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China's Biggest Surveillance Company Could be Next on the White House's Hit List

The U.S. might ban American companies from doing business with Hikvision, the Chinese company that's exporting surveillance technology to the world.

by David Gilbert
May 22 2019, 11:36am

For months, the White House has been looking for a way to punish China for its mass detention of the Uyghur Muslim minority. Now, in the midst of an escalating trade war, it may have found its target.

The Trump administration is considering banning U.S. companies from doing business with Hikvision, the biggest surveillance technology company in China and the world, according to a report in the New York Times.

The company could become the first target of the Trump administration’s desire to punish China for its surveillance and mass detention of the Uyghurs, a mostly Muslim ethnic minority, in the northwest region of Xinjiang.

Blacklisting Hikvision could also deal a significant blow to China’s push to make itself the world leader in surveillance technology. The move would mirror the Trump administration’s decision to bar American companies from doing business with Chinese telecoms giant Huawei. Hikvision shares plunged almost 10 percent when news of the possible ban broke.

Hikvision has denied playing any part in human rights abuses against the Uyghurs, emphasizing that it makes surveillance products but has no control over how its clients, including the Chinese government, choose to use them.

“Hikvision is a product supplier. We have never engaged in inappropriate behavior in Xinjiang,” a company spokesperson told the state-run Global Times newspaper on Wednesday. “The company has not, is not and will not operate business under the condition of human rights violations.”

Chinese rights activists claim that up to one million Uyghurs are detained in internment camps in Xinjiang, undergoing “re-education,” and former prisoners told the BBC of physical and psychological torture in these camps. Human Rights Watch claims the Uyghurs are under constant surveillance and have been forced to give the state samples of their DNA and other biometric information.

China has become a world leader in surveillance and tracking technology with Hikvision easily the biggest player. The company helped to build China’s police state surveillance apparatus at home and has become a leading part of China’s bid to export surveillance technology across the globe, a trend that has caused significant concern among western governments.

What is Hikvision?

Hikvision produces video surveillance equipment that features cutting-edge technologies like artificial intelligence. Hikvision’s cameras have been used in China’s mass surveillance system, which can track people by their facial features and how they walk. The cameras can even detect if people are acting strangely, for example if they are running or gathering as part of a crowd.

The vast majority of the company’s revenues come from government contracts in China, though in recent years it has expanded internationally.

Hikvision drew the ire of lawmakers in Washington last year after it sold 1,000 cameras to a massive surveillance network run by one of Iran’s largest financial institutions, Bank Tejarat, which was one of the entities targeted by U.S. Treasury sanctions last November.

Will blacklisting hurt Hikvision?

Hikvision has been a potential target for U.S. sanctions for months now.

Just like Huawei, Hikvision relies heavily on U.S.-made components for its cameras. It depends on Intel and Xilinx for its integrated circuits, and Intel and Advanced Micro Devices for parts of its central control equipment.

It is likely that the company has put in place contingencies should the U.S. Commerce Department place it on its Entity List. Huawei said this week that it has been stockpiling chips ever since the U.S. administration temporarily blacklisted ZTE last May.

“The chips Hikvision uses are very commercial and most of the suppliers are actually in China although there are some in the United States,” a company spokesperson told Reuters. “Even if the U.S. stops selling them to us we can remedy this through other suppliers.”

But replacing U.S. components may not be easy to do in the short term, meaning Hikvision’s rapid expansion to markets like the U.S., the U.K., and Australia could be significantly curtailed

How will China respond?

After the U.S. blacklisted Huawei, Beijing said it would retaliate in kind, but didn’t give any details of what measures it would take.

But U.S. companies doing business in China worry they will become the target of Beijing’s retaliatory ire.

"Particularly in the wake of the decision to put Huawei on the... entity list, there are concerns that the government of China may decide to retaliate against American companies," Tim Stratford, chairman of the American Chambers of Commerce in China, told the BBC.

“These are real concerns, and they increase the risk as people are considering how they should make adjustments to their business models.”

Cover: In this Sept. 20, 2018, photo, an Uighur woman uses an electric-powered scooter to fetch school children as they ride past a picture showing China's President Xi Jinping joining hands with a group of Uighur elders at the Unity New Village in Hotan, in western China's Xinjiang region. Germany's top official for human rights is visiting Tibet for a dialogue with Chinese counterparts after being denied permission to visit the heavily policed northwestern region of Xinjiang. (AP Photo/Andy Wong, File)