it’s different. Now people pursue what they want. They are more constructive.”
There was some more talk about the potential of Big Data, Deep Learning Cameras, Analytics, Deep Intelligence and “The new era of Secure Data Technology”, and then the discussion was over. I can’t guarantee it, but I believe the rest of our team came to the pretty much the same conclusion that I did -- that it was a very informative meeting, even if we may not have fully understood every subtlety that was embedded in Mr. Hu’s statements.