Chinese video surveillance system manufacturer Hikvision lays off more than 1,000 employees due to US sanctions

Chinese video surveillance systems manufacturer Hikvision has begun cutting staff in its research and development (R&D) department amid US sanctions. With growing pressure on business due to geopolitical and economic issues, the company is struggling to cope.

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According to the Chinese edition of the South China Morning Post, the manufacturer plans to lay off more than 1,000 employees in China. However, Hikvision denied information about “large-scale layoffs”, indicating that it was making internal adjustments aimed at “optimizing research resources” at the head office and key sales cities.

It should be noted that Chinese companies often use the term “streamlining” to refer to downsizing to avoid negative publicity. According to Chinese law, the dismissal of more than 20 people, or more than 10% of a company’s employees, requires the intervention of labor authorities. According to the latest report, Hikvision had 58,544 employees at the end of last year.

The staff reduction situation, according to analysts, indicates the challenges faced by Hikvision due to ongoing US sanctions and the slowdown in the Chinese economy. In 2019, the Donald Trump administration placed Hikvision and its competitor Dahua Technology, as well as 26 other Chinese companies, on a blacklist by US authorities for their alleged involvement in human rights abuses against Uyghur Muslims in China. Companies on this list are prohibited from purchasing components from American firms without Washington’s approval. At the time, Hikvision said it “strongly objects” to the US government’s decision.

Also in 2022, the US Federal Communications Commission banned Hikvision and four other Chinese companies, including Huawei and Dahua, from selling new equipment in the US without special permission. The commission said the companies’ equipment poses an “unacceptable threat to U.S. national security.” However, Hikvision denies these accusations.

Although the company remains the world’s largest maker of video surveillance equipment by market share, shares listed on the Shenzhen Stock Exchange and the company’s earnings have declined significantly over the past two years, losing more than half their value from their peak, according to consultancy Omdia. in July 2021. The company’s revenue grew just 2.1% in 2022 and 7.4% last year, a stark contrast to 2021’s 28% growth.

«In recent years, the global economy and politics have faced serious external shocks, ranging from deglobalization and pandemics to inflation and regional conflicts, the company said in its annual report for 2023. — If we compare Hikvision to a moving truck, we can say that we change the engine on the move. And the extremely rough road makes this path even more difficult, making it difficult to put our plans into practice.”