Uncovering Hikvision Subsidiaries in the Open Source

Sayari Analysts

Uncovering Hikvision Subsidiaries in the Open Source

Chinese technology firm Hikvision has been added to the U.S. Commerce Department’s Entity List for its role in supplying surveillance equipment to authorities in Xinjiang province, where  Uighurs and other predominantly Muslim ethnic minorities have been subject to mass arbitrary detention.  

Going forward, any American company that wants to export to Hikvision will have to apply for a special license with the U.S. government. But adding Hikvision to the Entity List only targets the company itself. According to official public records reviewed by Sayari, Hikvision has a global footprint with subsidiaries from East Asia to North America.

Last year, members of Congress urged the Trump administration to consider adding Hikvision to the specially designated nationals (SDN) list under the Global Magnitsky Act, legislation that applies sanctions to individuals and entities implicated in gross violations of human rights. 

If added to the SDN list, Hikvision would be barred from any trade dealing in U.S. dollar transactions. It would also block those same transactions with entities owned 50 percent or more by Hikvision. 

Using official public records, Sayari was able to identify numerous Hikvision subsidiaries worldwide. Following Hikvision’s addition to the Entity List, it is critical for compliance professionals and regulators alike to know where Hikvision and its affiliates operate globally. 

Background

Hikvision is a leading manufacturer of surveillance hardware based in the southeastern Chinese city of Hangzhou. In addition to producing digital cameras and networking equipment, it also develops the software underlying these technologies. This includes facial recognition programs that have been implicated in Chinese state surveillance programs targeting ethnic minorities.

Besides Hikvision, several other entities were included in the recent Entity List additions for their respective roles in the persecution of Uighurs and other ethnic minorities. Eighteen state security bureaus were added to the list for implementing programs of arbitrary detention and repression in Xinjiang. Eight technology firms, including Hikvision, were added for providing the technology to make those programs possible.

Identifying Hikvision Subsidiaries

Hikvision is a large corporate entity with a wide global presence. Corporate filings indicate it employs more than 16,000 engineers, and its marketing materials claim that it operates in more than 20 countries. Hikvision reportedly imports supply parts from several U.S.-based technology companies.

Identifying Chinese subsidiaries of Hikvision is relatively simple, as Chinese law requires a high level of transparency in corporate disclosures. But identifying overseas Hikvision subsidiaries is not as straightforward. However, there are some ways to identify these subsidiaries in open-source corporate filings.

Identifying Hikvision Subsidiaries in Stock Exchange Filings

As a company that has been publicly traded on the Shenzhen Stock Exchange, Hikvision files mandatory disclosures with the exchange on a regular basis. Among these filings, annual reports frequently disclose subsidiaries, and Hikvision’s 2018 annual report is no exception (see p. 73-74). 

Fig. 1: Hikvision’s subsidiaries, according to Hikvision’s 2018 annual report filed with the  Shenzhen Stock Exchange.

It is important to keep in mind that these disclosures have some limitations. Companies only disclose subsidiaries that contribute more than 10 percent of the company’s net profit, and those that have been opened or closed during the reporting period. Furthermore, while overseas subsidiaries meeting either of these prerequisites are listed, their jurisdiction is not indicated.

Additionally, Hikvision files a copy of its annual report in both Chinese and English, but most companies on the Shenzhen Stock Exchange only file disclosures in Chinese. This can be a hurdle to analysts who do not have Chinese language skills.

Finding Hikvision Subsidiaries in China’s Overseas Investment Database

The Chinese Ministry of Commerce publishes a list of Chinese companies that have overseas investments. The list includes the Chinese names of their overseas subsidiaries and the countries where the subsidiaries are located.

Using this database, we can identify several Hikvision subsidiaries that are not referenced in the company’s 2018 annual report. In cases where the annual report lists overseas subsidiaries in name only, the Commerce Ministry’s overseas investment database shows their location.

Fig. 2: Hikvision’s subsidiaries, according to the Chinese Ministry of Commerce. Jurisdictions include Peru, Uzbekistan, Kazakhstan, Turkey, Colombia, South Korea, the Netherlands, Canada, and Russia.

For example, the overseas investment database lists a Kazakhstan-based Hikvision subsidiary called “Hikvision Kazakh Co. Ltd.” (海康威视哈萨克有限责任公司). The Kazakhstan corporate registry reveals the subsidiary’s official name is “Hikvision Kazakhstan LLC” (Товарищество с ограниченной ответственностью “Хиквижн Казахстан”). Hikvision’s two most recent annual reports filed with the Shenzhen Stock Exchange do not list this company. 

Using the Ministry of Commerce overseas investment database, it is possible to identify a total of nine Hikvision subsidiaries. According to the database, Hikvision has subsidiaries in jurisdictions as diverse as Russia, Turkey, the Netherlands, and Canada. 

Drawbacks to the Overseas Investment Database

The database does have a few drawbacks. First, it is entirely in Chinese. Not only does this make it difficult to use for non-Chinese speakers, but it also creates challenges identifying the subsidiary in local records.

For example, the database lists a Hikvision subsidiary in Turkey called “Hikvision Turkey LLC” (海康威视土耳其股份有限公司). The only company with the word “Hikvision” in its name in Turkish records is Hikvision Turkey Technology and Security Systems Joint Stock Company (Hikvision Turkey Teknoloji ve Güvenlik Sistemleri Ticaret Anonim Şirketi). Turkish records list several officers of the company who we know are affiliated with Hikvision’s parent company in China. This gives us confidence the Turkish company is a Hikvision affiliate. However, we cannot be certain that it is the same company referenced in the overseas investment database.

Another drawback of the overseas investment database is that it is not comprehensive. In Hikvision’s case, several overseas subsidiaries that are disclosed through stock exchange filings do not appear in the database. Furthermore, the database does not list any subsidiaries of Chinese companies located in Iran or the Democratic People’s Republic of Korea—likely a deliberate omission by the Chinese Ministry of Commerce.

The Future of Trade with Hikvision and U.S. Trade

Despite the fact that Hikvision’s addition to Entity List blocks the company from importing American products, Board Secretary Huang Fanghong expressed confidence that the company would be able to continue to supply its customers. 

U.S. Commerce Department documentation does not indicate that subsidiaries of companies on the Entity List are subject to the same trade restrictions as the companies themselves. However, it does indicate that “transactions of any nature” with listed entities carry a “red flag.”

Notwithstanding the type of restrictions placed on trade with Hikvision, compliance professionals in the global marketplace and government regulators should be keen to inform themselves on Hikvision’s global footprint. 

If Hikvision faces Treasury Department sanctions in the future, any company dealing in U.S. dollar transactions will be prohibited from transacting with all majority-owned Hikvision subsidiaries. And if that’s the case, official corporate records will be key to identifying those entities.


The public records data used to power this research is available through Sayari Search! If you’re curious how this data could drive insights for your team, please reach out here.