Hikvision and JD.com are in America’s crosshairs

Business & Technology

The U.S. may sanction Chinese surveillance companies for human rights reasons, and delist Chinese tech companies from American stock markets for lack of auditing transparency.

Illustration by Derek Zheng

Video surveillance hardware and software provider Hikvision’s share price fell 10% on Thursday, after the Financial Times reported that Washington may impose tough sanctions on the Chinese surveillance technology giant. Hikvision has been accused of facilitating human rights abuses against ethnic minorities including the Uyghur population.

“The potential action by the U.S. government, as reported, remains to be verified. We believe any such sanction should be based on credible evidence and due process,” the company said. “We look forward to being treated fairly and without bias.”

Hikvision is the world’s largest maker of surveillance equipment and has more than 3 million cameras connected to the internet 24/7 in 33,000 cities around the world, according to data compiled by a host of organizations.

As of December 2021, there were 33,636 Hikvision cameras in London, compared with 26,760 in Beijing. In Asian hubs: Seoul has 32,067, Ho Chi Minh City has 72,269, and Bangkok has 22,274. In the United States, more than 750,000 Hikvision devices have been installed and at least 100 counties, towns, and cities have bought surveillance equipment made by Hikvision and Dahua, another blacklisted company, since federal actions do not apply at the state and city level.

Hikvision would be the first Chinese tech giant to be hit with human rights-related sanctions from the U.S. if Washington goes ahead with the punitive action.

“The SDN list is Washington’s ‘most powerful sanctioning tool’… One expert interviewed had expected this to be reserved in case of a ‘more active conflict with China,’” Rui Ma notes on Twitter.

Hikvision has already been blacklisted multiple times by the U.S. for both their role in human rights violations against ethnic minority groups and over national security concerns. Though the U.S. makes over 60% of the semiconductors used in Hikvision’s surveillance equipment, the company is “rapidly increasing its procurement of Chinese-made products” amid the ongoing trade war with the U.S.

The SEC’s list of companies facing delisting expands

Meanwhile, more Chinese tech companies have gotten ensnared in the audit war. The U.S. Securities and Exchange Commission (SEC) has added over 80 firms — including JD.com, Pinduoduo, Bilibili, and NetEase — to its list of foreign companies that face delisting from the U.S.

  • Ecommerce giant JD.com responded, per Reuters: “The company will continue to comply with applicable laws and regulations in both China and the United States, and strive to maintain its listing status on both Nasdaq and the Hong Kong Stock Exchange.”

Washington’s list is a provisional lineup of U.S.-listed Chinese entities under a 2020 law called the Holding Foreign Companies Accountable Act, which sets a ticking time bomb for firms to be booted from U.S. exchanges if they fail to comply with American auditing standards for three years in a row.

  • Supporters of the act argue that Chinese companies enjoy the privileges of a market economy without the same standard of transparency, and while also benefiting from Beijing’s support.
  • On the other hand, Beijing claims that turning over company audit papers to U.S. regulators would breach national security and data privacy laws.

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The move comes after reports that the U.S. was in negotiations with Chinese regulators on getting access to their auditing’ records, though nothing has come of it since.

  • Last month, Reuters reported that Chinese regulators had asked some of the country’s U.S.-listed firms, including Alibaba, Baidu, and JD.com, to prepare more audit disclosures.

The tougher stance on Chinese companies may signal a tougher stance with China: However, in a similar fate to Nancy Pelosi, Anthony Blinken tested positive for COVID before he could speak on the Biden administration’s long-awaited China policy.

Nadya Yeh