Two years ago, Taiwan’s government agencies banned the use of security and surveillance products by Chinese vendors Hikvision and Dahua Technology.

Many distributors have told CommonWealth Magazine, however, that the two companies’ products have still entered the local market since the ban was imposed disguised as Taiwanese brands, and they have even won government tenders.

Taiwan/Chinese brands like twins

A CommonWealth team disassembled two digital video recorders (DVRs) – key components of any surveillance system that capture the images recorded by the cameras and transmit them to a storage destination – and their respective motherboards to confirm the rumors

The first was a DVR sold under the Taiwan brand “Benelink.” The Benelink DVR model number was DFT6016E, a mid-range product that sells for under NT$10,000 and can be connected to 16 surveillance cameras at a time and transmit 16 split images to smartphones for convenient monitoring.

In October 2019, this DVR obtained the MIT smile logo, a label certifying that it is “made in Taiwan.” 

We then took apart a Hikvision DVR, with the model number DS-7216HQHI-K1/E(S), which CommonWealth purchased from a local distributor. The two DVRs had similar specifications, and their appearances and the guts were identical.

The motherboards in the Benelink and Hikvision products both had the same item number -- DS80305P – and the same production date of June 19, 2017 and were otherwise identical, indicating that the two almost certainly came from the same production lot from a Hikvision factory in China.

Hikvision: Blacklisted by Taiwan and the U.S.

This matters because Hikvision Digital Technology Co., based in Hangzhou, is the world’s biggest producer of surveillance equipment and has close ties to the Chinese Communist Party.

The hundreds of millions of its cameras and monitors dispersed around China and the advanced technology behind them have led the state-run company to be seen as an accomplice of a totalitarian country’s violation of human rights through technology. Its products have been considered instrumental, for example, in the Communist Party’s crackdown on Uyghurs in Xinjiang. Because of this dubious record, Hikvision has emerged as the latest target in the U.S.-China technology war after Huawei.

In October 2021, the U.S. Congress passed the Secure Equipment Act that essentially banned the sale of Chinese security equipment technology in the United States. 

Taiwan has taken similar steps. In December 2020, the Executive Yuan issued a directive prohibiting public agencies from using information and communications products sold by Chinese brands and ordered that all Chinese products in use at that time be replaced by the end of 2021.

Well before the comprehensive ban, many agencies such as the Ministry of Economic Affairs (MOEA) were already including clauses in their tenders forbidding the purchase of Chinese products.

Yet, while Hikvision’s surveillance equipment seems to have largely disappeared from government agencies and institutions, streets, and private companies since the ban was announced, a closer look reveals that is not the case. 

CommonWealth obtained documents related to a tender for maintaining and replacing surveillance equipment installed on intersections in the Hsinchu Industrial Park that told another story.

These documents showed that registration of the product’s certification with the Bureau of Standards, Metrology and Inspection (BSMI) provided by the winner of the tender likely covered the 34 DVRs delivered to the industrial park, all of which were Benelink products. One was the DFT6016E model disassembled by CommonWealth. 

Raising suspicions was that the applicant shown on the BSMI certificate for this lot of Benelink products was Digifocus Technology, whose responsible person, listed as Ho Chih-pai (何志白), is also the responsible person for Benelink Technology.

Even more curious, Digifocus also happened to be Hikvision’s agent in Taiwan until 2019.

Security vulnerability?

The Hsinchu Industrial Park is the biggest industrial park managed by the MOEA, with more than 70,000 employees. It is home to many heavyweight manufacturers, including the Chang Chun Group, China Motor Corporation, and Powertech Technology, that pump out goods from the park worth about NT$600 billion a year.

Industrial parks are designated as “critical national infrastructure” by the government and in theory should be even more focused on the information security of sensitive equipment. Yet, the Hsinchu Industrial Park has allowed a “hidden version” of Hikvision products to penetrate its defenses.

In fact, the “China bans” created by all levels of government and state-run companies and supported by many layers of regulations may be “bans” in name only.

According to figures from information service providers IHS Markit, Taiwan has the third highest density of surveillance cameras in the world, with one for every 5.5 people.  

Should we be worried that the security equipment with Chinese motherboards installed on our streets is quietly transmitting data back to Hikvision without our knowledge?

Benelink’s instructions direct users to install a remote operating software called “Guarding Vision” that enables users to access images from their surveillance cameras in a remote location through their smartphones.

But when a CommonWealth software engineer tested it with the help of a veteran security systems engineer, they discovered that the Guarding Vision website’s authentication went through “Hangzhou Hikvision Digital Technology Co.” 

“This indicates that Hikvision is managing the servers for the Guarding Vision web pages,” said the engineer. 

Does that make it possible for Hikvision and even the Chinese government that supports the company to see images from the surveillance cameras? A manager at a major information security company said it would be technically possible if the uploaded images were temporarily stored in their cloud.

Chinese giants extremely active in Taiwan

This special report was originally inspired by a story we worked on about nine months ago. For that story, we interviewed a senior manager at a security company who said he had been asked by a friend at Hikvision to refer the Chinese company to Vivotek Inc., one of Taiwan’s top surveillance solutions brands and a subsidiary of Delta Electronics. The Hikvision contact, this manager said, was hoping to sell the company’s products to Vivotek on an OEM basis.

“It was even willing to go after Vivotek!” the manager said in surprise, an indication that Hikvision probably had solicited all of Taiwan’s security device companies, fully knowing that its products were not allowed for use in Taiwan by the public sector.

The manager noted that despite the ban against Chinese products, the surveillance equipment of China’s two security equipment giants had not been erased from Taiwan. 

“The truth is that [Hikvision] supports local brands by putting those companies brands on its products. There are a lot of companies it does this with,” he said.

Almost every Taiwanese distributor of Chinese security equipment manufacturers have rolled out own-branded products best described as “Chinese-made products in a Taiwanese shell.” Digifocus has the Benelink brand, Koangyow Integration Machine has the KIM brand, and Huang Sheng Technology has HST.

A CommonWealth reporter checked out a small security equipment store and found a whole row of white-label surveillance cameras for sale. 

The shop’s owner said without the least bit of reservation: “This is a Hikvision camera. It’s really good and almost never breaks down.”

He then pointed at a basket on the floor containing a bunch of cameras to be repaired. “These are all Taiwanese brands,” he said, as though implying that Taiwanese equipment was overpriced and shoddy and that it would make more sense to buy a Hikvision-made white-label product. 

When Commonwealth confirmed that the motherboard in the Benelink DVR was made by Hikvision, it quickly informed the MOEA’s Industrial Development Bureau (IDB).

A bit of subterfuge to beat the ban

On Sept. 15, a CommonWealth reporter discovered on a visit to the Hsinchu Industrial Park that its 69 surveillance cameras and the 16 DVRS they were connected to were all Benelink-brand equipment. One of the DVRS was the one CommonWealth confirmed as the DFT6016E model made by Hikvision.

The day before, the IDB took apart the 16 DVRs and found that 15 Benelink-brand models had “Made in China” printed on their bottom panel.

That clearly violated the bureau’s procurement contract rules prohibiting China-made products.

Moreover, similar to what CommonWealth discovered, the chips in the DFT6016E models taken apart by the bureau did not show their brand. Benelink later admitted that the batch of motherboards used on the DVRs installed in the park were made with chips from Huawei semiconductor subsidiary HiSilicon Technologies.

How did these products pass BSMI inspection? Both the BSMI and IDB are scrambling to find out.

The head of the Hsinchu Science Park Administration, Wu Tsui-yuan (吳璀原), said the park had originally installed Hikvision DVRs but then removed them because of the government’s ban on Chinese brands. It stipulated that their replacements have the MIT smile logo, but instead what the park got, a confounded Wu said, was “old wine in a new bottle.”   

Why can’t the public sector escape Hikvision?

Shaking free of Hikvision has been difficult, in part because of expediency.

Wu said the tender won by Benelink referred to the specifications stipulated in the 2018 and 2019 tenders that were based on the specs of previously purchased Hikvision DVRs. 

This tendency toward sticking with familiar specs out of expediency is common practice for public agencies.

Another factor is that Hikvision products have generally good reputations.

Looking at the Hsinchu Industrial Park tender documents, CommonWealth found that the low bidder won with a bid of just over NT$800,000, a price unlikely to be met by a Taiwanese brand.

According to a local vendor who sells both Taiwanese and Chinese products, Taiwan-made equipment costs twice as much as imported China-made goods, and the vendor described Hikvision products as “cheap and easy to use and they rarely break down.” 

As a vertically integrated manufacturer, Hikvision controls all aspects of its products in-house, resulting in a quality level that surpasses that of Taiwanese makers, the vendor said.

Another vendor familiar with Hikvision products felt Hikvision has a one- to two-quarter technology lead over the rest of the market.

MIT double the cost

Despite the price and quality incentives, white-label surveillance equipment made in China has not penetrated all of Taiwan’s public institutions.

Shengli New Village in Pingtung County, a project that renovated old Japanese colonial-era military buildings into a cultural recreation area, installed 32 surveillance cameras and two DVRs in July. They were made in Taiwan by Vivotek and a new brand Scoo (Jia Huang Jhan Ye Co.), but cost more than twice as much as Chinese-made equipment.

(Source: Ming-Tang Huang)

To ensure that it would acquire only Taiwan-made items, Pingtung County’s Cultural Affairs Department took the rare step of holding a “most advantageous tender” (a process that takes several factors into account rather than simply the lowest price) and ending up procuring the equipment for NT$4 million.

(Source: Ming-Tang Huang)

The process had a behind-the-scenes hero, Hikvision’s agent in central and southern Taiwan, Huang Sheng Technology. The company’s vice president Huang Tzu-chin (黃資欽) admitted Huang Sheng markets Chinese brands but said it was determined to find Taiwan-made equipment after the government issued its ban. Otherwise, he said, “you end up telling a lie and then you have to tell even more lies to make up for it.”

(Source:Vivotek)

The anti-China wave helps Vivotek 

Benefiting from the anti-China wave in the security equipment sector in Taiwan and even in Western countries, Vivotek had higher revenues in the first eight months of 2022 than in all of 2021, and its stock hit a seven-year high in mid-September. 

The head of Vivotek’s Global Marketing Division, Allen Hsieh (謝邦彥), confirmed that the company has received more orders from the West over the past year, and even a well-known Japanese brewery specified that it wanted Made in Taiwan products.  

Six years ago, Vivotek and the rest of Taiwan’s security equipment sector were nearly put out of business by China’s Hikvision and Da Hua, which left an opening for Delta Electronics to acquire Vivotek in 2017.

But as the U.S-China trade war intensified, HiSilicon’s chips were first blacklisted, followed by U.S. sanctions on Hikvision and Da Hua, dealing a heavy blow to the momentum of China’s security equipment sector. As the trend toward “one world, two systems” has become clearer, Vivotek has been a major beneficiary.

That’s because while many Taiwanese companies decided to slap their brands on Chinese-made products to stay in business, Vivotek bucked the headwinds and actually expanded its factory in Zhonghe, in the Taipei suburbs, and has also added two new production lines in Delta Electronics’ factory complex in Taoyuan.

In this two-system world, only “hard power” can survive for long, and it has provided Taiwanese brands with new opportunities to overcome intense competition from Chinese manufacturers.

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Translated by  Luke Sabatier
Uploaded by Ian Huang