China’s surveillance industry plays down US blacklist at annual expo designed to showcase its technology
- Half of all AI applications are based on motion imagery and the development of video sensing and ultra-fast 5G communications will drive AI adoption, says Huawei
- Expo attracted buyers from over 150 countries and regions despite the cloud over the business from the imposition of sanctions that prevent the purchase of US tech
At one of China’s biggest public security expos this week it seemed like business as usual. Surveillance cameras of all sizes gazed down from nearly every booth inside the 110,000-square-metre exhibition area, feeding nearby display screens with information like the gender, estimated age and even emotional state of passers-by. Screens also played videos of models parading around with wearable cameras pinned to their outfits.
Groups of French, Spanish and Russian-speaking trade visitors listened to demonstrations and pitches from sales reps at various booths, accompanied by interpreters. Middle Eastern buyers, distinctive in their headgear and national dress, were also prominent among the visitors.
One thing that is not out in the open was the fact that some of China’s biggest names in video surveillance had earlier this month been blacklisted by Washington over alleged ties to human rights abuses in the country’s Xinjiang region.
The expo, which alternates each year between Shenzhen and Beijing, this year attracted a record number of buyers from over 150 countries and regions despite the cloud over the business from the imposition of sanctions that prevent the companies from buying American technology without approval.
The Trump administration added China’s two top surveillance camera providers, Hikvision Digital Technology and Dahua Technology, to Washington’s Entity List as well as its national champions in artificial intelligence – SenseTime, Megvii, Yitu and iFlyTek. China is the world’s biggest market for closed-circuit television cameras, access control and intruder detection productions.
The ban represented an escalation after Washington first named Hikvision and Dahua in the 2019 National Defence Authorisation Act, which bars federal agencies from purchasing surveillance cameras from both companies over concerns they pose a risk to national security.
We believe, over the next 20 to 30 years, human society will enter a smart era with omnipresent sensing, all connectivity and pan-intelligence
Still, the elephant in the room was ignored at the four-day expo that wrapped up on Thursday, with no official references to the US blacklisting in the product launches, speeches, presentations and round table discussions.
“We believe, over the next 20 to 30 years, human society will enter a smart era with omnipresent sensing, all connectivity and pan-intelligence,” Wang Tao, Huawei Technologies’ executive director, told an audience of hundreds on Tuesday. “Smart video, 5G and AI will be core technologies that enable it to happen.”
The telecommunication equipment giant, which was placed on the Entity List in May, used the expo to launch an online marketplace for cloud-based algorithms. The HoloSens store is expected to “redefine” the ecosystem of smart video technologies, Huawei said.
Around half of all AI applications are based on motion imagery and the development of video sensing and ultra-fast 5G wireless communications will drive AI adoption in the future, according to Wang.
On the sidelines, executives from Hikvision, Dahua, SenseTime and Yitu, who agreed to talk to the South China Morning Post on the condition of anonymity because they were not authorised to comment on corporate matters, shrugged off the US trade restrictions, calling the impact “minimal”. They added that Huawei’s chip unit HiSilicon was able to provide most China’s semiconductor needs, along with the burgeoning number of new entrants emerging as a result of China’s state-directed semiconductor ambitions.
However, HiSilicon relies on sophisticated US software to design its chips and uses wafer foundries that depend on American equipment to manufacture the silicon.
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Earlier this month, Hikvision senior vice-president Huang Fanghong confirmed at an investor meeting that some product supplies from the US had resumed within a week of the Entity List announcement, as goods provided by most American suppliers were “not entirely US originated”.
Chip makers Intel and Nvidia and data storage specialists Western Digital and Seagate are among the key US suppliers to the Hangzhou-based company, according to surveillance video research platform IPVM.
However, for sellers of data storage products used in surveillance, it was “business is as usual,” according to Zhao Xu, sales manager for one of Seagate’s distributors in China, referring to the fact that the Seagate products were manufactured in Asia-Pacific, not imported from the US. However, it is unclear whether the US origin rules under the Entity List apply to US designed products outsourced to factories outside the country.
After the US targeted China’s ZTE with similar sanctions in 2018 and then hit Huawei in May this year, Chinese companies accelerated contingency plans in the event they became the next target.
In the first nine months of this year, Hikvision reported a 70 per cent surge in inventories mainly due to stockpiling of key components, according to its third-quarter earnings report.
“The worst case scenario is that we distance ourselves from the server business where US suppliers are crucial, and direct our clients to solution integrators who can pick up from there,” said a Hikvision executive who requested anonymity.
Separately, SenseTime has been working on developing training and inference AI chips for its own use, according to two people familiar with the matter.
Megvii co-founder and chief executive Yin Qi said earlier this month that the company has been preparing for a possible supply shortage since May and was “well-equipped for the fight”.
“The specific impact is that we can’t directly buy products subject to US export regulations, such as x86 servers and GPUs (graphics processing units) made in the country,” he told staff in an internal letter earlier this month, a copy of which was obtained by the Post.
The surveillance camera industry saw booming demand in the wake of the September 11 terrorist attacks in the US and subsequently from China’s state-directed efforts to build an “omniscient” surveillance network.
Each year, suppliers produce millions of cameras used to power surveillance systems both at home and abroad, watching over public and private areas such as prisons, railway stations and airports, as well as scanning roads for vehicular breakdowns.
In a ranking based on the number of CCTV cameras per 1,000 people, China had eight of the top 10 most surveilled cities in the world, according to Comparitech, a British pro-consumer website that provides information for research and comparison of tech services.
The country had about 176 million surveillance cameras in operation as of 2016. By 2022, the number is expected to reach 2.76 billion, almost double the total population of 1.4 billion, according to IDC, a market intelligence company.
Nevertheless, China has faced an outcry from human rights activists and western governments over alleged mass detentions and strict surveillance of the mostly Muslim Uygur minority and other Muslim groups in the far western region of Xinjiang.
The role of China’s tech companies in that surveillance has put them under the microscope.
“Some customers may take a ‘wait and see’ approach, wanting to know what will happen to Chinese companies with the sanctions and resume business when it gets clearer,” said Hikvision’s Huang, adding that the company expects impacts to emerge “more directly” in the fourth quarter.
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