Dahua Russia Dahua Technologies Rus

Performance indicators

2022: Falling revenue and going out at a loss

As TAdviser found out, the revenue of the Russian office of the Chinese manufacturer of products and services for video surveillance and access control Dahua Technology - Dahua Technologies Rus LLC - in 2022 decreased by 59%, to 987 million rubles. The company ended the reporting period with a net loss of 206.3 million rubles. Such data are contained in the database of financial accounts of the Federal Tax Service. Prior to that, the company had posted a net profit of two years in a row.

The explanation of the financial accounting of Dahua Technology Rus, published there, refers to the reasons for the negative financial results. Dahua HK (Hong Kong Dahua Technology) is an importer of products in the Russian Federation. The main contract for its supply with Dahua Russia was concluded in US dollars. At the end of the first quarter of 2022, due to the depreciation of the ruble, there was an increase in the cost of goods and the cost of importing products from China in ruble equivalent. Thus, the cost of goods for Dahua Russia increased, which led to a decrease in margin.

Dahua Technology's Russian office has been operating since 2017

During the second and third quarters of 2022, the opposite trend occurred: the value of the ruble against the dollar strengthened. To stimulate sales, Dahua Russia could use various promotions and provide discounts to customers, but the sales margin was negative. Dahua Russia could not profit from the sale of products.

The main difficulties in forming a profitable pricing policy in 2022 were associated with the volatility of the ruble. Dahua Russia is the main distributor of products in the Russian Federation and operates in the B2B segment. As a result, the main partners of Dahua Russia, distribution chains and flagship stores took a wait-and-see policy and suspended the purchase of goods, - said in the explanations to the financial accounting of Dahua Technologies Rus.

To stimulate sales in networks in the second and third quarters, distributors requested to adjust the cost of previously sold products in the 1 quarter of 2022.

Net assets of Dahua Technologies Rus in 2022 amounted to a negative value - 206.18 million rubles. In this regard, the company's ability to continuously continue operations and fulfill its obligations in the foreseeable future depends on support from the Dahua group of companies, including the main founder of the Russian office, Dahua Europe B.V, based in the Netherlands.

For 7 years, Dahua HK has made major investments in the Russian market and has taken a strong position as a leader in sales of video surveillance products. The management of Dahua HK has decided to provide comprehensive support to Dahua Russia to continue commercial activities in Russia, as indicated in the explanations to the financial accounting of Dahua Technology Rus.

The production processes of the parent company Dahua Technology are also greatly influenced by the use of American technologies. To reorient the business, the company intends to change internal procedures in the production of products and enter new possible supply chains without using unfriendly countries.

Dahua Technology in 2021 was the world's second largest provider of video surveillance solutions in terms of revenue, second only to another company from China - Hikvision. The latter did much better in Russia in 2022 than Dahua, according to data in the FTS database. Thus, the revenue of the Russian office of Hikvision - Hikvizhn LLC - in 2022 increased by 42%, to 10.9 billion rubles. Read more here.

History

2017

Opening of the Russian representative office

In August 2017, the Chinese manufacturer of video surveillance systems Dahua Technology announced the opening of an official representative office in Russia and held a ceremony on this occasion. The company is confident that the player's output "of this level" is significant for the development of the domestic market, including in terms of introducing innovative developments. Representatives of the company also believe that this event is "the most important vector in strengthening Russian-Chinese relations and the decisive stage in the security of Russia."

At the opening ceremony of the Russian representative office

In Russia, Dahua will offer all its product lines, including video surveillance systems, intelligent transport solutions, Smart Home systems, access control equipment, video doorphones, Smart Lock systems.

Local office specialists will provide pre-sales support, warranty and after-sales service to CIS customers. The Director of Dahua Technology for Market Development in Russia and the CIS at the time of the opening of the representative office is Zhao Shenbo.

Dahua Vice President Michael Chen, who is responsible for working in foreign markets, told TAdviser that Dahua's revenue in Russia grew by more than 30% in 2016. He noted that in the past few years it has not grown in the country as fast as we would like. In 2017, according to Michael Chen, Dahua sets the bar for growth at 80%.

Dahua Technology ranks second in the world in terms of market share in its segment, according to a 2016 IHS report.

Opening their own office and changing the management team should make it possible to achieve the necessary result, Dahua expects. The company plans to gradually increase the number of offices in Moscow. At the time of its official opening, it is about 30 people.

According to Michael Chen, the company has the largest growth in sales in Russia by products and solutions for small and medium-sized businesses. In terms of solution classes, the most popular include various analog systems, Chen said in a conversation with TAdviser. This includes, for example, analog cameras and DVRs. Dahua's top manager added that in Russia, customers are very sensitive to the price of products.

Dahua plans to direct its main efforts to the commercial sector. At the same time, the public sector is of interest to her. At the official opening ceremony of the office, Dahua presented certificates for free equipping its equipment with premises in a number of government agencies. Certificates must be delivered, in particular, to the Presidential Administration of the Russian Federation, the Ministry of Defense, DIT of Moscow, and a number of others.

Dahua has been supplying products to the CIS markets since 2008. By the time of opening a representative office, according to the company's website, it has about 160 partners in Russia.

Formally, the legal entity of the representative office was registered in Moscow back in 2015 and registered with the tax authorities in the fall of 2016. According to the Kontur. Focus database, the commercial and management expenses of Dahua Technologies Rus in 2016 amounted to about 24 million rubles.

Collaboration with Merlion

On August 9, 2017, Merlion signed an agreement with the Chinese company Dahua Technology, a global player in the security technology market. Under its terms, Merlion received the status of an official distributor of Dahua in Russia and the CIS.

Taking into account the fact that the security market in general (and video surveillance systems in particular) is one of the most stable and promising in Russia, partnership with technological leaders in this area is an important component of Merlion's strategy, the company notes.

By entering into an agreement with Merlion, Dahua Technology expects to attract many new, including regional dealers, to cooperate.

Having joined forces with Merlion, which has experience in successfully promoting equipment from various manufacturers, we are building an all-Russian partner network to meet the needs of our customers, "said Deputy CEO of Dahua Technology Rus Wang Dzyin (Wang Ziyin).

Products

Among the product products offered by the company are video cameras, camera optics, sensors, information encoding and transmission products, processors, graphics processors, video analytics system, software products, network security systems, etc.