Daybreak - Chinese surveillance companies are prospering in India despite global sanctions

Episode Date: March 3, 2023

CP Plus, a CCTV camera brand, procures 80% of its supplies for its parent company Aditya Infotech Ltd (AIL) from the Chinese security-equipment manufacturer Dahua Technology.   Dahua and Hikvision, another Chinese surveillance-tech firm, are facing sanctions in the UK, US, Australia, and other countries, for their connection to the Chinese government.But in India’s growing CCTV market, which is said to be worth Rs.5000 crores, both these companies are flourishing. Bringing them under control is turning out to be a huge policy challenge for the government.Tune in.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first studio recording, episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. CP Plus, intelligent security systems. Be careful. Kewke, Upurvala. Did you recognize that voice? That was Bollywood actor Salman Khan in an advertisement for CP Plus, a CCTV camera brand. You might have seen these ads somewhere.

I saw them a couple of years ago in Delhi. Massive billboards all around town featuring Salman Khan dressed in these very Mission Impossible Ethan Hunt like clothes, complete with a bulletproof west, of course. And it was the tagline of the ad that I found a bit unnerving. Upar Walla's Sub Dekra Ha'u. Which essentially translates into something around the lines of Big Boss is watching you. But in his book called On the Move,

journey as a relentless entrepreneur, Harsh Kemka, the chairman of CP Plus, explained that Uparwala meant God. He wrote about how the creative team had come up with the idea that they thought would resonate with a lot of Indians. What it really means, I will leave it up to you. But it is a fact that CP Plus was also one of the main sponsors of Big Boss. Here is an excerpt from Harsh Kameka's book.

And I'm quoting, In fact, Big Boss gave us our biggest impetus because the reality show was based on surveillance. During the IPL campaign, we competed with hundreds of brands for audience attention, but with Big Boss, we were sharing airtime with just a handful of brands. Thanks to the happy concomitants of the Uparwala ad and Big Boss,

CP Plus finally came of age. End quote. But today I'm not here to tell you about the ethics of surveillance. I'm talking about CP Plus because these advertisements skip an important. important piece of information about the company. 80% of its supplies for manufacturing as well as trading activities for its parent company called Aditya Infantec Limited come from Chinese surveillance equipment manufacturer, Dowwa Technology. Dowwa and Hick Vision, another major Chinese security tech manufacturer, are facing regulatory

action in the US, UK and Australia and other countries too for their close links to the Chinese government. But in India's growing CCTV market, which by the way is said to be worth 5,000 crore rupees, both these companies are leaders. Hick Vision claims to have a market share of 35% and Dowah, according to industry sources, has a market share of at least 15 to 20%. And it is not like the Indian government is oblivious to what is happening, especially since the tensions with China along the border have escalated more than once. But restraining these companies, is not as easy as you might think. It is a very tricky policy challenge for the Indian government.

Welcome to Daybreak, a business podcast from the Ken. I'm your host Nick Das Sharma and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Friday the 3rd of March. Hequishan's links to the Chinese government were first reported in 29. It was found that the company was supplying its cameras in the thousands to surveil mosques, schools and concentration camps in China's Xinjiang region. They were being used against the persecuted minority community of the Uyghurs.

In response, many countries around the world began sanctioning Higvigin. In December last year, the American government effectively banned these Chinese surveillance tech companies from selling in the country. It said that it was for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure and other national security purposes. Just before that, the British government too had announced that it would ban equation from sensitive sites. Some British politicians are still not satisfied with it and want more action against these Chinese security tech companies.

A Guardian report published in December last year talked about how, Hick Vision was promoting ethnicity recognition technology to British and European countries. Earlier last month, Australia too had announced that it would remove Chinese-made surveillance cameras from defence sites over national security fears. So what is India doing? The Indian government has added these Chinese companies to its radar as well. In July 2020, the Indian government, through an order of the Department of Promotion of Industry and internal trade said that it would not allow companies linked to entities from countries

that share a land border with India to bid for tenders of the central government. This meant that Hick-Vision and Dawa could not bid for projects of various ministries, public sector units, union territories or projects funded by the centre. But you see, this was only a sort of a partial ban. Chinese companies like Hikwision and Dawa are deeply embedded into our security tech landscape. Stay tuned to find out how. The influence of Dawa and Hikwizian in the surveillance tech industry is far-reaching. And bringing them under control is very, very difficult.

The Ken reporter Anushka Jain wrote about it in a recent report. She says it is like taming a monster with regenerating heads. You cut off one and another one pops up immediately. And the reason for this is that Hick Vision and Dawa not only sells surveillance products. They also sell components that are used to make them and software that is used to power these products. Their technology is so superior that so far no Indian manufacturer has been able to figure out the entire value chain. These companies have managed to win large government contracts and some of them are in what you may call sensitive areas. They have been leaving their competitors behind on prices. You remember Huawei,

right? The Chinese telecom giant? It came and swept the markets not just in India, but globally as well. It was only much later that authorities woke up to its link to the Chinese state surveillance programs. According to a senior executive at a multinational company working in the sector that has been involved in several government projects such as smart cities, the Indian government's order restricts Chinese companies from bidding for central government projects, not Daowa or Hick Vision specifically. This means that Daoha and Hickvision might not be able to bid on such tenders, but both companies continue to flourish in our country.

I will tell you how in the next segment. Hey, I'm Srivar, the host of Cost to Company, but I'm here. here to tell you about the latest episode of First Principles, our fortnightly podcast on leadership. In the latest episode, Rohin speaks to Shan Kadal, the CEO and co-founder of Fresh to Home, one of the largest online sellers of fish and meat in India.

The episode is meaty too, packed with insights around obsessing over metrics, encouraging employees to becoming entrepreneurs and some tough lessons from being a serial entrepreneur. Fishing or otherwise, Shan means business. Listen to first principles on your favorite podcast app. All right, back to Snigha. In India, Hickvision operates as Pramah Hickvision.

It is a 48 is to 52 partnership with an Indian technology company called Prama India, where Hick Vision holds the majority state. In September 2021, the Indian Navy had asked all its formations to discontinue the procurement of CCTV cameras and surveillance systems from Hickvision. But again, there are no broad restrictions against Hikwision from the government. In fact, it also has supplied to Bharat Electronics, and Bharat Electronics works on highly sensitive and classified defence projects in the country. The Ministry of Defence noted that Hickvision was marketing its products as made in India.

In late 2020, Ashish Dhakan, the managing director and co-owner of Prama Hikvision, launched another brand called Prama India, which like Aditya Infotech Limited also used its make-in-India tag. Now, let us look at the other Chinese company that is under the scanner, Dawa. Dawa's Indian subsidiary was established in 2017, but the company has been active in the country since at least 2009. This was when it entered into a partnership with Aditya Infotech Limited. Till the year that ended in March 2020, the subsidiary was largely providing marketing services to the parent company. But after that, the company started local distribution and billing. According to the filings with the Ministry of Corporate Affairs, Daohar logged over 800 crore rupees in revenues in India last year.

From early 2020, the company has strengthened its local presence. It has expanded its sales teams and set up new headquarters in Guru Gramm, and New Delhi. It has also started at least two new regional offices last year. Plus, it is not like they're just selling their branded products in India. Smaller companies in the country also re-label Hick Vision and Dawa equipments and sell them. The executive that Anushka spoke to also told her that before the 2020 restrictions, Hickvision and Dawa would have each had at least a 20% share in government CCTV surveillance projects. For example, Hakevision supplied cameras to state-owned railtell Corporation of India Limited.

Railtel provides security and surveillance facilities to the Indian railways. Dowah has also supplied cameras to the Delhi Transport Corporation. So now you see what Anushka meant when she compared them to a monster with regenerating hands. Even if these companies are not allowed to bid for government tenders, they have businesses and partnerships with private enterprises. Cut that head off and we still have retail sales. And apart from all these, there are a range of electronic products. From baggage scanners, switches to interactive boards for classrooms.

And of course, the upurala that is watching everything. I mean CCTV camera components. Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings, A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website.

I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.