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China's surveillance tech: Western bans, global growth

March 29, 2023

As the West cracks down on Chinese tech, video surveillance firms are also facing increased scrutiny. But global demand for Chinese surveillance cameras isn't waning, despite fears they could be used for spying.

Three chinese Hikvision surveillance cameras in Shanghai
Image: Wang Gang/dpa/picture-alliance

Do you have a security camera at home? If so, there's a good chance it was made by either Hikvision or Dahua, two Chinese companies that are dominating the business of video surveillance. In 2021, they made up over one third of a global market worth around $35 billion (€32 billion), according to the latest data of market researcher IDC.

But while Chinese companies like Huawei are increasingly seen as a security threat in European countries, the two surveillance giants have received relatively little attention – even as their equipment watches over airports, train stations and even government buildings all over the world. Tens of thousands of Hikvision devices are currently in use in Germany, including in police stations and ministries, according to recent media reports.

Ties to China's Communist Party

Not everyone is happy about this. The Chinese government owns parts of both companies, and their presence in critical infrastructure has led to worries about potential espionage. Critics warn that their systems may have built-in back doors, through which Beijing could secretly syphon off sensitive data.

Such security breaches are difficult to detect. But Beijing does have a more obvious access to data that it is potentially interested in:

"If we look at the Chinese laws, it is very clear," says Antonia Hmaidi, a researcher at Berlin's Mercator Institute for China Studies. "Every Chinese company has to cooperate with the government and hand over data, if asked. This includes data stored in the PRC that was gathered abroad."

Antonia Hmaidi, analyst at the Mercator Institute for China Studies
China's broad national security laws mean companies can be forced to cooperate, Antonia Hmaidi says.Image: www.marco-urban.de

Security risks and human rights violations

This is why many countries are banning Chinese firms. Telecommunications providers Huawei and ZTE may be the most prominent cases, but Western governments have increasingly been trying to rein in Hikvision and Dahua as well. Since late 2022, Australia and the UK have decided to remove the companies' products from government sites and other sensitive areas. The United States have banned their sales and import altogether, citing an "unacceptable risk to the national security."

The two surveillance companies are also facing severe allegations of enabling human rights abuses: Several independent reports have found Hikvision to be providing video technology used in China's persecution of its Uyghur minority.

Dubious path to market dominance

Considering such grave concerns, how were the Chinese behemoths able to secure such a dominant position in the first place?

The answer can be found on their price tags: Hikvision equipment can be up to ten times cheaper than its competitors, according to a 2021 report from digital rights NGO Access Now. A price gap that's hard to explain within the rules of competition.

"The concern is that because they're so tightly coupled with the government, they may not be playing fair in terms of the price of their technology," says Mike Jude, a market analyst at IDC specializing in video surveillance. This brings a decisive advantage in poorer countries in the Global South, where Jude sees a large potential for the video surveillance market.

Latin America lured in by cheap prices

Take Latin America, where analysts project an annual market growth rate of over 13% for the next few years. Governments across the region are already expanding their video surveillance capabilities, including tools for biometric recognition. But data protection laws in many countries are insufficient to hold authorities and companies accountable. This poses a threat to people's privacy, Access Now told DW.

In their efforts to amp up public surveillance, governments in the region have often turned to Chinese manufacturers. Along with cheap prices, Hikvision has also tried to increase its presence by providing free equipment to some countries to test drive, or to detect infections during the Covid-19 pandemic. The company is also expanding in less subtle ways, opening an assembly site in Brazil and acquiring Mexico's largest security systems company, industry research group IVPM reports.

Cyber attack leads to state of emergency

Addressing cyber-security risks

The market for surveillance technology is likely to continue to grow, both within Latin America and globally. While the impact of Western sanctions on the operations of Hikvision and Dahua is hard to assess, overall demand for their products is unlikely to wane anytime soon.

To safeguard data gathered by video surveillance systems, bans and sanctions that exclude Chinese companies could provide a remedy. But cyber-security expert Antonia Hmaidi sees the need for improved security in surveillance systems more generally. In Germany, for example, most of these systems are currently not updated regularly, she explains – no matter where they were built. This leaves them vulnerable to cyber-attacks. "And we know that state-sponsored and private actors operating from China are very active in this field," Hmaidi adds.

Longer-term solutions for improved cyber security, she says, must include transparent rules obliging all video surveillance providers to keep their devices updated and, ideally, to keep their servers outside the reach of authoritarian regimes.

Current global trends, however, do not seem to be pointing in that direction yet.

Edited by: Kristie Pladson