Recently, Mitsubishi UFJ Morgan Stanley and other securities institutions studied hikvision, hikvision Senior Deputy General Manager, Secretary of the Board of Directors Ms. Huang Fanghong and others on the relevant issues.
Can you tell us something about overseas business orders?
Uncertainty in overseas markets remains very high, the trend of negative growth in the U.S. market continues, and we expect it to be difficult to change in the short term. Turkey has been subject to U.S. economic sanctions and is expected to have a big impact.
On the whole, there are not many countries and regions where the macro situation is particularly good, and there are problems in every country, one way or another.
Based on this, we judge that overseas markets will enter a relatively stable phase. We see these short-term negative fluctuations and will try to absorb them in all its efforts.
In terms of credit impairments, hikvision saw that he was actually in a very cautious phase, and would there be a more relaxed policy on customer returns and so on, bringing better growth to subsequent revenues?
Our consideration in terms of customer credit is to give the customer no account period, or to give the customer how much credit. Security industry and other industries are not the same, this is a sales model with a period of accounting, so we report high amount of accounts receivable, long account period.
hikvision in the account period control is relatively strict, we have a set of internal operating rules, we will from the customer’s business situation, customer’s assets, as well as the customer’s business situation, to judge how much credit should be given to the customer and account period, combined with the comparative business judgment to carry out a relatively flexible processing.
In the past in the macro situation is not very good account period policy will tighten, because the market liquidity is too poor may lead to increased risk of bad debts, the market macro-good including liquidity of funds is relatively adequate, our back office will also be relatively adjusted some strategies.
Can it be understood that the macro slowdown has a certain negative impact on Haikang?
A: We are seeing the macro start to stabilize and there are expectations for a pick-up in PBG, but there may still be a lack of investment confidence in various sectors.
hikvision to reach the current business scale, but our business is small single more, our daily average order volume and the turnover of each order is not high, our company’s business is not completely dependent on tens of millions of levels of orders, but more sinking to do a piece, scattered, the company’s business has a certain stability, this is the first aspect.
Second, hikvision’s product line is particularly rich, we have thousands of products, some of these products are not large, but the convergence of The relatively stable business support of Haikang.
Third, the first three quarters of 2019 EBG development is relatively better, it is related to the digital transformation of many industries, the various industries will continue to have this change, may now garbage classification is good, and then there may be some new productdevelopment, such as our radar and vision technology combination, Traffic accidents at corners or intersections can be avoided to a greater extent.
Through technology and product innovation, we are also able to drive changes in some industries to address needs that were not resolved in the past. These are the real driving forces for Haikang to maintain a stable and sustainable business.
How will the number of personnel increases or decreases be arranged in the next two to three years?
Detailed plans for personnel growth, the company every year to do, every year to the next three years to do a rolling strategy, the strategy development process will also include the evaluation of the investment of talent.
16, 17, 18 three years, the speed of personnel investment is relatively fast, an average of more than 30%, because of the integration of material and letter, strategic structure adjustment and other changes in these business strategies, the need for personnel input to match, the current stage of the large investment has been basically completed.
Today, next year will enter a relatively smooth, solid process, so the staff input will not be so radical. In the headquarters security business area, personnel growth by budget card is relatively strict, but in the innovation business, because in the high-speed stage of development, personnel input is based on business needs to do, personnel planning strategy is not the same, the innovation business personnel investment rate will be relatively high.
In 2019, there has been talk that EBG is performing better than both PBG and SMBG, and will this trend change in the coming quarters? Does this mean that PBG growth will start to outpace EBG?
With regard to the expectation of PBG growth, it is difficult to predict that PBG growth will return to a very high level. Of course, it also looks at the overall investment strategy of the Chinese government. If the big strategy doesn’t change much, it may be difficult to make a big change in the current environment.
hikvision in terms of research and development costs and personnel has improved a lot, the next in sales or marketing and other personnel will not make further adjustments, so that the total number of people to maintain a level?
In recent years, hikvision is not only the rapid growth of research and development personnel, marketing staff also grow fast, so in both aspects of simultaneous matching the company’s sales growth.
On the other hand, in the past two years, hikvision ‘s business sinking strategy, we have made provincial branches into provincial business centers, to promote the forward movement of resources, business decision-making focus from headquarters to provincial business center sending.
In the process of migration, the provincial business center’s research and development, marketing personnel are growing, resources then sink to the second-level city branch. After experiencing a large input cycle, the next we will enter a relatively stable personnel input cycle, to put the past input of resources solid, is Hu General (Hu Yangzhong) said “sprinkle a layer of soil, we have to step on a step, so that the ground will be strong”, otherwise the soil is floating on it, the efficiency is not high.
So next we’ll increase our internal management and efficiency improvements. Within hikvision , in terms of human resources strategy, has been continuously promoting the survival of the fittest policy, to maintain a certain vitality of the team, we can not let the last, incompetent staff precipitated in the pool, this is a very important part of the entire management process.
Is there a split in research and development costs, such as where the money is invested? How many research and development staff have sunk into provincial business centers?
The split of research and development expenses cannot be refined, roughly by head, and the scale of revenue is directly related.
Mainly in the security sector, and due to the rapid growth of innovation business, the two years of personnel growth will also accelerate. When it comes to research and development personnel, it’s not so much sinking as expanding. Because in essence is the research and development responsibility to sink, not all of the headquarters personnel sinking, personnel are mainly recruited.
What is the percentage of chips used by hikvision that are affected by U.S. supplier constraints? If U.S. companies continue to restrict hikvision , does the company have the corresponding countermeasures?
The company’s current component supply is stable, domestic chip suppliers have dominated the industry.
Security industry scene scattered, product models, the company will use from the world, including the United States, including the appropriate components, but the company’s requirements for chips are the normal level of business, can be obtained through general commercial channels.