Hikvision Reportedly Conducts Major Restructuring, Cutting R&D Centers from 32 to 12

Chinese surveillance camera maker Hikvision, a global leader in the security industry, is reportedly conducting a major organizational restructuring that could affect over 1,000 employees. According to sources within the company, Hikvision is reducing its research and development footprint, cutting the number of R&D centers from 32 down to just 12.

An employee who wished to remain anonymous revealed that the company plans to keep only a few core R&D hubs while optimizing or shutting down the rest. The restructuring is already underway, with centers in regions like Hunan Province being closed, though locations near the company’s headquarters have yet to be impacted. The move is expected to affect more than 1,000 personnel.

The reasons behind Hikvision’s decision appear tied to shifts in the company’s business strategy and the evolving market landscape. In recent years, Hikvision has expanded rapidly, setting up R&D centers across China to be closer to regional customers and respond quickly to their customization needs.

However, this decentralized approach also led to higher costs and redundancies. With 32 R&D centers, almost equivalent to the number of provincial-level administrative divisions in China, Hikvision likely found the structure unwieldy and expensive to maintain, especially as growth in China’s domestic security market slows.

Hikvision has been facing intensifying competition in its home market from the likes of Dahua Technology, as well as encroachment from Chinese tech giants like Xiaomi in the smart home security space. Overseas, the company’s business has been impacted by US sanctions over alleged human rights violations.

These challenges have put pressure on Hikvision’s previously rapid growth and high profitability. In 2022, the company reported a 23.59% decline in net profit attributable to shareholders. While profits showed some recovery in 2023, the gain was a modest 9.89% over the prior year.

By streamlining its R&D operations, Hikvision appears to be pivoting to a leaner, more focused organizational structure suited to navigating the current economic climate. The company will likely concentrate resources on its core competencies and most promising market segments.

The large-scale layoffs, while painful for those affected, reflect the increasingly common practice among big Chinese companies of optimizing headcount to align with business realities. In a slowing economy, even industry leaders are having to make difficult choices to stay competitive.

For the employees impacted by Hikvision’s restructuring, the months ahead will undoubtedly be challenging as they seek new positions. But as veterans of an industry pioneer, their skills and experience should be valuable assets in their job search. And for some, the change may prove an opportunity to explore new avenues in their careers.

As for Hikvision, the company’s ability to adapt and streamline will be critical to retaining its market leadership in a difficult environment. Observers will be watching to see if a leaner operation helps the surveillance giant weather current headwinds and find new engines for growth.