海康威视:2020年年度报告(英文版)

Hangzhou Hikvision Digital Technology Co., Ltd.




              2020 Annual Report




                April 17th 2021
                                                               Hikvision 2020 Annual Report




                                 To Shareholders


     In the past three years, we have met some challenges in development, and our

management has been dedicated to their duties with diligence to ensure the Company’s

stable operation with a view to long-term development. The Company's revenue has

increased from RMB 41.91 billion in 2017 to RMB 63.50 billion in 2020, with a three-

year compound growth rate of 14.86%; and the Company's net profit has risen 12.46%

from RMB 9.41 billion in 2017 to RMB 13.39 billion in 2020 by the three-year

compound growth rate.

     For us, technological innovation is the key to sustainable development. To respond

to various challenges and to embrace new opportunities, our R&D expense ratio grew

from 7.62% in 2017 to 8.99% in 2018, 9.51% in 2019, and 10.04% in 2020. In addition,

we have accelerated our steps to deploy big data businesses and develop innovative

businesses. And in order to meet the challenges, the spin-off and public listing of

EZVIZ Network has also been initiated.

     The application of artificial intelligence (AI) technology has been speeded up both

domestically and globally. And we have sniffed the chances brought by the rise of big

data technology applications, by the fusion of multi-detector technology, and by the

end users’ improved awareness of smart city, enterprise digital transformation and the

Internet of Things (IoT). In the three years to come, we will invest more in Research

and Development (R&D) and further improve operational efficiency to reward

shareholders. And we believe that this will be an opportunity for us to grow.

                                                                                              1
                                                               Hikvision 2020 Annual Report


     This year marks the 20th anniversary of Hikvision since its establishment. We have

grown from 28 to more than 40,000 in staff number, and every setback and test have

toughened us, bringing us the new starts for growth and development. And all should

be attributed to this great era.

     Being open, transparent, and honest as always, we will pace ourselves to

encounter challenges. And we will also pay attention to all kinds of new opportunities.

     Finally, we’d like to extend our sincere thanks to all shareholders for your trust

and support to the Company's management team!

     See far, go further!




                                    Hangzhou Hikvision Digital Technology Co., Ltd.

                                                                   Board of Directors

                                                                                  2021.04




                                                                                              2
                                                                           Hikvision 2020 Annual Report


             Section I Important Notes, Contents and Definitions

     The Board of Directors, Board of Supervisors, directors, supervisors and senior management of
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report shall be together be wholly liable for the
truthfulness, accuracy and completeness of its contents and free of any false records, misleading
statements or material omissions, and will undertake individual and joint legal liabilities.

     Chen Zongnian, the Company's legal representative, Jin Yan, the person in charge of the
accounting work, and Zhan Junhua, the person in charge of accounting department (accounting
supervisor) hereby declare and warrant that the financial statements in this annual report are authentic,
accurate and complete.

    All directors of the Company have attended the board meeting to review this report.

    The profit distribution proposal passed upon deliberation at the meeting of the Board of Directors
is set out as follows: based on the Company’s current total share capital of 9,343,417,190 shares, the
Company proposed to distribute cash dividend of RMB 8 (tax inclusive) per each 10 shares to all
shareholders, bonus share and share distribution from capital reserve is nil.




Note:
This document is a translated version of the Chinese version 2020 Annual Report (“2020 年年度报
告”), and the published announcements in the Chinese version shall prevail. The complete published
Chinese 2020 Annual Report may be obtained at www.cninfo.com.cn.

                                                                                                          3
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Please read the full annual report and pay particular attention to the following risk factors:

    1)   Global COVID-19 epidemic risk: The global threat of COVID-19 epidemic has not yet been eliminated,

         and the potential threats brought about by the aggressive monetary policies of various countries during

         the epidemic have not yet fully manifested. The Company will maintain its business strategy focusing on

         stable and healthy development and closely monitor the impact of the epidemic, to ensure the normal

         operation of the Company’s businesses. If the epidemic leads to the deterioration of the global economy,

         the adverse influences on the Company’s businesses will escalate accordingly.

    2)   Risk of technology upgrade: Technologies such as artificial intelligence (AI), big data, cloud computing,

         and edge computing are developing rapidly. The speed of technology diffusion is accelerating. If the

         Company is unable to closely track and adapt to the changes in cutting-edge technologies, or fails to

         quickly realize business innovation, the risk of uncertainty in the company's future development will

         increase.

    3)   Risk of internal management: The continual expansion of business scale, the continuous increase of

         new products and new businesses, the continuous growth in total number of employees, which led to a

         significant rise of internal management complexity and higher requirements on the Company's

         management system. The Company’s sustainable development will face certain risks if the management

         level fails to proportionally address the Company’s business expansion.

    4)   Supply chain risks: COVID-19 epidemic and political conflicts have brought adverse impact on the

         global raw material supply system. The Company has been making efforts to enhance management for

         our supply chain and optimize inventory adjustments and controls. However, if systemic risks arise in the

         global supply chain, the Company’s operating capabilities may be affected.

    5)   Global business risks: The Company operates in more than 150 countries and regions around the world.

         As the potential risks of epidemic, debt issues, political conflicts, and exchange rate fluctuations in various

         countries around the world are difficult to eliminate, the Company’s overseas business operations may be

         adversely affected.

    6)   Legal and compliance risk: The world's multilateral trading system is facing adverse impacts. The laws

         and regulations of various regions that need to be complied with for business activities are very

         complicated. China and overseas countries have stricter data supervision and business compliance

         requirements. If the Company's legal compliance capbilities cannot keep up with the situation, it will bring

                                                                                                                      4
                                                                                        Hikvision 2020 Annual Report

          adverse impacts on the Company's operations.

     7)   Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions

          with different currencies, mainly settled in non-RMB currency (mainly in USD). Exchange rate

          fluctuations could have impact on foreign exchange exposures arising out of sales, procurement and

          financing, which could likely affect the profitability level of the Company.

     8)   Risk of cybersecurity: The Company has always attached great importance and taken active measures

          to enhance cybersecurity performance of our products and systems. However, in the context of Internet

          applications, there is still a possibility of deliberate attempts, including computer viruses, malicious

          software, hacker and others to intentionally attack our systems or products, causing cybersecurity issues.

     9)   Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of

          R&D investment, and produces considerable technical milestones. At the same time, the Company

          implements well-organized intellectual property right (IPR) protection measures. However, the risk of

          intellectual property disputes and the risk of intellectual property rights violations still exist.


The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential investment
risks.




                                                                                                                       5
                                                                                                                     Hikvision 2020 Annual Report



                                                                      CONTENTS



To Shareholders .................................................................................................................................................. 1

Section I Important Notes, Contents and Definitions ...................................................................................... 3

Section II Corporate Profile & Key Financial Data......................................................................................... 9

Section III Corporate Business Summary ...................................................................................................... 14

Section IV Discussion and Analysis on Business Operation .......................................................................... 95

Section V Significant Events .......................................................................................................................... 118

Section VI Changes in Shares and Information about Shareholders ......................................................... 147

Section VII Information of Preferred Shares ............................................................................................... 159

Section VIII Information about Convertible Corporate Bonds .................................................................. 160

Section IX Information about Directors, Supervisors, Senior Management and Employees .................. 161

Section X Corporate Governance .................................................................................................................. 185

Section XI Corporate Bonds .......................................................................................................................... 194

Section XII Financial Report ......................................................................................................................... 195

Section XIII Documents Available for Reference ........................................................................................ 355




                                                                                                                                                                  6
                                                                                   Hikvision 2020 Annual Report


                                               Definitions
               Term                                                   Definition

Reporting Period                     From January 1st 2020 to December 31th 2020
Articles of Associations             Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Hikvision, our Company, the
                                     Hangzhou Hikvision Digital Technology Co., Ltd
Company
                                     China Electronics Technology Group Ltd., the actual controller of the
CETC
                                     Company
CETHIK                               CETHIK Group Co., Ltd. Controlling Shareholder of the Company
                                     Hangzhou Qianmo Jiaying Equity Investment Partnership (Limited
Qianmo Jiaying                       Partnership) (formerly Hangzhou Hikvision Equity Investment Partnership
                                     (Limited Partnership))
EZVIZ, EZVIZ Network                 Hangzhou Ezviz Network Co., Ltd.(According to the context, also refers to
                                     the corresponding business)
HikRobot                             Hangzhou Hikrobot Technology Co., Ltd. (According to the context, also
                                     refers to the corresponding business)
HikAuto                              Hangzhou HikAuto Technology Co., Ltd. (According to the context, also
                                     refers to the corresponding business)
HikMicro                             Hangzhou Hikmicro Sensing Technology Co., Ltd. (According to the
                                     context, also refers to the corresponding business)
HikSemi, Hikstorage                  Wuhan Hikstorage Technology Co., Ltd. (According to the context, also
                                     refers to the corresponding business)
HikImaging                           Hangzhou Hikmed Imaging Technology Co., Ltd. (According to the context,
                                     also refers to the corresponding business)
HikFire                              Hangzhou Hikfire Technology Co., Ltd. (According to the context, also
                                     refers to the corresponding business)
                                     Hangzhou Rayin Technology Co,. Ltd. (According to the context, also refers
HikSecurityCheck, HikRayin
                                     to the corresponding business)
                                     Located in Binjiang District, Hangzhou, Zhejiang Province, the planned use
Hangzhou Innovation Industry Park
                                     is for R&D, office space and supporting facilities.
Chengdu Science and Technology Located in Chengdu, Sichuan Province, the planned use is for R&D, office
Park                           space and supporting facilities.
Chongqing Science and Technology Located in Chongqing, the planned use is for production plants, warehouses
Park                             and supporting facilities.
                                     Located in Xi'an, Shaanxi Province, the planned use is for R&D, office
Xi’an Science and Technology Park
                                     space and supporting facilities.
Wuhan Science and Technology Located in Wuhan, Hubei Province, the planned use is for R&D, office


                                                                                                                  7
                                                                                   Hikvision 2020 Annual Report

              Term                                                    Definition

Park                               space and supporting facilities.
                                   Located in Wuhan, Hubei Province, the planned use is for production plants,
Wuhan Intelligence Industry Park
                                   warehouses and supporting facilities.
Zhengzhou Science and Technology Located in Zhengzhou, Henan Province, the planned use is R&D, office
Park                             space and supporting facilities, etc.
                                   EZVIZ smart home product industry park, located in Hangzhou, Zhejiang
EZVIZ Industry Park                Province, is planned to be used for R&D, office space and supporting
                                   facilities of Hangzhou EZVIZ Network Co., Ltd.
                                   A long investment cycle, business prospects uncertain, has the high risk and
                                   uncertainty, in need for direct or indirect investment in exploration, in order
                                   for the Company to timely enter into new areas of business. Initially
                                   disclosed in Announcement about Management Measures for Core Staff
Innovative Business                Investment in Innovative Business (《核心员工跟投创新业务管理办法》)
                                   (www.cninfo.com.cn).
                                   In this report, innovative business also refers to EZVIZ, HikRobot, HikAuto,
                                   HikMicro, HikStorage, HikImaging, HikFire, HikRayin and their related
                                   business or products.




                                                                                                                  8
                                                                                                Hikvision 2020 Annual Report




                 Section II Corporate Profile & Key Financial Data

I. Corporate Information

                Stock abbreviation                       HIKVISION                 Stock code                     002415
 Stock exchange where the shares of the Company
                                                                                Shenzhen Stock Exchange
                   are listed
         Name of the Company in Chinese                                   杭州海康威视数字技术股份有限公司
      Abbr. of the Company name in Chinese                                              海康威视
     Name of the Company in English (if any)                HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD
  Abbr. of the Company name in English (if any)                                       HIKVISION
               Legal representative                                                  Chen Zongnian
                Registered address                                No. 555 Qianmo Road, Binjiang District, Hangzhou
         Postal code of Registered address                                               310051
                 Business address                              No. 518 WuLianWang Street, Binjiang District, Hangzhou
          Postal code of Business address                                                310051
                 Company website                                                   www.hikvision.com
                        E-mail                                           market@hikvision.com; ir@hikvision.com


II. Contacts and contact information

                                                       Board Secretary                      Securities Affairs Representative

                Name                                  Huang Fanghong                                   Zhou Xinyi

                                             No. 518 WuLianWang Street, Binjiang         No. 518 WuLianWang Street, Binjiang
               Address
                                                      District, Hangzhou                           District, Hangzhou

                 Tel.                          0571-88075998; 0571-89710492                          0571-89710492

                 Fax                                   0571-89986895                                 0571-89986895

               E-mail                             hikvision@hikvision.com                       hikvision@hikvision.com



III. Information disclosure and place of the report


Newspaper designated by the Company for information disclosure                Securities Times, Shanghai Securities Journal

Website specified by CSRC for release of the Annual Report                                www.cninfo.com.cn

Place where the Annual Report is available for inspection                    Office of the Board of Directors of the Company




                                                                                                                                9
                                                                                                 Hikvision 2020 Annual Report

IV. Company Registration and Alteration


Organization code                                                                 91330000733796106P

                                                     During the reporting period, there is no change in the Company's business
                                                     scope. The Company's business scope is: research and development (R&D)
                                                     and production of electronic products (including explosion-proof electrical
                                                     products, communication equipment and related ancillary equipment,
                                                     multimedia equipment, transmission and display equipment), fire protection
                                                     and control products, big data and Internet of Things hardware and software
                                                     products aircrafts, robots, intelligent equipment and intelligent systems, real-
Changes in principle business activities since the   time communication systems, auto parts and accessories, automotive electrical
Company was listed (if any)                          signal equipment, servers and supporting hardware and software products;
                                                     Sales of self-produced products; provide technical services, electronic
                                                     technology consulting service, training service (excluding the organizational
                                                     training), electronic equipment installation; electrical engineering, design,
                                                     construction and maintenance of intelligent system projects. (except country
                                                     prohibited and restricted items, relating to the specific mandatory license
                                                     certificate) (subject to ratification in accordance with the project, approved by
                                                     the relevant departments to operate)
Changes of controlling shareholders of the
                                                                         No change during the reporting period
Company (if any)


V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm                                   Deloitte Touche Tohmatsu Certified Public Accountants LLP

Business address of the accounting firm                            30F Bund Center 222 Yan An Road East Shanghai

Name of accountants for writing signature                                    Tang Lianjiong, Zhang Shushu

Sponsor institution engaged by the Company to continuously perform its supervisory function during the Reporting
Period
□ Applicable √ Inapplicable
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reporting
period
□ Applicable √ Inapplicable




                                                                                                                                    10
                                                                                                   Hikvision 2020 Annual Report

VI. Key accounting data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
                                                                                                 Unit: RMB
                                                                                                       YoY Change
                                                                 2020                   2019                              2018
                                                                                                          (%)

Operating income (RMB)                                    63,503,450,891.78 57,658,110,065.22               10.14% 49,837,132,481.61

Net profit attributable to shareholders of the Company    13,385,526,714.15 12,414,587,690.45                7.82% 11,352,132,255.21
(RMB)
Net profit attributable to shareholders of the Company
                                                          12,805,839,276.44 12,037,518,321.42                6.38% 10,983,228,170.60
excluding non-recurring gains and losses (RMB)

Net cash flows from operating activities (RMB)            16,088,156,566.67 7,767,720,171.14               107.12% 9,113,286,027.76

Basic earnings per share (RMB/share)                                    1.445                  1.343         7.59%               1.240

Diluted earnings per share (RMB/share)                                  1.444                  1.343         7.52%               1.234

Weighted average ROE                                                  27.72%               30.53%           -2.81%            33.99%

                                                           At December 31st At December 31st           YoY Change    At December 31st
                                                                 2020                   2019              (%)             2018

Total assets (RMB)                                        88,701,682,384.20 75,358,000,240.29               17.71% 63,491,508,747.79

Net assets attributable to shareholders of the Company
                                                           53,794,311,162.05 44,904,033,876.83              19.80% 37,589,417,652.35
(RMB)



The total share capital of the Company as of the previous trading day of the annual report disclosure:
The total share capital of the Company as of the previous trading day of the annual report disclosure
                                                                                                                        9,343,417,190
(share)

Fully diluted earnings per share calculated with the latest share capital
Fully diluted earnings per share (RMB/share) calculated with the latest share capital                                            1.433


VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards

1. Difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards and China Accounting Standards

□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.


2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards

□ Applicable √ Inapplicable

                                                                                                                                    11
                                                                                            Hikvision 2020 Annual Report

There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards in the reporting period.



3. Explanation of the differences in accounting data under domestic and overseas accounting standards

□ Applicable √ Inapplicable


VIII. Key Quarterly Financial Indicators
                                                                                                                    Unit:RMB
                                                   st                   nd                 rd                  th
                                                  1 Quarter           2 Quarter           3 Quarter           4 Quarter
Operating income                                 9,428,902,974.38    14,842,256,269.38   17,750,035,645.90   21,482,256,002.12

Net profit attributable to shareholders of the
                                                 1,496,269,608.01     3,127,703,222.86    3,814,978,645.77    4,946,575,237.51
Company
Net profit attributable to shareholders of the
Company excluding non-recurring gains            1,469,074,026.95     2,994,424,350.73    3,576,189,605.69    4,766,151,293.07
and losses

Net cash flows from operating activities         -3,982,048,164.94    4,052,014,505.51    5,464,651,652.26   10,553,538,573.84

Whether there is significant difference between the above individual or aggregate financial indicators and that of
what disclosed in the quarterly report, half-year report
□ Yes √ No

V. Differences in Accounting Data between Domestic and Overseas Accounting Standards

1. Difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards and China Accounting Standards

□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.

2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards

□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards in the reporting period.

3. Explanation of the differences in accounting data under domestic and overseas accounting standards

□ Applicable √ Inapplicable




                                                                                                                           12
                                                                                          Hikvision 2020 Annual Report

IV. Items and Amounts of Non-recurring Gains and Losses

√ Applicable □ Inapplicable
                                                                                                              Unit:RMB

                              Item                                    2020                  2019             2018

Profit or loss from disposal of non-current assets (including
                                                                        -5,836,675.36      -2,053,875.22     4,975,825.83
the write-off for the impairment provision of assets)

The government subsidies included in the current profits and
losses (excluding the government subsidy closely related to
regular course of business of the Company and government               571,403,657.30     413,790,429.84   319,304,315.50
subsidy based on standard quota or quantitative continuous
application according to the state industrial policy.)

The investment cost of the company to obtain subsidiaries,
associates and joint ventures is less than the income
                                                                             281,193.50
generated by the fair value of the investee's identifiable net
assets when the investment is obtained

Net gains and losses from beginning of the reporting period
to the merge date for the subsidiary merged involving                                        -885,138.65      -736,986.11
enterprises under common control

Profits and losses attributed to change in fair value for held-
for-trading financial assets, derivative financial assets, held-
for-trading financial liabilities, and derivative financial
liabilities; and investment income from disposal of held-for-
trading financial assets, derivative financial assets, held-for-        98,373,869.75      26,872,639.66    62,153,461.82
trading financial liabilities, derivative financial liabilities and
other debt investments, excluding the effective hedging
business related to the regular business operation of the
Company.

Other non-operating income and expenditures except the
                                                                        74,007,631.14      52,155,026.79    94,651,413.78
items mentioned above

Less: Impact of income tax                                             109,931,807.07      86,193,406.35    84,510,487.85

     Impact of the minority interests (after tax)                       48,610,431.55      26,616,307.04    26,933,458.36

Total                                                                  579,687,437.71     377,069,369.03   368,904,084.61

Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the definition in the
Public—Non-recurring Gains and Losses>, or classifies any non-recurring gain/loss item mentioned in the
aforementioned note as a recurrent gain/loss item
□ Applicable √ Inapplicable
In the reporting period, the Company did not classify an item as a non-recurring gain/loss according to the
definition in the Securities to the Public—Non-recurring Gains and Losses> into a recurrent gain/loss item

                                                                                                                       13
                                                                                   Hikvision 2020 Annual Report




                        Section III Corporate Business Summary

I. The principal business of the Company during the reporting period


1. Business Scope


     Vision, hearing, smell, taste and touch together constitute the five senses of human beings. As for information

perception, vision may be deemed as the most vital means, as more than 80% information obtained by human beings

comes from sight. Deeply engaged in video technology development for the past two decades, Hikvision has been

upgrading machine’s video perception ability from capturing the target and capturing clearly all the way to

understanding the target. And based on the video technology, we have built a complete value chain spanning from

R&D, manufacturing to marketing.

     For human beings, what you see is what you get, as human vision can only perceive the visible light, which is

only a small segment of 390-700 nanometers in the electromagnetic spectrum. Varying in wavelength and frequency,

electromagnetic waves can extend from visible light to both ends. One end is a frequency band with longer

wavelengths: infrared rays, microwave, and radio waves, etc., and the other end is a frequency band with shorter

wavelengths: ultraviolet rays, X-rays, and gamma rays, etc. In light of the strategic positioning of the perception

business of the Internet of Things (IoT), Hikvision has expanded and deployed new business in a planned manner,

and built the main technology architecture for multi-dimensional perception by establishing five main technical

lines in visible light, millimeter wave, far-infrared rays, X-rays and sound wave. On this basis, we’ve managed to

offer a richer and broader technical product portfolio.

     Hikvision, focusing on the intelligent IoT, big data services and intelligent business, offers intelligent IoT

products and services integrating software and hardware, cloud and edges, as well as big data platform products and

services combining IoT and information network, big data and intelligence, and develops innovative businesses in

smart home, mobile robots and machine vision, auto electronics, intelligent storage, infrared thermal imaging,

intelligent fire protection and control, intelligent security check, intelligent medical services, etc. Experience

gathered bit by bit in perception platforms, data platforms and application platforms naturally drive the R&D of

more perception means, the acquisition of more perception data, and the development of more perception

applications. Perception technologies such as millimeter wave, far-infrared rays, X-rays and sound wave together

empower Hikvision to enlarge its business scope and build an open and cooperative ecosystem to serve users in the

                                                                                                                 14
                                                                                    Hikvision 2020 Annual Report

public service sector, big enterprises and small and medium-sized enterprises, and contribute to the construction

and service of intelligent business such as smart cities and digital enterprises.


2. Core Capabilities


2.1 Integration of Software and Hardware: Mutual Promotion between Software and Hardware Product

Systems


     In recent years, Hikvision has unified the software development system, standardized the hardware

development process, provided a unified embedded software platform for various equipment, and unified interface

specifications for networking accessing and operation and maintenance management of various equipment, ushering

the development of software and hardware products into a benign iterative cycle.


2.1.1 Unified Equipment Software Platform


     Various hardware product types, diversified product operating environments, and different product operation

and maintenance management ways have posed major challenges to the development of the IoT business. In this

context, Hikvision has launched HEOP (Hikvision Embedded Open Platform) to support containerized independent

deployment and flexible scheduling of algorithms or components for the sustainable development of intelligent IoT.

     Hikvision is currently migrating its original hardware products to HEOP step by step, with all new products

developed based on this platform. On this unified embedded software platform, all intelligent IoT equipment of

Hikvision will feature the same software foundation to avoid the differences between various hardware development

and operating environments, and support function changes of hardware products through software upgrades to

improve development efficiency significantly.

     In addition, partners can realize iterative development of intelligent application functions of intelligent IoT

equipment based on HEOP efficiently, and work with Hikvision to create value for customers.


2.1.2 Unified Software Support for Equipment


     Hikvision provides various intelligent IoT equipment with unified access, networking, operation and

maintenance support capabilities through a unified intelligent perception networking platform, making the large-

scale intelligent IoT a reality.

     The unified device access framework supports the connection of various video equipment, multi-dimensional

                                                                                                                 15
                                                                                     Hikvision 2020 Annual Report

sensing equipment, and intelligent equipment. With open interfaces and protocols, various intelligent IoT equipment

can access Hikvision’s software platforms. And the development of equipment network access drivers is relatively

separated from application software, that is, we can set up the platform first and then develop device drivers.

     Networking is possible in a large scale to support a variety of IoT perception equipment in line with national

standards and multi-industry standard specifications. And the integrated operation and maintenance service platform

is applicable to a variety of IoT devices and IT equipment.

     Moreover, partners, through the interface provided by the intelligent perception networking platform, can

connect other manufacturers’ IoT equipment to the same software platform.


2.1.3 R&D Synergy Between Software and Hardware


     At Hikvision, the R&D of software or hardware meeting customer requirements, application scenarios,

industry characteristics and other demands is not carried out separately in most cases. Offering the best solutions to

meet users’ demands is our top priority. So, you will find that the hardware development demands may be completed

by the software R&D team, while the software development demands may be undertaken by the hardware R&D

team. We have formed a synergy between these two R&D types with the two teams supporting each other. When

communicating with users on business needs, software personnel will advise them on the hardware equipment they

need; and for the newly developed intelligentequipment, the software team will develop application software that

maximizes their value.


Software Demand Drives Hardware R&D

     When understanding the demands of relevant industries and designing software functions, the business team

will analyze the demands for hardware products at the same time, and timely feedback to the hardware products and

AI algorithm team. Take hyperspectral water quality monitor and gas-cloud imaging gas detection explosion-proof

camera as examples:

     Hyperspectral water quality monitor: To meet the needs of water resources protection, river and lake

shoreline management and protection, water pollution prevention, water environment governance, water ecological

restoration, law enforcement supervision and other demands, Hikvision’s hardware products and AI algorithm team

has developed a hyperspectral water quality monitor, breaking through the limitations of traditional water quality

monitoring methods. This device retrieves the water quality information with the hyperspectral technology,

including chlorophyll a, total nitrogen, total phosphorus, transparency, COD, turbidity, suspended solids, ammonia


                                                                                                                   16
                                                                                     Hikvision 2020 Annual Report

nitrogen, etc. To adapt to various application scenarios, the team has created an array of product forms including

single-point hyperspectral water quality monitor (for water quality detection in urban/rural rivers, water conservancy

rivers, and natural lakes), and airborne hyperspectral water quality monitor (for urban/rural river basins, lakes,

pollutant discharge monitoring, agriculture and forestry, plant protection, etc.).

     Gas-cloud imaging gas detection explosion-proof camera: To meet the gas detection demands of oil and

gas field exploration, petroleum refining, natural gas pipeline transportation, environmental law enforcement and

other scenarios where hazardous gas leakage may occur, Hikvision’s hardware product and AI algorithm team,

going beyond the restrictions of traditional gas monitoring methods, gives play to the unique spectral imaging

technology and detection algorithms to monitor, identify and quantitatively analyze leaking gas in real time,

realizing real-time detection and early warning of dozens of flammable and explosive hydrocarbons such as methane

and ethylene in a highly efficient, long-distance, wide-range, dynamic and intuitive manner.




Hardware Capabilities Drives Software Development

     Leveraging Hikvision’s strong hardware research and development capabilities, the hardware team is

committed to introduce new hardware devices. The software team, through in-depth communication with the

hardware team, keeps abreast of the latest developments in hardware products, and rolls out new application

software R&D in a timely manner to maximize the functions of hardware equipment and reflect the application

value of the equipment. Take specific route video relay software, traffic projection and intelligent analysis software

as examples:

     Specific route video relay software: The intelligent tracking PTZ dome camera designed by Hikvision

supports functions of automatic target recognition and target positioning of vehicles. To fully give play to the

                                                                                                                   17
                                                                                     Hikvision 2020 Annual Report

functions of this equipment, Hikvision’s software team has created a specific route video relay software, which uses

multiple intelligent tracking PTZ dome cameras to track cross-border vehicle targets, and is applied in the full

seamless video relay of hazardous chemical vehicles and other scenarios.

     Traffic projection and intelligent analysis software: The Radar-Assisted Camera developed by Hikvision

combines the strengths of video and radar in perception methods and information perception in a profound way; the

high-precision monitoring capabilities of millimeter-wave radar makes harsh environment no more a trouble, and

the full-structured analysis capabilities unique to video, covering license plates, models, and car logos, body color

recognition, etc., realizes functions such as accurate movement description and behavior analysis of motor vehicles

and non-motor vehicles on the road. To double the might of the equipment, the Hikvision industrial team has

developed the traffic projection and intelligent analysis software. Working together the comprehensive intelligent

collection capabilities of the radar-assisted camera, it can reproduce the real-time road traffic movement, and

accurately depicts the entry and exit of a single vehicle at the intersection, collect precise traffic parameters and

timely detect traffic incidents such as intersection and road section congestion, continuous lane changes to assist in

the diagnosis of intersection traffic operation, and support traffic signal control, comprehensive evaluation of road

safety, and optimization of traffic scheduling.




2.2 Cloud-Edge Fusion: Perception Fusion Empowering Platform


2.2.1 Perception Fusion Empowering Platform: Realizes Intelligent Fusion and Utilization of Front and Back

Ends


     Aiming at “co-construction of locations, resource sharing, algorithm co-management, computing power

integration, and service sharing”, Hikvision’s perception fusion empowering platform is geared towards the fusion


                                                                                                                   18
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and utilization of industrial or urban IoT perception resources. As for perception resource construction, it supports

access networking, lean management and planning and deployment of front-end devices to realize “co-construction

of locations”. For perception resource utilization, the label association, fast retrieval, and on-demand access of

perception data are readily available for “resource sharing”. In terms of algorithm management, the open training,

unified management, and flexible programming of intelligent algorithms together make “algorithm co-management”

possible. In the aspect of intelligent computing power integration, the platform supports the unified management,

load monitoring and reasonable scheduling of computing power resources to achieve “computing power integration”.

Lastly, in terms of intelligent analysis service, there are directory publishing, business application and service

configuration of intelligent services for “service sharing”.

     Hikvision’s perception fusion empowering platform provides competence center, application center,

programming center, investigation and judgment center, operation center, and management center. The competence

center provides the classification and search services of perception resources, and releases intelligent service

capabilities; the application center serves for the application and review management of perception resources and

intelligent analysis services; the programming center is for scene tag management, scene configuration, and

intelligent analysis algorithm programming for the perception resources of the IoT; the investigation and judgment

center features functions such as automatic push of intelligent analysis events, manual investigation and judgment,

event statistics and retrieval; the operation center offers intelligent service applications, intelligent service task

monitoring, execution statistics, regular operation reports and other functions to business managing personnel; the

management center is characterized by management functions covering background resource management

scheduling platform, IoT resources and algorithm resources for technical operation and maintenance personnel.




                                                                                                                   19
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2.2.2 AI Open Platform: Makes Front-End Intelligent and Definable


     Intelligent industry algorithms available in large number is the premise for the perception fusion empowering

platform to function. Based on existing mature algorithms, it is necessary to provide more algorithm customization

services matching with users’ actual application scenarios. Hikvision’s AI open platform, as a one-stop algorithm

training platform for fragmented industry application scenarios, is capable of training perception algorithms based

on small sample data.

     Easy to operate, the AI open platform can generate intelligent algorithms through sample data collection, online

data labeling, and online algorithm training, and deploy the algorithms to front-end and back-end equipment.

Supporting two training modes: public cloud and private cloud, this platform currently has more than 2,000

registered users with over 15,000 intelligent algorithms trained for users in 2020 alone in addition to algorithm

training services offered by Hikvision to its own users.




2.2.3 Algorithm Database: Provides a Basis for Algorithm Reuse


     Hikvision’s algorithm database manages algorithms of different vendors, different functions, and different

forms in a unified way, providing a basis for the reuse of intelligent algorithms.

     Formulating a complete algorithm description specification, Hikvision’s algorithm database can describe and

manage the name, type, function, technical parameters, application scenarios, operating environment and other

characteristics of the algorithm, so as to provide the appropriate technical environment or scheduling parameters to

deploy, arrange, and manage algorithms, and work together with the resource management scheduling platform to



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realize the unified management of intelligent algorithms and on-demand scheduling.


2.3 Fusion of IoT and Information Network: Data Resource Platform Comes into Play in Multiple Industries


     Hikvision’s iDatafusion platform has been applied and promoted in various fields such as public safety, traffic

management, bus scheduling, water conservancy and water affairs, natural resources, financial anti-fraud, and

campus management. Through the fusion, management, mining and service of perception data and business data, it

provides users with data models and applications, and meets users’ business application needs.


2.3.1 iDatafusion Platform: Brings Out a Complete Product System


     Hikvision’s iDatafusion platform provides users with data integration, data processing, data analysis, data

sharing, data services, and model repository capabilities.




 The data resource platform provides data integration tools such as data integration workbench, general data

collector, data exploration, data definition and data simulation, etc., data processing tools such as data development

workbench, data desensitization and quality inspection, etc., data analysis tools such as BI (Business Intelligence)

visual analysis, data mining engines, knowledge graphs, data cubes, and space-time engines, etc., data sharing tools

such as API (Application Programming Interface) gateways, data cascades, etc., and data service capabilities such

as data catalogs, IoT catalogs, API catalogs, data subscriptions, data exchanges, etc. Among them, data mining

engines and knowledge graphs together constitute the intelligent cognitive open capabilities based on the AI open

platform, and the data analysis operators and data models formed thereby can be further utilized by other analysis


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tools such as the data cubes.

     To effectively improve the quality of IoT data, Hikvision advocates IoT data management from the source, and

provides comprehensive management applications for IoT elements, offering a series of management tools such as

equipment management, space calibration, and transportation unit management; to better serve industries, we also

provide a series of optional data service product add-ons packages such as perception data service, multi-

dimensional data fusion service, general application data service, industry application data service, etc., to elevate

the efficiency of application development based on the data resource platform.


2.3.2 Model Repository: Provides a Basis for Model Reuse


     With models as the granularity, Hikvision’s model repository provides unified data model deliverables

description specifications to manage the process or task of data tools such as data integration workbench, data

development workbench, data mining engines, data cubes, BI visualization analysis, and API gateways associated

with models. Possessing such capabilities as model release, version management, information inquiry, statistical

analysis, and integrated deployment to serve all 3rd parties developing models based on tools of the iDatafsion

platform, this repository can facilitate model reuse between various projects.

     The final deliverable of the data model can be the dataset, API service, or BI visualization chart that supports

the application. A data model can be used for multiple applications, and an application can rely on the support of

multiple data models.

     The model repository functions as a foundation for the reuse of data models in multiple application sites.




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2.4 Big Data-intelligence Fusion: Intelligent Application Open Platform Empowers Industries


2.4.1 Intelligent Application Open Platform: Support Universal Intelligent Application Scenarios


     Hikvision has set up the intelligent application open platform for edge node applications, edge domain

applications, cloud center applications, and Internet operation applications respectively, to support universal

intelligent application scenarios.

     Edge node Hikvision Embedded Open Platform (HEOP): Consists of three parts: development environment,

open content, and standard specifications. Therein, the development environment, with standardized tool chains and

development tools (model toolsets, packaging tools), as well as containerized deployment methods, makes one-click

deployment of development environments possible for cooperating vendors. The open content, through the

abstraction of software functions, provides a unified external capability interface to avoid differences between

products; and through the abstraction of hardware, realizes on-demand use of hardware resources to prevent resource

preemption between different apps. Standard specifications, with a series of related standard specifications such as

open interface specifications, architecture execution specifications, test design specifications, etc., to ensure the

consistency of cross-device and cross-platform implementation.




     HEOP features a device-level open platform that supports application decoupling development. Developers

can develop apps independent of intelligent devices to achieve two-way decoupling of product hardware

development and software feature development, thus promoting product development flexibility, shortening product


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development cycles, and improving product development efficiency. For the time being, it has gathered multiple

apps that have been applied to corresponding products; based on its basic capabilities, including audio and video

processing capabilities, deep learning reasoning, etc., partners can develop their own apps leveraging device

resources and open capability interfaces to meet the demands of different scenarios, such as dangerous goods

identification, electric bicycle identification, etc. Partners can also publish their apps on the Hikvision App Store

for promotion and sales; flexible deployment between devices is easy to achieve. No matter whether they are

developed by Hikvision or by a partner manufacturer, they can be directly used across products through a simple

secondary compilation and packaging, to achieve one-time development, multi-machine sharing, and high R&D

efficiency.

     Edge domain intelligent application platform (Hikvision iSee): Provides a development framework for edge

domain intelligent applications, and general service capabilities that can be integrated into this framework, including

video live view and playback, access control, video intercom, elevator control and other connected perception

capabilities and video intelligent analysis functions, in addition to a number of optional common functional

components. Developers can further develop dedicated components that meet specific application requirements on

this basis.

     Cloud center intelligent application platform (Hikvision iFar): Provides a development framework for

cloud center intelligent applications, and general service capabilities that can be integrated into this framework,

including comprehensive data intelligence application support capabilities such as IoT perception, intelligent

analysis, and big data analysis. Developers can further develop dedicated components that meet specific application

requirements on this basis.

     Internet operation application open platform (Hikvision Infocloud): Based on EZVIZ cloud, provides

business operation service support capabilities for cities and industries, and a public Internet underlying platform

(supporting the access and management of hundreds of millions of devices) and Internet-based high-concurrency

business services for industry users. The tenant platform integrates shared service units such as resource services

and user services for the rapid up integration by business platform; the operating platform mainly delivers product

services, project services, etc., for operators to manage products and projects; intelligent services support people-

vehicle identification, OCR text recognition, intelligent voice recognition, AI training service, data annotation,

intelligent application engine, etc. At present, it has achieved online business operations of 14 public service areas,

including community operation service cloud platform, rental house management cloud platform, environmental,

food and drug enterprise information collection cloud platform, small and micro enterprise safety production

                                                                                                                    24
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supervision platform, and waste classification intelligent management cloud platform, municipal IoT platform,

temperature measurement data cloud platform, video integrated operation platform, intelligent voice cloud platform,

fire protection operation cloud platform, vehicle security management cloud platform, Internet cloud court trial

platform, smart parking operation cloud platform, etc.


2.4.2 Component Database: Provides a Basis for Software Reuse


     Hikvision’s unified software technology system supports the “architecture + component” development model.

And our component database has gathered over 2,300 components of various types for four development

architectures.

     Hikvision’s component database manages the component development of internal software development teams

around the world in a unified manner to avoid repeated component development plans, and combine and divide

components with repeated functions, thereby reducing development and maintenance costs.

     The Hikvision component database, as an alternative source for software function reuse, offers a large number

of common functional components which support multiple development frameworks at the same time. Developers

can further develop dedicated components that meet specific application requirements on this basis, and use the

tools provided by Hikvision’s unified technology system to package, deploy and manage components. The software

development process based on Hikvision’s unified software technology system can be boiled down to “selecting

architecture + selecting components + configuring components + developing new components + integration”,

thereby improving the consistency and compatibility of the software released by us while ensuring high software

quality.


2.5 Ecological Empowerment: Forms an All-round Open Ecological Empowerment System


2.5.1 Open System: Open Equipment + Open Platform + Open Data + Open Application


     Hikvision offers comprehensive open capabilities spanning equipment, platforms, data, and applications to

industry application developers in all aspects.

     Hikvision intelligent application open platform provides four development frameworks, more than 1,000 open

interfaces, more than 730 common components, and nearly 200 software platform products including basic software,

general software, and industry software.

     Our integrated operation and maintenance service platform offers equipment probes for the access of third-

                                                                                                                25
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party sensing devices, operation and maintenance data interfaces for data output and report output of operation and

maintenance data; and the partner operation and maintenance team management and cascading assessment function

for various teams to deliver operation and maintenance services based on the same platform.

     Hikvision’s IoT-information integrated data resource platform supports the access of third-party data storage

management systems or data formats in addition to mainstream data access; the IoT data management tools provided

is capable of managing elements of various types of IoT devices from multiple vendors while evaluating location

deployment; and data service interfaces support the development of business applications.

     Hikvision provides more than 80 related standards and specifications including overall technical specifications,

general technical specifications, software interface specifications, IoT perception technical specifications,

intelligent algorithm technical specifications, big data management and service specifications, technical

management specifications, etc., to ensure the seamless integration between ecological partners’ technical

achievements and Hikvision’s software and hardware products.


2.5.2 Empowerment System: System Operation and Maintenance +Algorithm Training + Data Engineering

+ Application Development


     To support more partners to deliver application values for users based on Hikvision’s open system, Hikvision,

based in Hangzhou has established a training and certification system, three software R&D centers in the northeast,

northwest and southwest, the offline training empowerment mechanism of 19 provincial-level software R&D

departments, as well as an online training mechanism offering over 280 courses.

     The training empowerment system, oriented to system operation and maintenance, algorithm training, data

engineering and application development, issues certifications of associates, professionals and experts based on the

Hikvision training and certification system and the training content and evaluation system.




                                                                                                                  26
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3. Software and Hardware Products


3.1 Hardware Product Family: Edge Node Comprehensive Perception + Edge Domain Scenario Intelligence

+ Central Intelligent Storage and Computing


     Hikvision, centering on intelligent perception, has further integrated its technological expertise accumulated

over the years and reinforced its basic technical capabilities, developing an open platform for embedded devices,

and creating an efficient and steady product development system that is safe and reliable. While enhancing its overall

competitiveness, Hikvision has created a series of star intelligent products such as “DarkFighter X” and “ColorVu ”

camera series, “DeepinMind” NVR, and “MinMoe” smart access control products, which are applied widely by

government agencies, enterprises, and the consumer market.

     In Hikvision’s hardware product family, edge node products focus on comprehensive intelligent perception,

edge domain products on realizing scenario-based intelligence, and cloud center products on intelligent computing

and streaming storage.


3.1.1 Edge Node Products: Comprehensive Intelligent Perception


1) Front-End Products

     With continuous investment into video images, intelligent algorithms, optical lenses, hardware structures,

software architectures, cyber security, and other technologies, Hikvision has put forward the philosophy of ultra-

clarity and full-color, panoramic details, multi-dimensional perception, scenario definition, and universal

intelligence to further improve cameras’ all-weather all-scenario perception, all-element extraction, and all-data

association capabilities.

     Ultra-clarity and full-color: With in-depth research of Darkfighter, ColorVu technologies and adaptation of

large aperture, ultra-depth-of-field lens, super photosensitive sensor, multi-spectral fusion architecture, 3D Color

augmented engine and AI image augmented technology, Hikvision has managed to achieve accurate color

reproduction, high dynamic and clear imaging and adaptation to complicated scenes, and developed a ultra-clear

full-color product matrix featuring 4K ColorVu and Darkfighter series, to improve data quality from the image

source, obtain richer detailed features, and present more true color night vision.




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     Panoramic details: We’ve comprehensively expanded the PanoVu product series. With multi-camera videoing,

dynamic and static details, the long and short views, and panoramic details, we can meet the needs of capturing

multiple targets and elements, and conducting multi-business analysis under the same scenario, while presenting

both the overall vision and the details and rendering the view broad and clear.




     Multi-dimensional perception: Based on video perception, combined with multi-dimensional sensing

technology, we’ve gained the multi-dimensional data perception, accurate target capturing capabilities with time-

space correlation, IoT sensing, and information fusion, thus being able to build a bridge between the physical world

and the digital world, and create a more accurate, more comprehensive, and richer IoT sensing system.


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     Scenario definition: The scenario defining cameras, with scenario-based hardware structure, intelligent

definition of software, and intelligent operation and maintenance, can meet the business needs under various

environments and conditions, with the strengths of professional adaptation, rapid deployment, and easy maintenance.




     Universal intelligence: Based on scenario-based application demands and driven by business, we’ve created

an intelligent product system oriented to all fields with product tiers and intelligent grading, to provide intelligent

services in all walks of life including public safety, emergency command, people’s livelihood, urban operation,

traffic management, cultural tourism, education, and medical care and enable industry digital transformation and

intelligent applications.




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2) Intelligent Transportation and Portable Law Enforcement Products

     Intelligent transportation products: Centering on the concept of “improving traffic order, alleviating traffic

congestion, preventing traffic accidents, improving traffic safety, and facilitating transportation and travel”, we’ve

put emphasis on scenario-based business adaptation, and innovated technologies to support new business models.

The environmental protection series products are fully upgraded to continuously tackle the problem of light

pollution; the radar-assisted series cameras with deep integration of multi-dimensional perception have realized all-

weather, multi-scenario, high-precision information detection, and innovatively introduced a complete closed-loop

system for the management of traffic congestion in urban cities, which covers diagnosis, simulation, operation,

evaluation, and adjustment, breaking through the technical limitations of single-dimensional perception, and with

supporting intelligent management and control system, and “weight balanced” adaptive control algorithm. At the

same time, perception products born in technological wave of video-radar multi-dimensional integration have

achieved business upgrades in urban roads, level crossings, curves, highways, ports and airports, industrial parks

and other scenarios, while integrating multi-dimensional perception data, and expanding to new business fields, to

create a benign ecology with the concept of “visible, knowable, intelligent and open”.




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     Static transportation products: For business involving entrances and exits, parking lots and roadside parking,

we’ve launched a new generation of parking products represented by the “Guardian” series through the

intensification, intelligence and informationization of the parking system, to optimize product portfolio and improve

parking operation and management level and efficiency; combining videoing and multi-dimensional perception

technologies, we’ve offered application for the sub-scenarios of parking management, and further researched the

urban roadside parking management business, to help solve the parking problem in urban areas, and facilitate

smooth transportation.

     Portable law enforcement products: With technological innovation, gyroscope motion sensing and PTZ

correction algorithm, we’ve introduced a mechanical anti-vibration law enforcement recorder, to effectively solve

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the industry pain point of law enforcement officers brought by motion blurring. In 2020, Hikvision was selected by

the police equipment procurement center of the Ministry of Public Security. With the integrated portable law

enforcement platform, we’ve realized the front-end and back-end integration, and the fusion of the business side, to

provide more complete portable law enforcement programs for public security, traffic police, urban management,

taxation, food and drug supervision, fire protection and other sectors.

3) Access Control and Intercom Products

     Hikvision has been investing in audio and video interaction, intelligent applications, multi-dimensional

perception, electromechanical control, and other technologies to improve user experience unremittingly. Based on

“MinMoe”, we’ve enhanced the competitiveness of access control products, realized the integration of multi-modal

detection and recognition technologies, built an open hardware ecosystem with intelligent hardware and HEOP

architecture as the core to provide customers with convenient and fast customized solutions. Further optimizing the

audio effects of video intercom products, we’ve delivered full-color visualization in low light, avoided light

pollution, enhanced users’ real-time interactive audio-visual experience, strengthened our competitiveness of

building intercom, and opened up prisons, medical intercoms, and other business fields to develop a unified video

intercom program. Comprehensively upgrading the control technology and manufacturing process of turnstile,

we’ve launched the new generation of intelligent, safe and stable products, covering buildings, transportation, scenic

spots, campuses and other scenarios. Access control, intercom and turnstile products, combined with industry

applications, have formed a comprehensive solution to access control and attendance, visitor elevator control,

building intercom, medical intercom, public address (PA), turnstile, smart storage and other application scenarios,

with rapid development in the domestic and foreign markets.




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4)Alarm Products

     Hikvision has been increasing investment in core technologies such as radio frequency, detection optics, multi-

dimensional perception, situational perception, and intelligent analysis to improve the comprehensive technical

competitiveness of products, aggressively drive cloud alarm/cloud operation business models based on Hik-Pro

Connect/ Hik-Connect, and create value for customers as always. Deeply engaged in the field of intrusion alarm

products with continued innovation, Hikvision has brought forth the second generation of wireless intrusion alarm

products, and made significant progress in overseas distribution markets and major customer markets. Iterating and

extending the perimeter alarm field, and paying close attention to the actual needs of projects and customers, we’ve

introduced the new generation of vibrating optical fibers and other product series to facilitate industry breakthroughs.

As for public alarm, we have worked closely with the industry to accurately understand customer needs and

launched a series of situational perceptional radar products, which have been widely adopted in key projects such

as border control and the Yangtze River fishing ban.




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3.1.2 Edge Domain Products: Fragmented Scenario Intelligence


     As for intelligent storage and computing application equipment in the edge domain, Hikvision has strengthened

the diversification of hardware platforms, further deepened AI application, improved product capabilities, enhanced

system opening to serve the intelligent and digital transformation of industries and meet fragmented AI demands.




1) Multifunctional Integrated Intelligent Equipment

     Intelligent storage and computing equipment for fragmented scenarios-Hikvision DeepinMind NVR:

With the digital development trend, edge storage and computing application equipment plays a key role in the

circulation of digital information, realizing the aggregation, storage, analysis or secondary analysis, localized

application of various perception data at the node end and uploading key data to centers. Hikvision’s DeepinMind

NVR series products have won honors such as “Top 10 Innovative Security Products” and “Special Award for

Innovative Products at CPSE”, etc. With years of development, the products have achieved more excellences. While

vigorously developing general intelligent applications, Hikvision has also been working with ecological partners to

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deeply explore industry business applications, launching the AI open platform DeepinMind and HEOP open

DeepinMind, etc., and has completed more than 100 industry-specific algorithm model trainings and applications.

Serving industries such as smart education, smart communities, smart buildings, smart enterprises, smart agriculture,

smart energy, smart logistics, etc., we’ve been dedicated to promoting efficiency with intelligence, driving industrial

upgrading and transformation, and maximizing social benefits

     Intelligent system application equipment for small and medium-sized edge scenarios-Intelligent Fusion

Server: For small centralized intelligent application scenarios such as streets, communities, police stations,

enterprises, schools, etc., we provide Intelligent Fusion Servers that integrate a variety of intelligent video analysis

algorithms, such as the Intelligent Fusion Server with dozens of city management algorithms, the AI toolbox to

improve business efficiency, the AI container that brings together intelligence, big data, and application platforms,

etc. Drawing on our AI intelligence and big data analysis capabilities, and IoT perception and various scenario data,

we’ve been trying to improve the ability and efficiency of fragmented scenario management to facilitate the elastic

expansion of the platform in business.

     Integrated Self-service Terminal: Featuring “government service, convenience service, and information

disclosure”, this machine offers such functions as information inquiry, self-service certificate application, certificate

printing, etc. It has access to various data in the Internet and business information networks to meet actual needs,

and is equipped with a variety of software functions, to support various self-service processing of public security,

social security, taxation, industry and commerce, real-name authentication with intelligent analysis, quick inquiry,

OCR data input, and multiple interactive methods such as touch-screen, voice intercom, etc., to facilitate handling

and improve user experience and efficiency. The integrated self-service terminal, interconnected online and offline,

can be widely deployed in communities, enterprises and other places to reduce urban operating costs and contribute

to the building of smart cities.




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     Interactive Tablets: We have developed a full-process solution incorporating conference tablets, conference

room door tablet, video conferences, and conference management systems. The pre-conference online reservations,

material sharing, meeting notifications, self-service sign-in, conference room door tablet information

synchronization, in-conference wireless projection, whiteboard writing, interaction and collaboration, and

generation of voice minutes, the post-conference centralized management and control of equipment, statistical

analysis of data, and sharing of meeting minutes provide users with a safe, intelligent and efficient meeting

experience. As for conference tablet hardware, Hikvision has developed new series of products with ingenuity and

persistency. The product adopts a unique penetrating arc pen slot for its look to bring out the sense of business,

which is matched with the high-quality anodized surface inferior by no means to notebook computer in touch. The

zero-fit technology makes handwriting no more necessary and display ghosting no more the case. The newly

upgraded writing pen now is characterized by the pen-lifting sensor function, bringing users more conveniences.

The fresh new Vision OS 2.0 interactive system, adopted for interaction, redefines the interactive information

architecture and functional layout of the conference tablet, and the system UI is fully upgraded to deliver the ultimate

tablet interactive experience.




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2) Intelligent Video Transmission

     In 2020, Hikvision had focused on the operation and maintenance of the IoT system and network system, and

released the intelligent video transmission system V1.0. This system combines the operation and maintenance of

the IoT system and the network system into one through “topological visibility, unified management, and intelligent

operation and maintenance”, thus reducing the requirements for the ability of operation and maintenance personnel,

and improving the efficiency to discover, analyze, and pinpoint hardware problems, with the scale of the unified

management capability reaching 5000 video channels.




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3.1.3 Cloud Center Products: General and Intelligent Storage and Computing


     Hikvision provides general computing, intelligent computing, general storage, streaming storage, and large-

screen display products to empower the building of data center.




1) General Computing

     Hikvision’s general server is a high-performance, high-reliable, and high-expandable general-purpose

computing product built by Hikvision drawing on 20 years of technological expertise and over 10 years of server

research and development experience and taking fully into consideration of the core demands of users in various

industries. Supporting X86 and ARM architectures and compatible with domestic CPUs, it is highly reliable, safe,

and ecologically versatile, and can provide a sturdy and reliable infrastructure for the construction of data center

computing resources.



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     Hikvision’s general server product series can meet the demands of large and medium-sized enterprises in

informationization, virtualization, industry data analysis and high-load applications. They are also the ideal choice

for the industry data centers of government, Internet, energy, operators, finance and other sectors with demanding

requirements on server performance, scalability and reliability as well as remote enterprise information

environments.

2) Intelligent Computing

     Embracing the video big data era, we need a solution to decouple video intelligent analysis and business. The

lower layer will undertake the intelligent analysis of massive videos, and the upper layer the analysis and processing

of big data and user business applications. Hikvision’s intelligent server, equipped with a general GPU hardware

platform which can meet various business needs, can also incorporate rapidly the cost-effective domestic GPU

hardware platform, which is of stronger market competitiveness and is suitable for various visual in-depth analysis

applications. Integrating server resources and intelligent analysis algorithms, and adopting cutting-edge

technologies such as multiple video intelligent analysis algorithms, clusters, and big data retrieval, it serves as a

strong foundation for video big data processing in smart cities.

     Hikvision’s intelligent analysis server has realized full analysis of multi-dimensional data such as audiovisual

data and IoT for city-level and various industry big data applications and governance business; intelligent analysis

products, acquiring gradually the independent learning ability, will improve the adaptability to scenarios remarkably

to meet user business needs; we’ve released a new AI engine, which is compatible with mainstream computing

platforms, and with further improved standardization and openness; with the commercialization of hundreds of

algorithms, we can facilitate intelligent applications in more business scenarios, and contribute to urban digital

construction and governance continuously.

3) General Storage

     Hikvision’s general storage equipment is a professional system-level storage product designed for IT data

centers and IoT applications. It boasts networking modes such as SAN, NAS, and object storage to offer block

storage, file storage, and object storage capabilities. Supporting core data protection functions such as RAID,

snapshot, WORM, data synchronization, mirror backup, etc., it is widely used in database system DB, office system

OA, enterprise information system ERP and production system’s disaster recovery backup system.




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4) Streaming Storage

   The streaming storage is embedded with the advanced streaming file system HVFS (Hikvision Video File

System). In addition to VRAID (Video RAID-Redundant Arrays Of Independent Disks) data protection technology,

it also incorporates intelligent algorithms for business data load to ensure that the system is of higher intelligence,

flexibility and data security. This product series adopts the mode combining streaming data structure and object

technology to offer more convenient and efficient data reading and writing services.

     Hikvision, enhancing its streaming storage technology and brand building in professional video storage, has

maintained its leading position in the video storage sector, toughened its multi-dimensional intelligence, data,

application and storage integration capabilities, accelerated the steps of industry digitalization and application of

industry innovations, and achieved groundbreaking technological progresses and mass production of products in

public security, transportation, finance, education, real estate, petroleum, power and other industries. Relying on the

technological strengths gained over the years in direct storage and intelligent integration, we’ve enriched the IT

information product family and related solutions in return.

5) Large-screen Display

     Hikvision’s display products, with video processing technology, image restoration technology, and image

augmentation technology as the core, are widely applied in monitoring centers and command centers. At cloud

centers, Hikvision’s high-resolution visualization solution has been widely adopted. This solution is based on ultra-

high-resolution display technology and intelligent interactive technology, and provides a display carrier for cloud

center big data applications. Valuing quality and display effect, Hikvision makes efforts to offer better color

consistency and higher definition resolution, releasing Mini LED, mirror series LCD products and other display

products. In the fields of special display and commercial display, we have further expanded application scenarios

and offered quality and cost-effectiveness display products and display solutions.


3.2 Software Product Family: Software Platform + Intelligent Algorithm + Data Model + Business Service


     Hikvision’s software product family is composed of software platform, intelligent algorithm, data model and

business service.




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3.2.1 Software Platform: Basic Platform + General Platform + Industry Platform


       Basic software platform: Represented by “two pools, three databases, one screen, seven platforms and one

environment”. “Two pools” refer to computing storage resource pool and data resource pool for edge cloud and

central cloud computing platform, cloud storage platform, and big data fundamental platform; “three databases”

refer to component database, algorithm database, and model repository, respectively supporting management and

reuse of components, algorithms and models; “one screen” refers to large-screen visual application development

tools, which support the configuration of visual applications and the association with data without coding; “seven

platforms” refer to resource management scheduling platform, intelligent perception networking platform, AI open

platform, perception fusion empowering platform, iDatafusion platform, intelligent application open platform,

integrated operation and maintenance service platform, providing intelligent application scenarios with storage and

computing resource scheduling and equipment network access, intelligent algorithm training, intelligent service

publishing, data aggregation management, intelligent application development, integrated operation and

maintenance service capabilities; “one environment” refers to the four-dimensional space operation environment,

that is, the virtual space-time operation environment instead of the physical world, supporting the storage,

correlation and analysis of perception resources and data resources in the same space-time environment.

       General software platform: Provides general software functions across industries, including general security

and protection, visual command, alarm management, inspection supervision, conference interaction, content release,

etc. The general software platform of visual command, as an example, includes AR scene tag platform, AR

virtualization platform, AR command platform, VR panoramic application platform, integrated communication

application platform, portable law enforcement integrated management platform, etc.

       Industry software platform: Hikvision, serving over 70 sub-industries, has gradually built more than 100

application software platforms for various industries. Taking the traffic police industry as an example, we provide

the traffic violation management platform, the comprehensive traffic management and control platform, the urban

traffic situation analysis and judgment platform, the traffic accident investigation and judgment platform, the law

enforcement comprehensive management platform, and the highway traffic safety monitoring and management

platform, the smart check station application platform, the intelligent driving management video inspection platform,

etc.




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3.2.2 Intelligent Algorithms: General Algorithms + Industry-specific Algorithms


       Offering services to all walks of life, Hikvision has accumulated a large number of video artificial intelligence

analysis algorithms which can be divided into general algorithms and industry-specific algorithms.

       General algorithms: algorithms that can be used for the development of intelligent applications in multiple

industries. For example, the algorithms to detect and classify transportation equipment, motor vehicles and non-

motor vehicles, and the algorithm to detect traffic flow of people and vehicles, etc.

       Industry-specific algorithms: algorithms developed for industry application demands. For example,

algorithms for the detection of exposed garbage, packaged garbage, misplacement of kitchen trash bins, road

uncleanness, road ponding, road damages, road leftovers, abnormal sidewalk piles, anti-collision bucket damages,

transformer box abnormalities, non-decorative tree hangings, billboard damages, tree protection facility damages,

incineration of garbage leaves, illegal parking of non-motor vehicles, messy materials on construction sites, etc.


3.2.3 Data Model: Industry Business Data Model


       Hikvision provides big data application services for all walks of life based on the big data collection,

management, analysis and service capabilities provided by the iDatafusion platform. In this process, we have

accumulated a batch of industry business data models, which can be managed by the model repository, and can be

replicated and optimized in other similar application scenarios.

       Taking transportation as an example, we provide illegal parking remediation model, urban road traffic

operation evaluation and diagnosis model, urban road traffic tracing analysis model, urban road traffic short-term

prediction model, high-precision real-time online traffic flow simulation model, and changeable lane feature

research and judgment and control model, tidal lane feature research and judgment and control model, time-space

analysis and judgment model for fake-licensed vehicles, racketeering car analysis model, traffic accident address

analysis model based on standard semantic analysis, public transportation OD1 passenger flow analysis model,

highway truck detour analysis model, driving behavior habit label and comprehensive scoring model, driving

behavior safety risk management and control model, and risky section mining model based on active safety data.




1   OD: O means Origin, which refers to the departure location, and D means Destination, which refers to the end of the journey.

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3.2.4 Business Service: System Operation and Maintenance + Data Engineering + Business Operation


     Hikvision, concerned with users’ application demands, explores the transformation from being a product and

system supplier to being a service provider for some business.

     System operation and maintenance services: Hikvision provides system operation and maintenance services

to some industry users. For systems and equipment out of warranty, the operation and maintenance team will offer

professional system operation and maintenance services.

     Data engineering services: Hikvision delivers data engineering services for IoT resource management, and

integration of data collection, management and services.

     Business operation services: Hikvision offers over 10 business operation services based on the Internet

operation platform and its private deployment methods. Among them, urban parking operation services have been

adopted in more than forty cities, and its business scope is expanding rapidly; business operation platforms for fire

protection operation, security check operation, community operation services, and waste classification intelligent

management cloud have also been put into use.


4. Business Organization


     With the evolution of core capabilities and business scope, the business organization model of Hikvision is

being constantly upgraded. In the era of HD and networked videos, Hikvision has identified the business scenarios

in over 40 sub-industries of the seven major industries, i.e., public security, transportation judicature, finance,

culture/education/health, energy and building. In recent years, Hikvision has been sharpening its video-centric

intelligent IoT solutions and big data service capabilities, pushing the industrial applications further forward.

Hikvision initiated business structure reforming in 2018, which divided the domestic business into three business

groups: public business group (PBG), enterprise business group (EBG) and SME business group (SMBG). In the

new business structure, we dig deep into the market demands, coordinate corporate resources and intensify capacity

building in the context of the three business models, and make great efforts in facilitating public service optimization,

driving users’ digital transformation and creating a pan-security industrial Internet, thus injecting vigor and vim into

the business organization.




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4.1 Public Business Group (PBG): Facilitates Public Service Upgradation


4.1.1 Overview


     As smart cities, smart police, smart transportation, smart urban management and other industries and cities-

oriented smart business develop further, the public service sector has entered the stage of “AI universal

empowerment and deepening of data value”. Hikvision, take advantage of the IoT, artificial intelligence, big data

and other technologies, has been endeavored to upgrade its “cloud-edge fusion, IoT-information network fusion,

big data-intelligence fusion” capabilities and expand the product portfolio in terms of “hardware, platforms,

algorithms, models, and services”. With precise marketing moves, we’ve covered the public service sector in

operation and further mined its value, to drive digital transformation for cites and industries, support smart city

operation and management, as well as intelligent business in public safety, urban governance, transportation, natural

resources, ecological and environmental protection, etc.


4.1.2 Core Technologies: Build a Big Data-AI Fusion Base for Smart Cities to Support Industry and City

Intelligence


     Based on the perception platform, data platform and application platform, Hikvision has built a Big Data-AI

Fusion Base for smart cities to provide basic support for the development of various smart city services.




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     Perception platform: Integrates and utilizes various perception resources in industries or cities, fully releases

the value of perception resources, and empowers industries to quickly form visual and intelligent perception

application capabilities. Leverages the existing urban perception resources to expand the application scope of

perception resources horizontally, and vertically enhance the capability of perception resources to support the

business segments, and ultimately boost the integration of perception applications with the functions of commissions,

offices, and bureaus, and establish automated and intelligent early warning and prevention mechanism to provide

intelligent support for government decision-making and command, and render social governance more intelligently.

     Data platform: Provides full life cycle support for the aggregation, management, mining and service of

perception data and government data for industries or cities. Distributes data to users in various sectors through data

catalogs, IoT catalogs, interface catalogs, etc., and realizes data distribution and sharing through subscription push,

sharing and exchange, etc.

     Application platform: For various intelligent application scenarios such as edge node applications, edge

domain applications, cloud center applications, and Internet operation applications ranging from the IoT to business

information networks, provides intelligent application open platforms and common application components for


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various industries to develop intelligent applications.

     Guarantee system: Provides standard specifications, operation and maintenance guarantee and safety

guarantee system to support the operation of intelligent businesses in industries and cities.


4.1.3 Value Fullfillment


     While deepening its understanding of business in public safety, urban governance, transportation, natural

resources, ecological and environmental protection and other fields, Hikvision is committed to design solutions for

various industry scenarios in the public service sector, and offer fundamental big data and artificial intelligence

supports to the construction of smart cities, striving to make cities smarter, the environment safer, services more

targeted, travel more convenient, and the ecology more livable.

1) Smarter Cities

     Hikvision has been researching in depth the evaluation indicator system for smart city construction, and

optimizing the system in light of specific situations of different cities to guide the construction of smart cities.

Adding efficiency indicator to constructive indicators, we’ve committed to making the construction of smart cities

further meet the actual urban management demands and the management goals of governors, and improve citizen

experience and satisfaction.

     Hikvision, relying on the Big Data-AI Fusion Base, has organically combined the capabilities of integrating

city intelligent IoT perception network, perception data and government data, and developing intelligent

applications rapidly, to endow cities with peripheral perception, nerve center and brain decision-making capabilities,

enable precise urban governance and the improvement and optimization of urban governance systems and

governance models fundamentally.

     Hikvision provides integrated communication support capabilities to connect the command links of various

government agencies in peacetime and emergency, and realize coordinated handling of incidents based on

synchronization of situation and analysis.

2) Safer Environment

     Hikvision provides security event monitoring, early warning and security protection capabilities for public

safety, traffic safety, production safety, natural disaster emergency management, etc. to build a safer environment.

     We have worked out industry solutions for public security. The comprehensive application capabilities for


                                                                                                                   46
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public security video images, and the three-dimensional prevention and control system for typical application

scenarios such as street patrol, community security, public security check station control, entertainment venues and

special industry public security control, etc., can enhance users’ security risks early warning, prediction, and

prevention capabilities to effectively carry out operations such as zone-level inspection and control, unit prevention

and control, and element control, and help build a safe and harmonious social environment.

     Our industry solutions for traffic safety provides intelligent detection capability for road traffic violations such

as red-light running, wrong road side, overrun, overspeed, improper hanging of the number plate, deliberate

shielding and defacement of the number plate, inconsistent driving model, disqualified driving, non-motor vehicle

violation, pedestrian violation, dangerous driving habits, etc., and for illegal transportation operations such as

unlawful operation, pick-up outside passenger station, illegal taxi refusal, etc., as well as data applications for real-

time traffic conflict warning, traffic accident root cause analysis, road structural hidden danger analysis, and

investigation and judgment on vehicles with hidden dangers and overloaded vehicles bypassing, to help ensure a

safe transportation environment.

     Hikvision has designed industry solutions for production safety, which is marked by the safety production

monitoring and early warning function for hazardous chemical companies, small and micro enterprises, coal mines,

non-coal mines, tailings ponds, fireworks and firecrackers businesses, etc. and functions for smoke detection, fire

detection, indoor and outdoor recognition of fire protection passage occupancy, tooling compliance detection,

personnel on-the-job and off-job detection, etc. to build a safe and efficient production environment.

     Hikvision’s industry solutions for natural disasters feature functions such as comprehensive monitoring of all

elements of natural disasters, disaster early warning, comprehensive disaster risk assessment, intelligent analysis,

consultation, investigation, and judgment of disaster evolution situation, to build an emergency safety environment

that reduces disaster risks.

3) More Targeted Services

     Hikvision provides capabilities such as intelligent event analysis, IoT status detection, and lean management

applications for city management and comprehensive governance in urban appearance, sanitation, municipal

facilities, environmental hygiene, etc., to render more targeted services.

     The industry solution for city appearance and environmental sanitation management by Hikvision offers

intelligent analysis services for street order, city appearance and environment, publicity and advertising,

construction management, emergencies, etc., and application systems for city appearance management, supervision,


                                                                                                                      47
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command and scheduling, administrative comprehensive law enforcement, and dregs removal supervision, etc. to

promote scientific decision-making in urban management.

     Hikvision’s industry solutions for municipal facility management serves to monitor the state of public facilities

such as manhole covers and trash bins through IoT, and the state of landscaping such as tilting and falling of ancient

trees, and supplies a closed-loop process covering problem collection, dispatching and handling, and feedback

evaluation to form targeted municipal management service capabilities.

     Hikvision delivers the industry solutions for environmental sanitation management, including management

applications for sorted drop, sorted collection, sorted transportation, sorted disposal, to assist the environmental

sanitation department to optimize garbage sorting operation mode, improve garbage sorting operation, and enhance

the lean disposal capacity for city appearance and environmental sanitation.

4) More Convenient Travel

     Hikvision provides support capabilities for smart road network, smart traffic management, smart bus, smart

parking and other urban transportation services to make travel more convenient.

     The industry solution for traffic road networks from Hikvision is appreciated with capabilities of highway

network monitoring, traffic situation analysis, intelligent monitoring of traffic incidents, emergency handling,

integrated overrun and overload punishment, image-based toll inspection, key vehicle control, tunnel safety control,

intelligent maintenance, perimeter prevention along the railways for expressways, national and provincial trunk

lines, railway networks, etc., and of hub security control, hub passenger flow monitoring and channeling, and

external services for railway stations, airports, ports, passenger and freight stations, and comprehensive

transportation hubs, to create “smart road network”.

     As for traffic management, Hikvision provides the industry solution with intelligent signal control capabilities

such as single-location adaptive control based on real-time traffic parameter perception, dynamic/static trunk green

wave control, and regional coordinated control, and professional smart travel service capabilities such as city-level

traffic situation investigation and judgment, intersection problem diagnosis, traffic flow traceability, traffic

simulation, intelligent guidance, vehicle traffic management, real-scene command, key vehicle traffic protection,

green parking, etc., for “smart traffic management”.

     The industry solution provided by Hikvision for urban public transportation is capable of intelligent bus

scheduling, bus capacity monitoring, bus passenger flow analysis, bus stop sign service, taxi emergency scheduling,

subway passenger flow monitoring, subway fast pass, etc. in urban ground public transportation, rail transit, and


                                                                                                                    48
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online ride-hailing, etc., for “smart public transportation”.

     And for urban parking, Hikvision, through its industry solution, aims to create “smart parking”, with

convenient parking fee payment channels for unattended parking lots, automatic detection and recording of the

parking process, integrated urban parking networks, unified management and comprehensive operations, aggregated

parking space data, the urban parking data center that sorts out and integrates data, and the convenient and diverse

services for car owners, such as parking space inquiry, reservation, route navigation, electronic payment, monthly

parking package, and bill inquiry etc.

5) More Livable Ecology

     Hikvision strives to create a more livable ecology by offering intelligent monitoring management and service

capabilities for natural resource monitoring and management, water conservancy and water affairs monitoring and

management, and ecological environment monitoring and management.

     Hikvision provides the industry solution for natural resource monitoring and management. The forest and grass

fire protection intelligent monitoring and management capabilities such as fire risk monitoring, early warning and

positioning, fire alarm investigation and judgment, spread analysis, fire protection command, fire protection

resource management, fire protection supervision, fire file management, etc., the intelligent land supervision

capabilities including land spot management, panoramic inspections, video-based land search, intelligent analysis

and alarm of unlawful buildings, collection of event clues, alarm investigation and judgment, land law enforcement,

etc., the nature reserve monitoring and management capabilities such as animal monitoring, pest control, patrol

management, biodiversity monitoring, etc., and the national park big data service capabilities, for example,

monitoring evaluation, regulatory decision-making analysis, geological disaster monitoring, emergency command,

forest and grass industry services, publicity and education training, together help realize intelligent supervision of

natural resources.

     In terms of monitoring and management of water conservancy and water affairs, Hikvision’s industry solution

features intelligent monitoring capabilities for rivers and lakes such as intelligent analysis of “four dislocations” of

rivers and lakes, river and lake cleaning management, sand mining management, intelligent management of water

shorelines, intelligent supervision of water conservancy projects such as safety supervision of water projects under

construction and intelligent supervision of water engineering safe operation, flood prevention and supervision

capabilities such as water and rain monitoring and early warning, flood scheduling visualization, etc., online visual

management of water plant security management and urban and rural water supply and drainage, and intelligent


                                                                                                                       49
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visualization of water administration law enforcement and water conservancy supervision to make possible

intelligent supervision of water conservancy and water affairs.

     The industry solutions for ecological environment monitoring and management from Hikvision provides

intelligent monitoring capabilities for air pollution such as road smoky vehicle control, open burning supervision,

heavily polluted weather vehicle control, construction site dust control, catering lampblack monitoring, moving

pollution sources on the road, VOCs emissions, etc., enterprise pollution management capabilities for secret sewage

discharge monitoring, secret waste gas discharge monitoring, and pollution source station/building management,

water ecological environment hyperspectral monitoring, solid waste full-process intelligent supervision, and

ecological environment big data analysis capabilities for water environment analysis, atmospheric environment

analysis, pollution source general investigation to realize intelligent ecological environment supervision.


4.2 Enterprise Business Group (EBG): Facilitate Users’ Digital Transformation


4.2.1 Overview


     The digital economy is thriving, and driven by digital and intelligent technologies, industrial reforms are

accelerating. Embracing the wave of digitalization, Hikvision, with business, product and technological innovations,

has been working with partners to create products, solutions and service systems to drive digital transformation, and

is committed to making itself the preferred partner of user scenarios, the major supplier of IoT equipment and

facilities, and an innovative partner for building the digital twin through the integration of IoT and information

network.




                                                                                                                  50
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     Utilizing the AI Cloud architecture and its technological capability in intelligent IoT and IoT-information

network fusion, Hikvision continues doubling down on the digital enterprise solutions that combine traditional

informatization, equipment and facilities IoT and intelligent scenarios IoT. Hikvision has created the

comprehensive-perception product system, where it uses the AI open platform to consolidate its AI engineering

innovation and delivery capability, creates low-code software engines, builds the digital world UI (User Interface)

and intensifies enterprise-level SaaS services. Hikvision focuses on user value and releases the value delivery

methodologies, which have been implemented for the users in numerous industries including coal mining,

metallurgy, commercial real estate, manufacturing, tobacco and liquor, salt, logistics, retail chain and education, etc.


4.2.2 Core Technologies: Drive Enterprises’ Digitalization by Building a Digital Product System for the

Intelligent IoT Industry


     Hikvision focuses on user value, perseveres in innovation of the core technology and provides the users with

the digital enterprise solutions for comprehensive perception, intelligent IoT and IoT-information network fusion.

Create the Digital Product System for the Intelligent IoT Industry

     Hikvision is dedicated to helping enterprises build their infrastructures for comprehensive perception and

intelligent IoT and realizing acute perception of the whole value chain of enterprises covering the supply chain,

production, market and services; through the IoT-information network fusion platform, we gain insights into the

operation and management problems and make improvements, thereby creating a complete digital twin.

     Hikvision has integrated the multi-dimensional sensing technologies that include microwave, infrared rays,

near infrared rays, visible light, X-rays etc. to develop the product series for over 10 industries, such as electric

power, petroleum, petrochemistry, coal mining, metallurgy, tobacco and liquor, salt, logistics and retail, etc. In the

realm of scenario IoT, Hikvision has rendered over 100 types of perception products represented by “AR PanoVu”,

solar-powered cameras, thermal imaging for hot work monitoring, and intelligent door tablet, to facilitate

digitalization based on the scenario elements including environment, personnel and behaviors; In the realm of

equipment and facilities IoT, the innovative products including micro-distance meter-reading camera, high-

temperature highlighting camera, serial number identification system, thermographic temperature measurement

camera, and intelligent IoT server have been introduced into the Industrial Internet, pushing forward digitalization

of production and service processes.

     Hikvision uses the industrial application platforms to enable large-scale equipment access, intelligent IoT and


                                                                                                                     51
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data aggregation and to bolster IoT-information network fusion business applications. We continue products

iteration within the unified software technology architecture, offer software products and business application

components oriented for specific industries and scenarios and have rendered multiple innovative business

applications such as digital platform, financial cash box handover and teaching assistant in instructional interaction.




Intelligent Application Implementation Accelerated by AI Engineering

     Dedicated to exploring and innovating AI technology, Hikvision transforms AI technology from a specialized

privilege to popularized offering and gradually to engineering application, seamlessly integrates AI visual

technology with multidimensional perception, software engine, data intelligence and mechanical automation

technologies and vigorously explores and builds AI engineering capacity, to facilitate rapid adoption of applications

that involves IoT perception and closed loop of corporate business process, mechanical automatic control and

autonomous decision-making, and in-depth data insight and predictive analysis.

     To assist in temperature screening and social distancing, Hikvision has brought together visible light and

thermal imaging temperature-measuring technologies and applied the “MinMoe” temperature screening equipment

extensively in hospitals, parks, factories and other scenarios and adequately meets safety control requirements

through personnel access control and temperature monitoring; in the coal mining industry, Hikvision has offered

the coal mining enterprises the innovative gangue separation system to efficiently identify and accurately sort out

gangue; in the financial industry, Hikvision has created the digital and intelligent risk control solution that is capable

of compliance inspection, credit risk assessment and liquidity risk scrutiny, to help financial institutions improve

their risk perception methods and identify risks efficiently, with accuracy rate increased tens of times compared

with traditional means.




Efficient Delivery of Corporate Digital Application by Low-Code Engine

     Hikvision, leveraging the low-code develop technology, has released the software engine products represented

by inspection engine and attendance engine, which use abstract business models and diverse configuration templates

and visualization templates to reduce the barrier of corporate application development, enable the business

departments of users to participate in application development and enhance corporate application development

efficiency. Drawing on its unified software technology architecture, Hikvision has realized AI collaboration,


                                                                                                                       52
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integrated IoT sensing equipment and IoT data, and provided highly expandable business interfaces to integrate the

corporate information system and introduce the corporate scenario digitalization into the core business process.

     Hikvision has offered the inspection engine intended for the inspection application in various industrial

scenarios. This product supports intensive integration with traditional IoT technologies and AI intelligent perception

technologies, quickly generates customized inspection application and is extensively applied in multiple industrial

scenarios including community property inspection, corporate safety production management and general education

and supervision safety, etc.; Hikvision offers the attendance engine intended for labor-intensive and office-centric

scenarios, which is capable of attendance data collection, attendance management and working hours counting

suitable for all scenarios and renders diverse easy-to-use report forms and boards.




Create UI for the Digital World

     Based on video and AI technology and fusion of multiple types of data from the IoT and information network,

Hikvision has created a new digital world UI and a new interactive experience between the physical world and the

digital world.

     Hikvision provides manufacturing enterprises with AR digital workshop solution, which is based on AR live

video and panoramic image stitching, interlinked with multidimensional perception information and business

system information such as production data, equipment operation data, blanking condition and relevant fault early

warnings, to realize information aggregation and tagged display, help managers detect problems in time, and

improve operation and management efficiency.

     Hikvision provides chemical industry parks with AR safety-environment map solution, which is supported by

the panoramic AR scene tag video and the safety and environment related data of the chemical industry park, to

centrally display the real-time status and changes of the hazard sources, pollution sources, fire-fighting equipment

and key public areas in the field of view; the system is interlinked with the emergency response plan and emergency

resources to realize safety-environment integration, thereby enhancing the overall capability of risk prevention and

control and emergency disposal of the park.

     Hikvision provides tourist attractions with AR scene guide solution, which integrates AR technology and

tourist interaction guide screen and uses multiple AR screens and the tags for tourist flow, buildings and scenic

spots to offer tourists real-time preview of the scenic spots in the scenic area, to improve tourist interaction

experience and enjoyment, and facilitate intelligent marketing of tourist attractions.


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Hikcloud: Enterprise-Level SaaS Service

     The Hikcloud, expanding from retailing to other sectors such as community, education and logistics, provides

chain-type users with digital transformation solutions covering connection, management, intelligence and insight.

     Hikcloud focuses on online IoT equipment, AI engineering and application service configurability, and

maintains sustainable fast growth of user base and connected equipment magnitude. Up to end of 2020, Hikcloud

had provided services to accumulatively over 150,000 retail outlets, 1,600,000 community property owners,

1,300,000 parents of students, 10,000 offices, 450,000 logistics nodes and 2000 developers, and had been connected

to nearly 1,600,000 terminal devices altogether.

     The Hikcloud is constantly improving the developer service platform, where there are now over 2000

developers that use its developer services to provide SaaS applications for specific scenario in their specialized areas

and the average daily interface invocation frequency exceeds 30 million times per day.


4.2.3 Value Fullfilment


     In the digital era, any enterprise would put more emphasis on value-creating business input, in hopes that the

digital technology will increase both quality and efficiency and create greater commercial value. Hikvision

continues its intensive exploration in the industries such as petroleum, petrochemistry, coal mining, metallurgy,

electric power, logistics, retail chain, intelligent manufacturing, education, health care and intelligent finance.

Thanks to its rich experience in successful delivery of digital transformation projects, it has refined its value delivery

methodology, which will accelerate digital transformation of enterprises and help users fulfill their value.




Value Delivery Methodology

     Hikvision puts forward the value delivery methodology, helps users shape their vision of digital transformation,

discerns the value chain of users, integrates digital solutions into the business process and boosts end-to-end

implementation of value-creating business.

     Vision setting: oriented by user value, Hikvision has refined a complete business framework and a solution

capability set and the value system centered on "shortening management distance, improving business efficiency,

regulating operation behaviors and preventing safety risks", to help users set the vision of digital transformation



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defined by ubiquitous perception and intelligent IoT.

     Value matching: based on its investigation and understanding of the industry and the analysis on key activities

of typical user base, we have been deeply engaged in the business scenarios of users, to help users discern their

value chain and clarify their value propositions and enable value matching and value extraction with the solution

capability set.

     Value fulfillment: we implement professional work procedure to facilitate delivery digitalization projects,

fulfill double objectives of implementing value-creating business and gaining user approval and trust, work with

users and help users fulfill their blueprint of digital development.


Build Industry Best Practices Unremittingly

     Underlain by the value delivery methodology and guided by the value principle of “shortening management

distance, improving business efficiency, regulating work behaviors and preventing safety risks”, Hikvision has been

working with the eco-system partners to build industry best practices for digital transformation, and has achieved

remarkable results.




 1)Help Enterprises Shorten Management Distance

     Hikvision adequately utilizes its video-centric IoT perception and connection capability to help enterprise users

and governmental regulatory entities evolve from “on-spot management and decentralized management” to “unified

management and centralized management”, shortening the distance between the managers at all levels and the

                                                                                                                   55
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production scenario, and alleviating management anxiety.

     Integrating IoT and digital technology, Hikvision provides the industrial park 3D digital command module

solution characterized by data-driven design and intelligent service, to help build digital intelligent management

platforms and realize the three-dimensional industrial park protection system that features “networked general

layout, closed partial areas, full monitoring over key entry points and full coverage on key locations”.

     Hikvision uses the “inspection engine” software to realize whole-process digital oilfield inspection and makes

efficient analysis on inspection data and image data to help safety personnel and managers maintain real-time insight

into potential hazard of operating equipment, reduce safety risks and ensure safety of workers.

     Using thermal imaging and multidimensional perception solutions, Hikvision builds the intelligent fishery

supervision system for the fishery administration, to realize full coverage of monitoring over water areas, intelligent

warning for vessels, remote inspection and other intelligent supervision approaches, and to implement the strategic

decision of “ten-year fishing ban on the Changjiang River”.

     Leveraging video AI and IoT sensing technology, Hikvision builds treasury management platforms for banking

institutions, to impose visualized operational management over treasury vehicles, personnel, articles, environment

and compliance and to lay the foundation for capability building for the purpose of comprehensively improving

business management, risk control and appraisal system.




 2)Help Enterprises Improve Business Efficiency

     Bring together AI and intelligent IoT technologies, Hikvision helps enterprises with their automated online

process-based operation and improves business efficiency in sectors such as production, logistics and education.

     Hikvision has intensively applied the intelligent IoT technology in production management of steelmakers,

which has realized asset number automatic identification, automatic counting, automatic inspection on equipment

and remote control over operation, increased the efficiency of steel pipe weighing line by over 10%, improved

operation efficiency and inspection efficiency and improved employee office environment.

     In collaboration with tourist attractions, Hikvision has founded the Intelligent Tourism Institute, which

conducts joint research into AI and big data, facilitates creation of IoT integrated platforms and focuses its efforts

on scenic area safety and tourist service experience. It has rendered a range of innovative solutions including AR

real scene guide, which significantly enhances the service capacity of scenic areas and improves tourist service

quality.


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     Hikvision uses AI open platform to provide commodity identification service to empower intelligent container

retailers and combines visual technology with intelligent hardware to offer the innovative unmanned retailing

solution that integrates intelligent container terminal and operation, which has significantly reduced retailer

operation cost and improved consumer shopping experience.

     Hikvision works with banking institutions to serve new scenarios and new business types and combines cloud

service, AI and remote video technologies to create remote financial modules, extend the service radius, provide

24h financial service and public service, create the bank that is always at the service of people and help banks

transform their customer service models.

     Combining the technologies and products such as audio/video processing, AI, remote visitation equipment and

intelligent interactive screen, Hikvision provides hospitals with intelligent ward solutions, to help hospitals optimize

medical care process and ward order management and improve medical service quality and patient experience.




 3)Help Enterprises Regulate Work Behaviors

     Drawing on AI scenario perception technology and corporate information-based management and employing

the traditional management methods such as human supervision and training, Hikvision efficiently helps establish

standardized management of process-based operation and scenario-based work behaviors.

     Hikvision has built the visualized safety control platform for the State Grid, to enable whole-process

standardized, traceable and intelligent management of operation plan, operation process, safety inspection and safety

information and to strengthen penetration and execution of safety supervision.

     Working with automakers, Hikvision uses intelligent on-board equipment and IoT sensing technology to create

the shuttle bus safety supervision platform, which realizes the intelligent applications such as bus positioning, bus

staff attendance and temperature measuring, to ensure safe travel of buses, help bus management decision analysis

and help creation of Internet of Vehicles.

     Joining hands with cigarette manufacturers, Hikvision vigorously explores industrial tobacco intelligent

manufacture management applications. By using the inspection engine to combine offline inspection of fire-fighting

equipment, online inspection of material assets and AI scenario-based intelligent inspection, Hikvision has reformed

the inspection method and realized complete closed loop covering inspection plan, execution, rectification and

analysis, to offer strong support for regulating work behaviors.

     Hikvision provides intelligent work site solution that uses digital and intelligent technologies in safety,


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environment and quality management of work sites. We have created the work site full view center that enables the

intelligent applications covering waste truck washing in key areas of work site, hoisting machinery testing and air

environment quality monitoring and enhances construction management efficiency.




 4)Help Enterprises Prevent Safety Risks

     Hikvision strives to create the corporate safety protection system that combines four elements--intelligent

management of personnel safety, intelligent monitoring of equipment and facilities, intelligent perception of

environmental safety and intelligent perception of bio-safety.

     Hikvision has provided the power generation safety solution for the China Southern Power Grid, to help the

grid protect work safety and improve quality and efficiency in the new context of grid development. Supported by

video-centric AIoT technology, this solution enables ubiquitous perception of personnel behaviors, equipment

temperature and operating condition and environmental state and provides the intelligent applications such as AR

panoramic view, intelligent patrol and remotely assisted switching operation, to help electric power system evolve

from traditional operation and maintenance to intelligent operation and maintenance.

     Hikvision provides universities, with data governance and application solutions and, centered around business

scenario abstract routine security business process and incident response process, has created a range of business

scenario based template applications and practice-oriented control cabin applications, which has significantly

enhanced the unified coordination and interoperation capability of campus security systems.

     Using innovative video-radar integration technology, Hikvision helps industrial parks realize precise

monitoring over risks in transportation of hazardous chemicals. Focused on monitoring over illegal travel of

hazardous chemicals transportation vehicles, this solution uses radar-assisted monitoring equipment to provide the

industrial park security supervision authorities with warnings on illegal travel of hazardous chemicals transportation

vehicles and facilitate compliance management over such vehicles.

     Offering the security-fire integrated innovative solution, Hikvision works with manufacturing enterprises to

deploy the digital corporate operation and command center and the seamlessly interoperating subsystems covering

three-dimensional control, fire safety network, hot work monitoring, warehouse temperature, electrical fire warning

and plant area inspection and to effectively enhance the ability to perceive and handle safety risks, so as to

accomplish the “security-fire integration” strategy and protect the core assets of manufacturing bases.




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     As the preferred strategy of any enterprise, digital transformation will usher the digital economy into the new

stage of fast growth and accelerate reformation of industrial value chain and generation of new business models and

new business types. Hikvision will always adhere to the concepts of all-round opening, division of work, integration

and win-win cooperation, and actively work with eco-system partners of solutions to push towards flourishing

digital transformation in the areas of products, solutions and service systems.


4.3 SME Business Group (SMBG): Create a Pan-security Industrial Internet


4.3.1Overview


     Driven by the emerging technologies such as AI and IoT, the customer demands of SME market have expanded

from the traditional security protection to all aspects of livelihood and production, forming the pan-security

industrial Internet defined by more expansive market, more abundant terminal products and more diverse

application scenarios.

     The SME market encompasses large number of specialized scenarios such as small and micro businesses, small

and micro industrial parks, shops, factories, residential areas, scenic areas and livestock farms, but due to small

project granularity and high degree of dispersion of users, it is difficult to achieve efficient coverage over the market.

Contractors, service providers and individual business owners are capable of fragmented coverage, but their solution

capability has yet to be enhanced and updated, they have problem conducting standardized business and their

survival and development space is constrained. Distribution partners are faced with complex and constantly iterating

product solutions, great pressure in business learning and high difficulty in operational management, and their

potential in large-scale business expansion has yet to be tapped.

     Working with general practitioners and drawing on the technological elements such as big data and Internet,

Hikvision optimizes the composite channel system, scenario solutions and service capability, integrates industrial

chain resources, helps distributors quick update their understanding, improve management process and expand

business scope, and helps business owners provide efficient services to users, streamline implementation process

and enhance interaction efficiency. Hikvision works hard to create one-stop preferred products and services defined

by omni-channel, whole-process and omni-scenario offering, to meet the demands of all parts of the industrial chain

and to create a pan-security industrial Internet.




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4.3.2 Core Technology: Build Industrial Internet Products Matrix and Help Improve Efficiency and

Experience


     The product matrix of the pan-security industrial Internet created by Hikvision is comprised of two mainline

platforms: Hikvision Interconnectivity and Hikvision SMBG E-commerce. Based on the infrastructure capacity of

Hikvision and the marketing network of partners, an enabling platform is built to adapt to the traditional industrial

structure.




1) Hikvision Interconnectivity

     Oriented for b2C process, this platform helps partners such as contractors and installers operate with high

efficiency and provides users with convenience in equipment usage, contents browsing and demand response.

Hikvision Interconnectivity integrates the capabilities in equipment management, application configuration,

solutions, value-added services and contents purchase guide, to provide SME users with one-stop scenario-specific


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solutions, online interaction, contents marketing and services.

2) Hikvision SMBG E-commerce

     Hikvision SMBG E-commerce: oriented for (F+B)2b process, this platform helps distribution partners link

to practitioners, integrates malls, communities, solutions, contents, services and tools, serves and also enables Tier

1 and 2 distributors, and provides many capabilities such as linking to contents, linking to customers, linking to

employees and operation analysis.

     The two platforms are mutually supportive and spirally driven, to improve omni-channel traffic integration and

eco-system marketing, promote whole-process marketing, increase channel attraction and create the secondary

growth curve.




4.3.3 Value Fullfillment


     Hikvision constantly examines the business demands at all levels of the industrial chain and strives to improve

the professional proficiency over the entire industrial value chain. The whole-chain digitalization of production

terminal, circulation terminal, marketing terminal and usage terminal will immensely enhance the operational

efficiency of the entire industrial chain, empower numerous partners and help meet the pan-security fragmented

demands.

1) Empowers Customers

     Expand mall categories to support digitalization and intelligentization of pan-security and weak current

projects; improve supply chain delivery efficiency, link and enable more channels/installers, and promote whole-

chain digitalization and online equipment installation in the channels; diversify channel customers eco-system,

promote integration of professional abilities, build directly supervised core stores, and enable comprehensive

coverage over market in lower-tier cities; use informatization to provide the contractors and installers with more

contents, tools and marketing support and help them provide better services to users and perform promotion more

efficiently.

2) Serves Users

     Provide more tools and contact points to link users, combine online access points with offline outlets, and


                                                                                                                   61
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provide the integrated whole-process service experience that covers requirements submission, solutions consulting,

survey and design, commodity sale and delivery, after-sale service, operation and maintenance, to enhance user

purchase efficiency; realize the value-added applications such as online operation and maintenance of products,

timely response to after-sale requirements and publicization of latest solutions and functions, to enhance the user-

brand interaction experience; make use of the advantages of intelligent IoT to provide SMB users with the core

solutions such as integrated security protection, intelligent office and store management, enable coverage over all

scenarios in AIoT digitalization and intelligentization, and help SMB users realize online digital operation of various

commercial elements and improve management efficiency.




5.Innovative Businesses


     Hikvision’s continuous efforts in technical reserves and expanding business scope provide a good basis

for innovative business development. Currently, the innovative business camp includes eight sub-businesses

including EZVIZ Network, HikRobot, HikAuto, HikMicro, HikSemi, HikFire, Rayin and HikImaging, which

may have a consistent technical foundation with Hikvision, or provide more abundant products and services

to customers, or form effective synergy between upstream and downstream. The development and growth of

innovative business has continuously injected new impetus into the long-term stability and sustainable

development of the Company.




5.1 Innovative business-EZVIZ Network


     The rapid development of the IoT and AI technologies has promoted the intelligence, convenience and

comfort of home life. The core of EZVIZ’s businesses is based on visual technologies. It uses Internet cloud

computing, AI, multi-dimensional perception, IoT communication and motion control technologies to create

a reliable IoT cloud platform, as well as safe and intelligent household products, so as to provide households

and home-like users with intelligent products and services and maintain a rapid businesse development.




                                                                                                                    62
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    After years of cultivation, EZVIZ has formed a “1+4+N cloud platform - independently developed

products-ecological products” business system. Centered on cloud platform services and by virtue of smart

home cameras, smart home entry, smart control and smart service robots and other independently developed

products, it has driven the side-by-side development of other smar home protducts such as smart fresh air

system, smart water purifier, smart bracelet, and kid’s smart watch, to create an intelligient home ecosystem.


5.1.1 EZVIZ IoT Cloud platform

    Based on a globally distributed “self-developed architecture + three-party cooperation” hybrid cloud

architecture, EZVIZ Cloud provides Cloud service capabilities with computing, storage and network support

which supports multiple types of device access. Centered on media services, it provides such services as video

storage, messaging services, AI services, application services and other rich and complete service options,

which offer big data service capabilities, and provide security, operation, operation and maintenance

guarantees and support for top-level consumer applications and derivative applications at EZVIZ IoT open

platform. As of the end of 2020, EZVIZ IoT Cloud Platform has nearly 100 million global access devices,

more than 70 million registered users on the platform, more than 25 million monthly active users, and     more

than 10 million daily active users.

    Aiming at ordinary consumer users, EZVIZ Cloud provides cloud storage, smart reminders, personnel

identification, screen detection, phone reminders, family-friendly text messages and other paid value-added


                                                                                                             63
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services applicable to home scenarios, and further enriched the services including cloud disks, elderly care,

and other diversified value-added services in 2020 and expanded value-added services overseas to major

countries in Europe, America, Asia, Oceania and other regions.




    Aiming at the application demands of enterprise-level customers in complex scenarios, EZVIZ Cloud

supports developers and strategic partners to provide customers with the development of various complex

applications. On the device access side, through compatible standard protocols, open modules, SDKs, etc., it

is convenient for customers’ multi-brand devices to access EZVIZ Cloud; on the users side, through EZVIZ

object model and EZVIZ interface definition tool, it helps customers build App with zero/low code; on the

application side, EZVIZ opens PaaS service and outputs through EZVIZ open platform and EZVIZ IoT open

platform.


5.1.2 Smart home products

    By virtue of vision technology and AI, multi-dimensional perception, IoT communication, motion control

and other technologies, EZVIZ maintains its continuous leading position in hardware products.

    Smart Home Cameras (SHC) includes a variety of product options with different outlooks and

performances, providing security services for users in personal, family, and home-like scenarios, facilitating

communication, encouraging sharing, and conveying care & love. EZVIZ SHC has maintained the leading

global sales for many years. In 2020, EZVIZ released new products such as courtyard waterproof PTZ cameras

and cameras that support mobile network access, which further enriches the access methods and usage

scenarios of cameras. Meanwhile, it is supported by solar power supply system, which realizes scenario

coverage in areas without electricity and broadband. In terms of intelligence, a number of intelligent featured

                                                                                                             64
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detection and recognition algorithms have been released to adapt to different scenarios, such as personnel

identification, fall detection, pet detection, etc.

     Smart home entry products mainly include smart door locks, smart visualized lookout and smart

visualized doorbells. With its core video technology capabilities, EZVIZ intelligently upgraded home entry

products which support direct access to the EZVIZ IoT Cloud platform and perform intelligent applications in

home scenarios such as personnel identification based on cloud resources. Through continuous technological

innovation and marketing, EZVIZ’s smart home entry business has achieved considerable development. In

2020, the product matrix of EZVIZ smart locks has been further enriched. In response to the requirements of

personnel access management for public rental housing and dormitory, centralized smart lock products were

launched; pre-engineering products for the hardcover business of housing development have been promoted

and applied to the fingerprint lock pre-installation business of Ronshine, Binjiang, Huafa, Jingrui and other

leading property developers.

     Smart control products mainly include smart sensors, smart screens, smart switches, and smart sockets.

After the devices are connected to EZVIZ IoT Cloud platform, users can monitor in real time and remote

control the indoor environment, lighting systems, home appliances, energy consumption, etc. In 2020, EZVIZ

released a 4-inch smart screen. Through intelligent voice and touch technology, it will bring users a new

interactive experience of smart home, and the EZVIZ smart control product matrix was further enriched. At

present, EZVIZ smart control products have been promoted and applied to the smart home pre-installation

business of many leading real estate developers such as Longfor, Lvdu, and Ruchen, etc.

     Smart service robots mainly include companion robots and robot vacuum. In 2020, EZVIZ devoted itself

to the development of companion robots based on vision, hearing and environmental perception. Through

connecting to EZVIZ IoT Cloud platform, it will provide personalized education and safe companionship for

children. In terms of Robot Vacuum, EZVIZ built a new generation of Smart Vision Robot Vacuum based on

independently developed ToF, structured light technology and AI algorithm capabilities.




                                                                                                           65
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     EZVIZ has gradually formed a dual-main business pattern of “cloud platform services + smart home”,

and is further building a smart home ecosystem, expanding other smart home product categories in addition to

the four major self-developed products, and incorporating more devices into EZVIZ’s IoT ecosystem to

enhance the richness of users’ home-scenario equipment and provide users with more comprehensive smart

home solutions. With the increase in the number and activity of platform users, EZVIZ also provides users

with more practical and considerate value-added services through in-depth exploration of user needs.


     EZVIZ will insist on exploring in-depth application scenarios, optimize product performance, and

continue to explore new breakthroughs to provide rich and high-quality security protection and smart life

experience for the broad EZVIZ users and smart home enthusiasts.




5.2 Innovative business- HikRobot


     Focusing on technologies such as visual perception, AI and navigation control, relying on its solid algorithm

accumulation, strong software and hardware development capabilities, and a complete marketing system, HikRobot

focuses on intelligent manufacturing, and continuously invests in the fields of mobile robots and machine vision to

promote the digitization and intelligence of production and logistics.



                                                                                                                66
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5.2.1 Mobile robots: focusing on intralogistics and promote intelligent logistics of factories

     The mobile robot business relies on the three major hardware product lines of Latent Mobile Robot (LMR),

Conveyer Mobile Robot and Forklift Mobile Robot, and the two software platforms of robot control system (RCS)

and intelligent warehouse management system (iWMS). It focuses on the intralogistics in the warehouse or factory,

and provides professional intelligent logistics solutions targeting automobiles, 3C electronics, new energy,

supermarkets, various vertical e-commerce and other sub-sectors, to further reduce operating costs for users, and

improve production efficiency and management quality.




     LMR series: In 2020, focusing on the improvement of intelligence and safety, HikRobot completed the

iterative upgrade of Simultaneous Localization and Mapping (SLAM) technology, which greatly improves product

performance and environmental adaptability, and achieves large-scale applications in the automotive, new energy,

household appliances and other industries. HikRobot is the leader in the industry in releasing the self-developed

“high-precision multi-vehicle collaborative operation control system”, which greatly expands the application range

of robots. The safety level of the safety controller independently developed by HikRobot reaches SIL3 (Safety

Integrity Level 3) level, making a major breakthrough in the industry.

     Conveyer Mobile Robot series: Fragmentation of demands have brought a lot of customization work, which

has gradually become a pain point in the industry. In 2020, HikRobot introduced the design concepts and methods

of parametric design, improved the online design platform, and accumulated a large number of common components.

The modularized development method has greatly improved the efficiency of customized development and

facilitated the rapid implementation of projects in various industries such as display panels, auto accessories, heavy

                                                                                                                   67
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industry, and etc.

     Forklift Mobile Robot series: In 2020, HikRobot increased investment in independent research and

development, strengthened collaboration with partners, and further improved and enriched its product portfolio. The

third generation omni-directional forklift F1-1000 has completed iterative upgrades and has been widely used in

communications companies. The second-generation Carton Transport Unit (CTU) F0-50 was released. Its

performance and stability have been greatly improved. The highest single stage stacking height can reach 5.2 meters,

which is at the leading level in the industry. The forklift F4-1000 and the forklift F3-2000 have also been

continuously upgraded and become the main products.

     Intelligent support system: The intelligent support system represented by automatic power change substation,

which could complete the battery replacement within 90 seconds, while the conventional charging method requires

at least one hour to fully charge the battery, which can greatly improve the actual operating hours of the robot. For

the latest generation of automatic power change substation, the number of robots that can be supported by a single

substation has increased from 60 to 240.

     The demand for transformation and upgrading of the traditional manufacturing industry continues, the

epidemic has continuous impact on traditional labor utilization methods, and the demand for automated logistics

continues to be strong. It is predicted that China's mobile robot market will continue to maintain a growth of more

than 40% in the next five years. The mobile robot business will continue to improve the intelligence of the robot

and optimize the delivery process of solutions and projects. Based on robot-based intelligent logistics applications,

HikRobot devotes itself to creating end-to-end full-process intelligent logistics solutions.




5.2.2 Machine Vision: Focused on industrial sensing to promote production digitalization and

intelligentization

     As the core of industrial sensing, machine vision is the eyes of robots and automation equipment. It is a key

technology for building the industrial Internet and the perception network for digital factory. It is also an important

part of realizing flexible and intelligent production. In 2020, HikRobot further enriched and optimized machine

vision products, and tried to cultivate a vision application ecology centered on the Visual Master Platform (VM

Platform), to work with partners to meet the application needs of fragmented industrial scenarios.




                                                                                                                    68
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     Industrial camera products: HikRobot released the second-generation of industrial camera series. It uses a

brand-new FPGA platform, and has comprehensively improved the power consumption control, image quality and

transmission stability; HikRobot optimized and diversified high-speed and high-resolution cameras by using

modular design of software and hardware, unified platform architecture, and achieved the combination expansion

of different interfaces and resolutions. It focused on breakthroughs in low-power control technology of 10 Gigabit

Ethernet, giving its products obvious power consumption advantages compared with competing cameras in the

industry, HikRobot has greatly improved image quality and product usability through comprehensively upgrading

ISP technology, adding pixel-by-pixel correction, and optimizing color restoration, image noise reduction and other

algorithms,

     In terms of ID products, the entire series of products adopt the AI architecture, including the use of AI code

reading algorithms and AI heterogeneous processing platforms, supporting on-site training and learning, and quickly

adapting to various complex scenarios. Among them, for logistics code reading applications, 12 megapixel high-

speed code readers were released; at the same time, a number of economic logistics code readers were released to

meet the code reading needs of various logistics links. For industrial code reading applications, the ultra-small

ID2000 series, the miniaturized ID3000Pro series and the large-field ID5000 code reading series have been

introduced, which greatly enhance the competitiveness of industrial code readers.

     AI technology application: The application of deep learning technology in machine vision was further

                                                                                                                69
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promoted. The company continuously optimizes AI algorithm tools, explores the integration of AI algorithms

and traditional pattern recognition algorithms to complement each other. HikRobot actively promoted the

hardware productization of AI technology, and released smart camera open platform that supports deep

learning, to provide hardware support for partners with AI algorithm development capabilities. In terms of

algorithm platform, in addition to continuously optimizing software performance and usability, HikRobot

focuses on opening up its software architecture, providing a software framework and development interface

for industrial partners in machine vision algorithm development and application development, and creating a

simple, easy-to-use, open and compatible machine vision operating system to make the development of

fragmented vision applications more convenient and efficient.

     In terms of solutions: For the logistics industry, HikRobot continuously optimized the multi-sided code

reading system and DWS (Dimension Weight Scanning) 2 system, while                         introducing the single-piece

separation system and theautomatic parcel feeding system for carbel sorting, which greatly improves the

efficiency of code reading, parcel feeding and sorting. They are widely used at major domestic express logistics

and transshipment centers and promoting the construction of smart logistics; for 3C, new energy and other

industries, HikRobot has launched a number of visual alignment assembly and defect detection solutions with

its partners to greatly improve production line flexibility and defect detection rate, helping industry customers

to improve quality and production capacity, reduce costs and increase efficiency.

     In 2021, the Company will continue to make key investments in AI, 3D, and multispectral technologies,

launch more competitive technologies and products, while investing more resources in ecological construction,

and gradually shift from a product layout centered on image capture and imaging towards the ecological

construction centered on the VM Platform. HikRobot looks forward to working with industrial partners to co-

develop and create value together.

     In the future, HikRobot will continue to focus on intelligent manufacturing. It will increase investments

in the two business areas of mobile robots and machine vision, and improve efficiency and reduce costs for

users through technological innovation of software and hardware products and platforms and continuous

improvement of delivery processes. HikRobot will facilitate the development of global intelligent

manufacturing.



2 Dimension Weight Scanning, integrated system for automatic volume measurement, weighing and multi- ID
authorization/recognition code reading.

                                                                                                                     70
                                                                                  Hikvision 2020 Annual Report

5.3 Innovative business - HikAuto


    HikAuto focuses on the field of intelligent driving. Centered on video sensors, HikAuto combines various

technologies such as radar, AI, and perceptual data analysis and processing. The company is committed to

becoming the industry’s leading supplier of vehicle safety and intelligent products empowered byvideo

technology, with the capability of providing a wide range of services to passenger vehicle users, commercial

vehicle users, and other types of consumption as well as industry users globally.


5.3.1 Passenger vehicle before-market

    In 2020, HikAuto further deepened the business cooperation with top domestic brands such as SAIC

Motor Passenger Vehicle, Geely Automobile, Chang’an Automobile, Great Wall Automobile, etc. In this year,

HikAuto won over 50 new mass production projects (more than 60 new projects and more than 40 vehicle

models in total). Besides, HikAuto further expanded the market of joint ventures and international brands.

This year, it officially passed the supplier reviewsof PSA, Mazda, Volvo, Jaguar Land Rover, etc., and has

obtained several designated projects including Dongfeng Honda, Shanghai General Motors and Renault Nissan.

It has helped in increasing the order numbers, the product penetration rate, and the coverage of mainstream

hot-selling models. It has also achieved some advantages in terms of platform and scale.




    With widespread use of intelligent driving technology, HikAuto's technological investments in early years

have entered the payback period. This year, it officially mass-produced fully automatic parking products based on

the fusion of video and ultrasonic radar, and the performance of this product has been recognized by customers and

                                                                                                               71
                                                                                    Hikvision 2020 Annual Report

won a number of new orders designations from multiple car factories. At the same time, HikAuto has further

increased investments in developing the intelligent cockpit, and taken the lead in mass production of systems

including ID authorization/recognition unlocking keyless entry, fatigue driving monitoring and gesture recognition,

which fully takes the advantages of HikAuto in the field of vision technology to bring about a more intelligent

cockpit experience.

     HikAuto will continue to increase its investments in intelligent driving sensors, algorithms and system

products, fully leverage its technological advantages based on the fusion of video, ultrasonic and millimeter wave

radars, and launch more competitive solutions for around intelligent driving and intelligent cockpits.

     In 2020, the business growth of the passenger vehicle pre-installation products doubled. Besides, the

accumulation of technical solutions, customers, and projects has laid a good foundation for the continuous and rapid

growth of HikAuto in the coming years.




5.3.2 Passenger vehicle aftermarket

     Passenger vehicle owners' demand for Dashcam and and Around View Monitor continues to increase, and

driving video recording, rear-end collision evidence, injured feigning prevention, and parking view assist have

gradually become rigid demands.

     In the dashcam product line, HikAuto has enriched its product line based on its differentiated technical

capabilities such as night vision, AI, and networking, and formed a comprehensive product layout, which has

achieved omni-channel sales through mainstream online e-commerce platforms and offline auto accessory sales

channel. Among them, the F6/C6 series dashcam has become the leading product of the 5 million pixel high-

definition intelligent networked recorder in the market.

     In the Around View Monitor system, HikAuto has expanded to five major vehicle lines and 31 vehicle

models on the basis of three major car lines and 23 vehicle models in 2019. The key indicators, including

image sharpness, night visibility, seamless interfacing, ultra-low delay and reliability etc., have reached the

industry-leading level, and advanced driving assistance functions such as BSD (Blind Spot Detection) and

LDW (Lane Departure Warning) have been integrated into the Around View Monitor system to enhance the

value and competitiveness of the system.




                                                                                                                 72
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    In 2020, HikAuto almost doubled the growth of its Dashcam products and Around View Monitor products

in the automotive aftermarket, which has created considerable brand value and earned more trust from

customers.



5.3.3 Commercial vehicle market

    Commercial vehicles have achieved world-renowned vigorous development during the 13th Five-Year

Plan. The rapid development of e-commerce has promoted the rapid rise of express delivery. Heavy trucks for

trunk logistics, medium and light trucks for branch transportation, and micro-trucks for urban distribution in

the “last mile” have all continued to grow, with sales exceeding 5 million units in 2020; the continuous

integration of traditional cruise-style taxis with online booking-type taxis has rapidly grown to more than 3

million units. At present, China’s commercial vehicle inventory exceeds 20 million units. A huge number of

commercial vehicle resources carries a large number of passenger and freight transportation in addition to

aviation, railway and water transportation, which is closely related to the production and life of the people.

However, safety issues such as traffic accidents, casualties, and damage to goods have become increasingly

prominent. Major traffic accidents are frequently reported, traffic accidents caused by blind areas of vision

have significantly increased after speeding and fatigue driving,.



                                                                                                            73
                                                                                 Hikvision 2020 Annual Report

     In 2020, forward collision warning, lane departure warning, fatigue driving warning, driving behavior

analysis, etc. have gradually become the standard configuration of active and safe advanced assisted driving

construction projects for commercial vehicles in various regions. HikAuto has deeply explored the effects and

efficiency of algorithms to improve the cost-effectiveness of the product system. It has won unanimously praise

from users in more than 100 projects such as dangerous goods transport vehicles in Hunan Province,

construction vehicles in Zhejiang Province, and heavy truck logistics vehicles in Guangdong Province. Besides,

because of the rising trend of injuries and fatalities caused by the blind area of the driver’s vision, HikAuto

has further studied vehicle operating scenarios in depth to explore blind area collision risk factors in

combination with the actual operating environment of the vehicle. Through the integration of video and radar,

it independently developed a 360° blind zone collision warning system for the entire vehicle body. This system

will be widely used in buses, engineering vehicles, heavy trucks and other vehicles in the future to reduce

traffic accidents and casualties caused by blind spots in the field of vision.




     In November 2020, the Intelligent Connected Vehicle Technology Roadmap 2.0 was released by National

Innovation Center of Intelligent and Connected Vehicles. Pursuant to the Roadmap, by 2025, the new car

installation rate for partial autonomous driving (L2) and conditional autonomous driving (L3) will exceed 50%.

According to Yole’s data, in 2018, the average number of cameras installed in vehicles worldwide was 1.7

                                                                                                             74
                                                                                      Hikvision 2020 Annual Report

units. It is expected that this number will reach 2.5 in 2021 and 3 in 2023. In 2020, the average number of

cameras per vehicle in China is only 1.3 units, and there is large room for market development. HikAuto will

continue to increase its R&D investments in sensors, algorithms, and intelligent systems to help passenger

vehicle and commercial vehicle customers to make progress in the direction of intelligence and connectivity.


5.4 Innovative business - HikMicro


     Centered on infrared thermal imaging technology and with MEMS-based technology, HikMicro provides core

devices, detectors, modules, infrared thermal imaging products and overall solutions to the world. The infrared

thermal imaging industry has always been restricted by the high price of core components, which limits the scale of

application. HikMicro is committed to coping with this challenge and promoting infrared thermal imaging products

from a niche to the general public.




5.4.1 Core sensor technology advantages

     Uncooled infrared thermal imaging sensor technology involves multiple disciplines and multiple fields. At

present, only a few countries in the world have mastered this technology. After 4 years of development and

accumulation, HikMicro has created advantages in the following five aspects:

     Advanced integrated circuit (IC) design: The ultra-low noise readout circuit design in the detector can realize

the collection of extremely weak infrared signals and stable output of signals in ultra-harsh environments. In the

signal output channel, advanced low-noise processing technology is used to reduce the influence of external

interference during the transmission process and ensure the clarity of the image; through the use of a hierarchical

buffer output structure, the chip area is reduced, the power consumption is reduced, and the stability is improved.

A readout circuit structure that suppresses external bias noise and suppresses environmental temperature changes is

adopted, so that the chip can be used in a low-power, low-cost TEC (Thermal Electric Cooler)-free detector, while

achieving excellent and stable imaging quality. On-chip non-uniform correction technology is adopted to improve

the dynamic range of the chip. High-precision digital output and simple customer design may improve anti-

interference ability; and standard universal input and output digital interface provide customers with convenience

for system integration.

     MEMS (Micro Electro Mechanical Systems) micro-bridge structure design: The pixel structure,

packaging structure and layout design in the detector are important factors that affect the performance of the detector.


                                                                                                                     75
                                                                                  Hikvision 2020 Annual Report

In order to obtain better performance, HikMicro optimizes the MEMS structural parameters of the detector. The

selected thermal material has the characteristics of high temperature coefficient of resistance (TCR) and low 1/f

noise factor. The small pixel adopts a double-layer structure design to maximize the infrared absorption area; the

design of the resonant cavity and the infrared enhanced absorption structure realizes the maximum infrared

absorption rate of the detector in the 8-14um band.




     MEMS and packaging process development: in accordance with the requirements of MEMS design and

packaging design, through craft menu development, stable batch output can be achieved. HikMicro’s process

capabilities are complete, with various metal film and dielectric film growth processes, dry and wet etching

processes, and organic cleaning processes. The minimum line width of the photolithography process can reach

0.35um. It has a number of self-developed core film growth processes and packaging processes in the infrared

field.

     High vacuum packaging technology: Whether the chip can be electrically connected to external devices

in a vacuum environment and work stably and reliably under mechanical or environmental protection is an

important factor affecting product size and cost. HikMicro adopts advanced TEC (Thermo Electric Cooler)-free

ceramic package packaging and wafer-level packaging processes. Compared with the traditional metal

packaging process, the ceramic package packaging process has obvious advantages of low power consumption,

small size and low cost. The wafer-level packaging process adopts wafer processing throughout the whole

process, which has higher integration and yield, and has the advantage of lower cost.

     Industrialization capability: The Company has self-built an independent and controllable 8-inch MEMS

production line and packaging line with an annual production capacity of 10,000 wafers and a million detectors,

which can continue to supply products to the market on a large scale.

                                                                                                               76
                                                                                                Hikvision 2020 Annual Report

5.4.2 Product core technical advantages

     With regard to the finished product, after years of development and accumulation, thermal imaging products

have accumulated five major advantages: clearer images, smarter algorithms, more efficient temperature

measurement, more stable applications, and more reliable manufacturing.

     Clearer image: Focusing on image optimization, the self-developed adaptive AGC34.0 can better adapt to the

environment and enrich the image level; DDE4 technology makes the image more delicate and richer in details; 3D

DNR5 technology can effectively remove the noise in the image and improve the picture quality.

     Smarter algorithms: The deep learning algorithm and scenario optimization improves the alarm accuracy of

behavior analysis, firework recognition, and target detection algorithms such as ships and vehicles.

     More efficient temperature measurement: through accurate and reasonable temperature measurement model,

strict calibration, and standardized inspection process, the accuracy of temperature measurement is effectively

improved, the temperature difference of temperature measurement is small, and the stability is strong. The dual-

light fusion technology superimposes visible light details in the thermal image, which is convenient for users to

judge, supports multiple rules and flexible control of points, lines, and frames to meet the temperature measurement

requirements of key areas and special points.

     More stable applications: PTZ’s intelligent temperature control system and intelligent air duct defogging

design ensure that the equipment can withstand the test of the severe cold in the northeast and the scorching heat of

Sanya, and can operate stably at -45℃~70℃. The self-developed optical axis adjustment technology allows the

visible light channel to be positioned without deviation, making it easy to find the details of the problem.

     More reliable manufacturing: manufacturing and testing strictly in accordance with high quality production

requirements, multiple standard screening of raw materials, fully automated production, and dust-free clean room

packaging; multiple rigorous tests such as aging and air tightness before leaving the factory ensure that the product

is stable and reliable.




5.4.3 Three major thermal imaging product lines

     Centered on its own sensors and relying on the advantages of sensors and product design technology, HikMicro



3 AGC: Automatic Gain Control, the gain mode is automatically adjusted to adapt to different scenes, so as to obtain a clearer image.
4 DDE: Dige Details Enhance, by sharpening the edges of objects in the image, the recognizability of the image is improved.
5 3D-DNR: 3D Digital Noise Reduction, the use of three-dimensional filtering technology effectively eliminates the noise in the

video image and obtains a smooth and clear image.

                                                                                                                                   77
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divides its business into three product lines: online, handheld temperature measurement, and commercial vision.

     Online products are mainly divided into two categories: security products and online temperature

measurement products. On the security product side, HikMicro combines thermal imaging, artificial intelligence,

and image recognition technology with the strong temperature perception of thermal imaging as a powerful

supplement to visible light to meet the needs of users for fire prevention and anti-theft. On the online temperature

measurement product side, based on video, HikMicro performs intelligent recognition of target characteristics and

behavior analysis and diagnosis optimized for temperature measurement application scenarios with leading

intelligent analysis algorithms, to create an efficient temperature measurement product suitable for the general

public, satisfying requirements of users to improve safety and efficiency.

     In outdoor fire prevention scenes, the firework recognition algorithm based on thermal imaging and deep

learning deeply integrates thermal imaging and AI technology to comprehensively improve stability and accuracy.

One machine has multiple functions to protect forestry safety and contribute to environmental protection. In

perimeter prevention scenarios, behavior analysis based on deep learning can effectively classify humans, animals,

vehicles and other targets, to filter false alarms, and provide reliable and accurate security guards. In the field of

temperature measurement, the dual-light fusion technology of visible light and thermal imaging is used to accurately

locate abnormal areas and assist the daily maintenance of industrial equipment. In fields such as breeding

temperature measurement, inspection and quarantine, high-precision blackbody6-free equipment greatly reduces

user costs.




     Hand-held temperature measurement products mainly focus on temperature measurement applications of


6 Blackbody: a device with constant radiant energy, which corrects the deviation of the radiation thermometer with the indication of
the blackbody temperature, thereby improving the accuracy of the radiation thermometer.

                                                                                                                                   78
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industrial equipment such as electric power inspections. HikMicro provides mobile temperature measurement

modules, as well as a series of economical, professional, master and other handheld temperature measurement

products, which constitute a complete mobile temperature measurement solution covering various applications,

assists users to accurately measure temperature and diagnose defects with the advantages of temperature

measurement and image technology.

     Commercial vision products are mainly divided into two areas: outdoor and assisted driving. In the outdoor

field, with its own sensor advantages and excellent image processing capabilities, HikMicro has released a series

of observation products ranging from consumer to professional, which are widely used in hiking, outdoor

exploration, search and rescue, and other scenarios; for assisted driving, HikMicro released thermal imaging

single/binocular car assisted driver products, which are used to assist driving under severe conditions such as closed

light driving at night and heavy fog or smoke.

     In addition, HikMicro has created a full range of integrated products from the detectors, cores,to the integration

of the whole machine, providing one-stop product integration services, allowing more partners to quickly integrate

and use thermal imaging products to help create an infrared ecosystem circle.




5.4.4 Thermal imaging applications go to the masses

     HikMicro launched its 160*120 resolution star product in 2019. The product is equipped with the most

advanced wafer-level packaging technology, which greatly reduces packaging materials, sensor costs, and promotes

thermal imaging products entering into the ““thousand-RMB era””. Such products have met market demand due

to their good performance and affordable prices, which have also brought out more fragmented application potential.

In 2020, HikMicro completed upgrading of economic products, which support algorithm customization and

switching, and load specified scenario algorithms trained and customized by the AI open platform to meet the

fragmented and personalized needs of customers and benefit thousands of industries.

     During the Spring Festival of 2020, in response to the COVID-19, HikMicro quickly launched thermal imaging

temperature screening products and a “fast and economical” temperature screening solution. Relying on self-

developed sensors, by shortening the temperature measurement range, in combination with a large amount of

temperature measurement data analysis, HikMicro improved the environment self-adaptive ability of the equipment

through intelligent algorithm, and adopted advanced constant temperature and dust-free automatic manufacturing

technology, so that the stability and consistency of the product have been greatly improved, and the product accuracy


                                                                                                                    79
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can reach ≤0.5℃ (no blackbody) and ≤0.3℃ ( With blackbody).




     With independent supply capability of core components, HikMicro will continue to consolidate its product-

side technical advantages, open up more application scenarios, and continue to lead thermal imaging from a niche

to the general public.


5.5 Innovative Business- HikSemi


     HikSemi is committed to providing high-quality products and comprehensive storage solutions for users

around the world. It provides a variety of storage products including solid-state hard disk SSD, memory card, cloud

storage, mobile solid-state hard disk PSSD, solid-state U disk, etc., and its business covers consumer level,

enterprise level, industrial control level, video surveillance level and data center level and other scenarios that meet

the needs of multiple users.

     Relying on a strong R&D team, deep technical precipitation, advanced management system and strict product

standards, HikSemi provides strong support for product development and production, which have reached the

advanced level of the industry in terms of safety, stability, durability, compatibility, reliability, etc.



5.5.1 Products of HikSemi



     HikSemi makes continuous technological innovations based on user needs and develops corresponding

products. For SSD products, it increases investment in research and development of industry/enterprise and data

center products, actively innovates, pioneers the Zoned algorithm cluster, and has realized intelligent reconstruction

                                                                                                                     80
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of data channels and cooperated with MagicBox management software to increase product life, and further

consolidated and expanded its video application advantages in the server field. In terms of dedicated SSDs for video

surveillance, the capacity has been further expanded, with a maximum capacity of a single disk reaching 8TB,

providing a better choice for high-performance, large-capacity, and high-density applications. In addition, based on

data and technology accumulation, HikSemi has developed service items such as life warning, fault diagnosis, data

migration of out-of-guarantee bad disks, product life extension, etc., effectively improving user service experience.

For the more consumer-oriented flash memory application products, HikSemi integrated resources to create the

HikSemi App, where users may access private storage products anytime and anyplace and browse and share data

in various formats such as pictures and videos. The H200 cloudstorage product launched in 2020, with a brand-new

hardware architecture, provides users with more ideal task processing efficiency. It is the first time in the industry

to realize remote switch on and off, which greatly solves the pain points of users’ instant switch on and off. It was

strongly concerned and favored by consumers at its launch. In terms of PSSD, as PCIE gradually becomes the

mainstream of SSD, HikSemi is also gradually applying new technologies. Following the launch of the fingerprint-

encrypted PSSD-T100F in 2019, HikSemi launched a new Elite series of products in 2020. This series of products

takes high-speed, safety, waterproof, and appearance as the main entry points, in consideration of Hikvision’s self-

developed firmware algorithm and extreme heat dissipation design, which greatly meets the needs of users in high-

speed application scenarios. In terms of memory card products, relying on its position in the high-end video

surveillance industry and the accumulation of video storage technology, HikSemi, on the one hand, has successively

launched cost-effective video monitoring cards suitable for continuous data writing scenarios. On the other hand,

HikSemi has continued to expand the memory card market segment and continuously launched cost-efficient and

high compatible consumer cards that can be widely used in civil secruity, mobile phones, cameras, speakers and

other products, as well as driving record cards used in driving recorders, and handheld game cards favored by

gamers.




                                                                                                                   81
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5.5.2 Channel construction and user services

     HikSemi has been developing in the industry market and channel markets and has initially completed the

major layout of domestic and foreign marketing networks, with nearly 2,000 customers, injecting strong new

momentum into sales growth. HikSemi has always paid attention to customer service. Adhering to the concept of

“dedicated to customers’ continual success, adding value to companies and communities", HikSemi provides fast-

responsive, efficient and convenient one-stop user services before, during and after product sales, so as to gain

customer praise.



5.5.3 Supply chain management and quality management

     HikSemi focuses on developing production control software, optimizing the supply chain management system,

expanding production capacity and implementing comprehensive quality management measures, improving the

supply chain management system and quality management, and further improving delivery capabilities and product


                                                                                                              82
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quality.


     With the accelerated advancement of technological innovations such as artificial intelligence, blockchain,

cloud computing and the Internet of Things in the digital information age, data has also shown explosive growth,

and the demand for storage in the memory market has continued to expand. Adhering to the original aspiration of "

"Storing every beautiful moment and using intelligence to change lives" and the user-oriented concept, HikSemi

will continue to provide enterprises and consumers with the latest safe and reliable storage devices, systems and

storage solutions through product innovation, technological innovation, marketing innovation and brand building,

and strive to become a leading provider of storage products and data storage solutions in China.




5.6 Innovative business- HikFire


     Hikfire is committed to the research and development, production, sales and service of integrated fire

protection solutions, continues to develop security-fire integrated products and technologies, serves industry

management and applications, and is committed to building one-stop fire safety system solutions and one-stop fire

operations service solutions.




5.6.1 One-stop fire safety system solution

     The gradual transformation of the fire protection industry to marketization and digitalization is an inevitable

trend, and the integrated application of fire-fighting materialization, platformization, and security-fire integration

has gradually become a consensus of the industry. From the pre-installation market to the after-installation market,

HikFire has built a one-stop fire safety system solution framework from detection and early warning, fire alarm,

emergency evacuation to fire fighting and rescue, which can be divided into traditional fire fighting and smart fire

fighting business from the product dimension.

     In the traditional fire protection field, products cover automatic fire detection and alarm systems and linkage

subsystems, including power supply monitoring of fire equipment, electrical fire monitoring, combustible gas

detection and alarm, fire emergency broadcast and telephone, fire door monitoring, emergency lighting and

evacuation, residual pressure monitoring, gas fire extinguishing controller, etc. HikFire advocates the digitization

of installation and commissioning of traditional fire protectionprojects, to realize remote commissioning and online

                                                                                                                   83
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management by using system-integrated commissioning tools, and provides convenient commissioning solutions

for partners, which greatly improve delivery efficiency.




     In the field of smart fire protection, by using multi-spectral fire detection and recognition technology, HikFire

improves wireless fire alarm solutions, optimizes fire graphic display devices and deepens the application of security

fusion products. The design of fire alarm and video linkage with traditional fire protection and smart security realizes

the integrated management of safety and fire protection, providing customers with full-cycle integrated solutions,

which are widely used in the fire protection after-installation market.




     HikFire provides industry solutions, and builds a scenario-based, systematic and visualized fire protection

system based on industry scenarios and actual business characteristics to help the industry improve the level of fire

safety management. At present, two basic solutions and eight industry solutions have been released.

                                                                                                                     84
                                                                                     Hikvision 2020 Annual Report

     HikFire is committed to building a three-dimensional fire protection system with global coverage, full-time

availability, and global visibility. Based on security-fire integration and intelligent management platform, through

data sharing, analysis, prediction, and research and judgment, it improves the ability of fire safety trend early

warning and forecast, which realizes differentiated and precise supervision, reduces fire safety risks, and improves

fire management efficiency.




5.6.2 One-stop fire protection operation service solution

     In the field of fire protection operation services, HikFire builds a cloud service center based on cloud

technology, and continues to provide operational service for key fire protection units, general social units,

community streets, maintenance organizations, operating organizations, etc., to further open up upstream and

downstream businesses, and achieve business intensification and intelligence by integrating fire protection offline

service and through “online operation + offline service”, so as to improve operating efficiency, reduce operating

costs, provide value-added services, and build an industry and service ecosystem.




     According to forecasts from the Prospective Industrial Research Institute, the scale of the smart fire protection

market in 2020 was approximately RMB 4 billion, representing a growth rate of about 15% over the previous year,

in line with market expectations. The scale of the smart fire protection market in 2025 will be nearly RMB 8 billion.

According to the calculations of Huicong Fire protection Website, the domestic fire alarm product market is

expected to exceed RMB 20 billion, and the overall market of the fire-fighting equipment market will exceed RMB

70 billion.




                                                                                                                   85
                                                                                     Hikvision 2020 Annual Report

     HikFire continues to create the one-stop fire safety system solution and the one-stop fire protection operation

service solution , and commits itself to the digital transformation of fire protection. Through continuous integration

of new technologies and innovative management methods, it reduces fire safety risks and improves fire management

efficiency, so as to provide a safer environment for the whole society and make life better!




5.7 Innovative business - Rayin


     Rayin is a complete solution provider focusing on X-ray detection business, dedicated to the technology

research and development, manufacturing, equipment sales and leasing services of non-visible light detection

equipment. Relying on the long-term accumulation in the fields of multi-dimensional sensing technology, invisible

light imaging technology, artificial intelligence technology, equipment IoT technology, etc., technology

empowerment and value creation are carried out in the fields of smart security inspection and industrial "intelligent"

manufacturing.




     Rayin applies the intelligent algorithm innovation of contraband intelligent identification algorithm, on-the-

job identification, equipment status monitoring and other intelligent algorithm to the field of security inspection. It

provides multiple series of products such as physical inspection products, human security inspection products and

industrial detection products. Based on data networking supported by intelligent algorithms, it empowers users to

achieve business closed-loop management, personnel on-the-job management, equipment operation and

maintenance management, and successfully implements system applications in core security business scenarios such

as public security, transportation, government, hospitals, cultural museums, enterprises, and large-scale event

venues.



5.7.1 Luggage security inspection field

     Based on X-ray imaging technology, Rayin focuses on the application of intelligent algorithms and the


                                                                                                                    86
                                                                                     Hikvision 2020 Annual Report

improvement of recognition efficiency. It provides multiple series of security inspection machines. Rayin

continuously optimizes and enhances the effect of intelligent recognition algorithms, improves the types and

accuracy of contraband identification, and helps security inspectors to improve the quality and efficiency of security

inspection work. The products are widely adapted to security inspection business scenarios such as transportation

hubs, judicature   cultural and tourism, etc. Rayin also released a series of intelligent analysis products, which

fully integrates the business needs of the security inspection machine for the detection of contraband, continuously

optimizes and improves the effect of the intelligent identification algorithm, improves the recognition type and

accuracy of contraband, and assists security inspectors to improve the quality and effect of security inspection.




                                                                                              疑似液体(97%)




5.7.2 Human security inspection field

     Rayin innovatively integrates and expands a variety of detection methods based on traditional metal detection

technology, enriches data collection types, and better responds to the needs of different users for human detection

in different scenarios. With the sudden outbreak of the COVID-19 pandemic at the beginning of 2020, Rayin

actively responded to the need for rapid screening of sudden epidemics. Starting from the Spring Festival, it has

successively released a number of walk through metal detector with temperature screening, which can quickly

complete body temperature measurement without contact, providing portable metal detection for traffic operation,

resumption of work and school opening, while adding the first line of defense for body temperature screening.




5.7.3 Industrial detection field


                                                                                                                    87
                                                                                     Hikvision 2020 Annual Report

     With the capability of X-ray penetration imaging X-ray detection technology has a very wide range of

application scenarios in industrial production. Rayin provides X-ray-based non-visible light detection products. In

combination with artificial intelligence technology, it actively explores the implementation of non-visible light

imaging technology in the industrial manufacturing field, hammers outoverall industrial detection solutions, and

empowers business partners to jointly create new applications in industrial intelligent manufacturing.


     Based on its understanding of multiple business scenarios, Rayin will implement the full-spectrum IoT strategy,

continue to increase R&D investment in non-visible light imaging technology, improve product performance,

expand market coverage, tap application potential, and contribute to the creation of a safer, more convenient and

better society.




5.8 Innovative business- HikImaging


     HikImaging is committed to the research and development of micro-vision and audio-video interaction

technology. Based on related technologies such as visual imaging, video analysis, audio and video encoding and

decoding and transmission in professional scenarios, it provides professional hardware and software systems for

many industries such as medical treatment and education.

     There are many video application scenarios in medical, education and other industries, which have professional

requirements for specific imaging effects. Real-time recording and transmission of high-quality audio and video

data are required. At the same time, the application in such industries possesses the characteristics of limited number

of single scenes, high degree of personalization and long productization cycle. Based on the technical accumulation

in the video image field and the continuous R&D of the professional technical team, HikImaging has broken

through the key technologies of micro-vision, close-range imaging, and audio and video interaction, deeply

understood the needs of user scenarios, and has launched a series of professional technical solutions and product

options such as micro-camera system, remote surgery demonstration , and professional practical training.




                                                                                                                    88
                                                                                    Hikvision 2020 Annual Report




5.8.1 Facilitating the upgrade of the minimally invasive medical industry

     Based on the foothold of serving minimally invasive medical product manufacturers, HikImaging provides

customers with technical solutions that have independent technical advantages and meet the video image

requirements of specific scenarios in different departments. It continues to invest in basic video image technology

to promote the effective transformation of advanced video image technology in the minimally invasive medical

industry and promote industrial upgrading. In 2019, HikImaging provided micro-camera system components to

help minimally invasive medical product manufacturers and obtained the first 4K endoscopic camera system

registration certificate in Zhejiang Province. In 2020, HikImaging further enriched its basic technologies, optimized

technical solutions, and assisted many minimally invasive medical product manufacturers to upgrade ultra-high-

definition video image technology.



5.8.2 Facilitating the improvement of medical education informatization

     The training of clinicians and medical students focuses on practical teaching, academic and scientific research

activities. Aiming at medical practice scenarios, HikImaging provides surgical teaching systems including ultra-

high-definition surgical vision cameras, video recording hosts, teaching software and other products, which support

mobile or fixed installation and deployment, and support local area network and public network applications. For

medical teaching scenarios, HikImaging provides video product solutions for specific teaching scenarios in medical


                                                                                                                  89
                                                                                              Hikvision 2020 Annual Report

schools and training bases (nursing, clinical, traditional Chinese medicine, etc.), which can achieve dual-teacher

application between medical schools and affiliated hospitals through the cloud interactive software platform, and

accelerates the spread and inheriting of superb medical skills.



5.8.3 Facilitating the improvement of vocational skills teaching quality

     Vocational education mainly cultivates technical skills talents, and the Ministry of Education requires practical

teaching hours in vocational colleges to account for more than 50% of the total hours in principle. Based on audio

and video interaction, recording and rebroadcasting, and close-range imaging technology, HikImaging provides a

training video teaching system for close-range/panoramic cameras, video terminals, training teaching software and

other products. In response to the teaching requirements of segmented scenes, HikImaging has launched

professional video teaching product solutions for auto repair, cooking, electromechanical and other training scenes,

which can realize cross-internet school-enterprise interactive teaching through the cloud interactive software

platform.

     HikImaging will continue to invest in the research and development capabilities of imaging detection, micro

vision, audio and video interaction and intelligent analysis in professional scenarios, statisfy the users and market

demands, accelerate technology application and product transformation, and provide more professional product

technical solutions for industry users and customers.




II. Significant changes in main assets

1. Major Changes in Main Assets


       Major assets                                        Explanation on Major Changes

                         The increase of 140.18% was mainly due to increased investments in Hangzhou Haikang Intelligent
      Equity Assets      Industrial Equity Investment Fund Partnership (L.P.) and China Electronic Technology Finance Co.,
                         Ltd.

       Fixed Assets      No significant change

                         An increase of 19.61% was mainly due to the addition of land use rights to Nanchang Science and
     Intangible Assets
                         Technology Park and other multi-site science and technology parks.

                         Increased by 125.67%, mainly due to increased investment in the construction of Chengdu Science
 Construction in Progress and Technology Park, Hangzhou Innovation Industry Park, and Chongqing Science and Technology
                         Park Phase II Project



                                                                                                                             90
                                                                                     Hikvision 2020 Annual Report

2. Major Overseas Assets


□ Applicable √ Inapplicable


III. Analysis of core competitiveness


     Hikvision sticks to the principle of taking its technology products as the root and empowering its customers as

the orientation, empowering application scenarios with AI and empowering enterprises in digital transformation and

smart city construction with big data-AI fusion, and to become a pragmatic practitioner of the real economy under

the intelligent era.



1) Continuous efforts in R&D inputs and technology innovation to drive the Company’s development

    The intelligent IoT industry that Hikvision is engaged in features fragmented demands and product appllication

scenarios. The essence of business expansion depends on the establishment of products and technology systems

applicable to the industry’s demands. The Company insists on the industry demands as its starting point to drive the

upgrade and iteration of products and solutions, maintain increasing efforts in R&D inputs and construct profound

technology capabilities of the Company.

     Hikvision has been developed from video collection, following the business expansion to continuously explore

the full spectral perception capability, extends information perception manners from visible light to far infrared, X-

ray, millimeter wave and other fields, and continues to explore perception methods such as sound, temperature,

humidity, pressure, magnetism, etc., polishes and iterates series of hardware equipment for signal processing,

transmission display and etc., and expands the product application scenarios from security and intelligent IoT to

industrial automation, ADAS, fire protection and control, security check and many other scenarios. The annual sales

of hardware equipment has reached 27,000 different models.

     Starting with customers’ needs, Hikvision has drawn a layout of industrial solutions since 2009 to gradually

cover public services and over various 10 large-scale and 70 small-scale industrial applications which are enterprise-

business-related, and has formulated the unified software technology architecture since 2016 to safeguard the

consistency of software R&D in a normalized manner and exploit the reuse value of software resources, and

promotes the AI open platform by focusing on the practice needs of fragmented-scenario AI algorithm trainings and

reduces marginal costs incurred by business expansion through reusability of technology instruments.

     Hikvision has invested over RMB 20 billion in aggregate in R&D over the last 5 years, among which R&D


                                                                                                                   91
                                                                                      Hikvision 2020 Annual Report

inputs in 2020 represented over 10% of total sales, with more than 20,000 R&D technical staff representing nearly

50% of the Company’s staff in total. The long-term high-intensity technology investments centering on business

scenarios has provided strong support for the Company’s solid business development. The Company will continue

to maintain its efforts in R&D inputs and closely focus on industrial demands to develop a strong technology system

of the Company.



2) Continuous optimization of domestic and overseas sales service system to jointly create value with

    partners

     Hikvision has established 32 provincial business centers nationwide to advance business-decision making and

software customization development capability at local level, with over 300 city branches covering a majority of

cities over China to ensure the effective implementation of businesses. Hikvision has established 19 regional

function centers overseas, with 66 branches under it, building marketing, service and R&D capabilities on a national

basis, and providing services to 155 countries and regions.

     Hikvision has multiple-layer channel partners spreading broadly across markets of various types, and has

established close cooperations with over 6,000 distributors, 10,000 integrators, 300,000 project contractors, 400,000

installers and over 1,000 service providers all over the world to jointly offer products and services to terminal users.

The Company has carried out cooperations with over 30 universities and scientific research institutes and established

joint innovative laboratories with over 100 user units which are fully open to partners for mutual benefits, to jointly

create an industrial innovation union.



3) Adhering to the core business philosophy to continuously enhance the management system

     Since its inception, Hikvision has always been adhering to the business philosophy of "professionalism,

honesty, and integrity”, which is always considered by the Company as the standard for guiding its business

development and has already become the faith of all staff in the Company to abide by, regardless of the changes in

internal and external environment and the circumstances of the times.

     Confronted with increasingly business development and changes, the Company also updates its resource

organization and management methods accordingly. Regarding the business direction formulation, the Company

has formed a comprehensive strategic planning method which is regularly refreshed and updated on a rolling basis,

unified awareness. Each business and functional department communicate effectively and align on work assignment

to ensure clear goals and decompose in place. Regarding the process management, the Company conducts the

                                                                                                                     92
                                                                                   Hikvision 2020 Annual Report

process management by centering on its customers and promotes over 100 reform projects of process management

each year, to keep optimizing resource layout and smoothing coordination methods. The Company has expanded

IT system to every aspects of business operation to effectively provide services and improve operating efficiency.

Through big-data measures, the Company carries out identification, management and control of financial risks,

constructs the digital and full-coordinated quality management system, improves the internal operation risk control

system, increases efforts in internal anti-corruption and integrity establishement, and respects and protects

intellectual property.

     Hikvision expands its businesses with its unchanged original aspiration, adapts to the increasing evolving

business environment through iterative organizations, and adapts into changes in development.



4) Guiding the supply chain system to adapt to changes and flexibly distributing production resources

     Stable and reliable raw material supplies are the important foundation of the Company to provide the industry

with diversified products, while flexible and high-efficient production layout is the important ensurance for the

steady growth of the Company’s businesses.

     Hikvision establishes solid and mutually beneficial cooperative relationship with suppliers and joins hands

with over 1,000 suppliers around the world to jointly develop and improve the hardware underlying technology

platform. In light of uncertainties on supply chains brought by politics and epidemic in recent two years, the

Company still maintains a high level of raw materials and adapts to changes and uncertainties in the external

environment through redundant inventories.

    Hikvision has domestic manufacturing bases in Hangzhou Tonglu, Hangzhou Binjiang and Chongqing, has

proceeded with the manufacturing base in Wuhan and the expansion plans in Tonglu and Chongqing, while

establishing local factories in India, Brazil and the United Kingdom, to support global product supply. Leveraging

on over 180 SMT production lines and over 40 automatic assembly lines, the Company has built leading automatic

production capabilities in the industry, and establishes a prompt, flexible and coordinative manufacturing system to

achieve the production model of multiple variaties, small batches and large-scale mass customization.



5) Adhering to the long-term philosophy of “talent-focused, growing together” and gathering talents from

    all over the world

     Hikvision considers talents as the most important source of enterprise competitiveness and gathers talents from



                                                                                                                 93
                                                                                     Hikvision 2020 Annual Report

all over the world, while adhering to the employment concept of “talent-focused, growing together”.

     To discover and cultivate talents and have a reasonable evaluation on them, the Company has formulated a

dual career development path consisting of management sequence and professional sequence, established a

professional qualification evaluation system and a talent assessment system, and implemented a multi-level training

mechanism, while making constant investments for the consolidation and upgrade of backbone talents as well as

the reservation and development of backup talents of the Company. The Company constantly improves the

performance evaluation mechanism, integrating talents recruitment, promotion and downgrading, training and

development as well as salaries and benefits, to boost the morale and creativity of employees. The comprehensive

return system for staff has been established which consists of remuneration benefits, share incentives and innovative

business co-investments. On one hand, share incentives and innovative business co-investment system, which are

designed for and applicable to all consistent strivers drive the rapid development of businesses; on the other hand,

long-term returns are also created for all staff who participate in co-investments, coordinating the long-term

development of business with continuous growth of talents at the same pace.

     The Company encourages its staff to organize hobby clubs freely, regularly holds diversified cultural and sport

activities to create an equal, open-minded and positive organizational atmosphere. Through theme events such as

“Face-to-Face with Executives”, “Dialogue with Managers”, “Humanities Lecture Hall”, “Reading Club”, etc., it

has assisted the staff with comprehensive growth.



6) Continuously developing the global compliance system and safeguard the business’s development

     Hikvision spreads its businesses all over the world and is required to put its efforts on the establishment of the

global compliance system to carry out businesses in every region pursuant to local laws and regulations in order to

ensure the long-term sustainable development of the Company.

     Hikvision has established the independent global compliance department in 2019, putting its efforts on

achievement of the internationalized corporate governance system and risk management and control capability,

willing to accept supervision from all parties. The Company’s compliance department cooperates with business

teams in each region to meticulously study the laws and regulations environment of each country and region,

conducts a full-process compliance guidance during business operation, and regularly carries out internal

compliance education to enhance compliance awareness of each organizational department in the Company,

facilitating the smooth implementation of the Company’s business operation.



                                                                                                                    94
                                                                                   Hikvision 2020 Annual Report


           Section IV Discussion and Analysis on Business Operation

I.       Overview


     In 2020, COVID-19 epidemic spread across the world, resulting in the lockdown of many nations and regions

and the occurrence of suspension and concession of their economy. The U.S. continued to stress on Chinese

technology enterprises which led to the further intensive impact on the global supply chains. Facing various

uncertainties in the external environment, the Company continued to increase its efforts in R&D inputs, continuously

promoted the Company’s steady and healthy operation through technology innovation, which is the most important

means of the Company’s sustainable development. During the reporting period, the Company achieved a total

operating income of RMB 63.50 billion, with year-over-year growth of 10.14%; the net profits attributable to

shareholders of the Company was RMB 13.39 billion, with year-over-year growth of 7.82%. The Company’s overall

gross profit margin in 2020 was 46.53%, an increase of 0.54 percentage points compared with the same period of

the prior year.


II. Core business analysis


1. Overview


1) Increasing input in R&D, and coping with challenges and embracing opportunities through technology

     innovation

     In 2020, the Company’s R&D input was RMB 6.38 billion, which was equivalent to 10.04% of the Company’s

total operating income; the R&D expenses ratio of the Company has further increased; the Company had over

20,000 R&D and technical service personnel.

     During the reporting period, the Company continued to cope with challenges brought by uncertainties of global

supply chains, and built up cooperations with more abundant alternative suppliers through adjustment, replacement

and supplement of product design plans to further ensure the continuous stable supply of the Company’s products.

     During the reporting period, the Company upgraded its software and hardware products, enhanced its

advantageous position of video products and actively conducted intelligent upgrade on non-video products, to

gradually build a comprehensive perception product system. Algorithm, components and module resources have

been continuously accumulated. Edge node, edge domain, cloud center and Internet-application open platform were

                                                                                                                 95
                                                                                   Hikvision 2020 Annual Report

optimized and iterated. The technology system of Hikvision, based on IoT perception, AI, and big data as its core,

has been improved constantly.




2) Solidifying multi-dimensional perception technology basis and expanding business areas

     In 2020, the Company continued to advance technology accumulation in fields such as visible light, far infrared,

millimeter wave, X-ray, sound wave, etc., to accelerate the integration and application of various detector

technology. At the beginning of 2020, HikRayin with X-ray detection business as its core was established. Taking

into account the business development and market integration, the Company adjusted the business of HikMicro.

During the COVID-19 epidemic, leveraging on the advantages of self-developed thermal imaging chip of HikMicro,

Hikvision quickly launched body temperature measurement products, while HikRayin quickly launched

temperature-measurement human-body security check machines through the fusion application of thermal imaging

and X-ray, to facilitate the control and prevention of the epidemic through technological measures.

     Based on the strategic position of IoT perception business, Hikvision expands and covers a number of new

business fields as planned. The new perceptive measures will bring more abundant and flexible perceptive channels

for the Company’s products. Long-term accumulation of technology reserves and product experience has helped

the Company respond to emergency, react quickly and timely and effectively in developing new technology and

novel products to seize potential opportunities under urgent cases.




3)Continuously advancing the construction of domestic and overseas sales and service system and promoting

digital marketing

     In 2020, the Company continued to propel the construction of sales service system. Currently, Hikvision has

established 32 provincial marketing centers nationwide with over 300 city branches and offices. The Company has

established 66 branches overseas to provide products and services to 155 countries and regions all over the world,

with Marketing and service network presence in every corner of the market. Due to the impact of the epidemic, the

Company accelerated the pace of marketing in digitalization, upgraded fully digitalized sales management process,

improved full-process management and control system on products and services, and enhanced comprehensive

management capabilities of R&D, manufacturing, sales and services.




                                                                                                                  96
                                                                                         Hikvision 2020 Annual Report

4) Attaching high importance to the construction and maintenance of the supply system to Ensure the

    continuous stability of supply

     In 2020, confronted with uncertainties brought by overseas politics and epidemic, the Company continued the

high-level inventory strategy for raw materials, realized stable progress of necessary material replacement, and

coordinated with all suppliers to ensure the stability of the supply chain. In addition, the supply chain continued to

propel lean production, improve the level of intelligent manufacturing, optimize delivery efficiency, and ensure a

solid business development.




5) Continuously promoting operation optimization and improving the level of internal management

    The Company’s performance results were significantly influenced by the COVID-19 epidemic at the first half

of 2020. To cope with external stress, the Company adjusted its expenditure strategy in a timely manner, enhanced

management, control and optimization for expenditure, and advanced the improvement of internal operation. Under

unfavorable external environment, the Company concentrated on the optimization of internal management work,

paid attention to details and improved operational efficiency.


2. Operating incomes and operating costs

1) Operating income structure

                                                                                                             Unit:RMB
                                             2020                                  2019
                                                                                                              YoY Change
                                                    Proportion to                           Proportion to        (%)
                                  Amount                                Amount
                                                  operating income                        operating income
Total operating income        63,503,450,891.78               100%   57,658,110,065.22               100%          10.14%

Classified by industry

Video products and video
                              63,503,450,891.78            100.00%   57,658,110,065.22            100.00%          10.14%
services

Classified by product

Front-end equipment           28,841,213,141.09             45.42%   27,175,127,832.29             47.13%           6.13%

Back-end equipment             6,867,289,356.22             10.81%    7,519,825,167.90             13.04%          -8.68%

Central control equipment     10,146,396,260.19             15.98%    8,822,675,802.63             15.30%          15.00%

Constructions                  1,614,246,940.42              2.54%    1,091,421,819.86              1.89%          47.90%

Others                         9,865,958,856.89             15.54%    8,612,324,560.21             14.94%          14.56%


                                                                                                                       97
                                                                                                   Hikvision 2020 Annual Report

                                                     2020                                      2019
                                                                                                                         YoY Change
                                                            Proportion to                             Proportion to         (%)
                                        Amount                                     Amount
                                                          operating income                          operating income

               Subtotal             57,335,104,554.81               90.29%     53,221,375,182.89              92.30%             7.73%

    Smart home business              2,918,904,302.62                4.60%      2,592,271,750.14                4.50%          12.60%

    Robotic business                 1,358,653,520.55                2.14%        813,993,602.43                1.41%          66.91%

    Other innovative businesses1     1,890,788,513.80                2.97%      1,030,469,529.76                1.79%          83.49%

               Subtotal              6,168,346,336.97                9.71%      4,436,734,882.33                7.70%          39.03%

    Classified by region

    Domestic                        45,806,567,913.73               72.13%     41,419,508,094.09              71.84%           10.59%

    Overseas                        17,696,882,978.05               27.87%     16,238,601,971.13              28.16%             8.98%



Composition of operating income of the three major business groups in China2

                                                                                                                        Unit: 100mn
                                                 2020                              2019                       YoY Change (%)

    PBG                                          163.04                           155.86                           4.61%

    EBG                                          151.80                           125.91                           20.56%

    SMBG                                         96.83                            93.56                            3.50%

    Total                                        411.67                           375.33                           9.68%



2) Industries, products or regions accounting for more than 10% of the Company’s operating income or
   operating profit
√ Applicable □ Inapplicable
                                                                                                                  Unit: RMB
                                                                            YoY Change (%)
                                                                     Gross                 YoY Change (%) YoY Change (%)
                             Operating income      Operating cost             of operating
                                                                     margin                of operating cost of gross margin
                                                                                 income

    Classified by industry

    Video products and
                             63,503,450,891.78 33,957,697,857.73 46.53%                   10.14%              9.05%              0.54%
    video services

    Classified by product

    Front-end equipment      28,841,213,141.09    12,797,470,301.71 55.63%                 6.13%             -1.69%              3.53%



1 Other innovative businesses include products of the corresponding businesses of the innovative business subsidiary HikAuto,
HikMicro, HikSemi, HikImaging, HikFire, Rayin and others. Same below.
2 Some innovative business products rely on the sales of the three major business groups. The sales statistics of the business groups

are divided by the sales responsible unit, but the sales statistics of the product / innovation business are divided by product forms.

                                                                                                                                         98
                                                                                         Hikvision 2020 Annual Report

                                                                       YoY Change (%)
                                                             Gross                    YoY Change (%) YoY Change (%)
                       Operating income     Operating cost               of operating
                                                             margin                   of operating cost of gross margin
                                                                            income

Back-end equipment       6,867,289,356.22    3,463,814,165.41 49.56%            -8.68%           -6.38%          -1.24%

Central control
                        10,146,396,260.19    5,587,909,127.42 44.93%            15.00%           30.28%          -6.45%
equipment

Constructions            1,614,246,940.42    1,353,524,939.67 16.15%            47.90%           60.36%          -6.51%

Others                   9,865,958,856.89    6,887,430,103.27 30.19%            14.56%            6.29%           5.43%

         Subtotal       57,335,104,554.81   30,090,148,637.48 47.52%             7.73%            6.21%           0.75%

Smart home business      2,918,904,302.62    1,772,362,386.38 39.28%            12.60%           12.54%           0.03%

Robotic business         1,358,653,520.55     703,671,619.41 48.21%             66.91%           85.10%          -5.09%

Other innovative
                         1,890,788,513.80    1,391,515,214.46 26.41%            83.49%           62.92%           9.30%
businesses

         Subtotal        6,168,346,336.97    3,867,549,220.25 37.30%            39.03%           37.68%           0.62%

Classified by region

Domestic                45,806,567,913.73   25,226,610,746.84 44.93%            10.59%           12.87%          -1.11%

Overseas                17,696,882,978.05    8,731,087,110.89 50.66%             8.98%           -0.66%           4.78%


Adjusted statistics of principal business are based on the caliber at the end of the reporting period of last year, if
the statistics caliber of principal business has been changed during the reporting period
□ Applicable √ Inapplicable


3) If revenue from physical products sales greater than revenue from providing services
√ Yes □ No
         Industry             Item              Unit                  2020               2019           YoY Change (%)

                         Sales volume          Per unit                139,309,170        141,859,538            -1.80%
Video products and
video services
                        Output volume          Per unit                138,254,927        148,141,909            -6.67%


Explanation on why the related data varied by more than 30% on a YOY basis
□Applicable √Inapplicable
4) Fulfillment of signed significant sales contracts by the reporting period
□ Applicable √ Inapplicable




                                                                                                                         99
                                                                                           Hikvision 2020 Annual Report

5) Operating cost structure
Classified by industry
                                                                                                              Unit: RMB

                                                2020                                 2019                       Increase/
     Industry          Item                            Proportion to                         Proportion to    decrease over
                                      Amount                               Amount
                                                       operating cost                        operating cost   previous year
Video products
and video         Operating cost   33,957,697,857.73             100% 31,140,176,777.12                100%          9.05%
services


Classified by products
                                                                                                                Unit: RMB
                                                2020                                 2019                       Increase/
     Product           Item                            Proportion to                         Proportion to    decrease over
                                      Amount                               Amount
                                                       operating cost                        operating cost   previous year
Front-end
                  Operating cost   12,797,470,301.71           37.69% 13,018,006,201.14              41.80%          -1.69%
equipment
Back-end
                  Operating cost    3,463,814,165.41           10.20%   3,700,043,734.49             11.88%          -6.38%
equipment
Central control
                  Operating cost    5,587,909,127.42           16.46%   4,289,265,345.53             13.78%         30.28%
equipment

Constructions     Operating cost    1,353,524,939.67            3.99%    844,074,602.62               2.71%         60.36%

Others            Operating cost    6,887,430,103.27           20.27%   6,479,665,731.95             20.81%          6.29%

Subtotal          Operating cost   30,090,148,637.48           88.61% 28,331,055,615.73              90.98%          6.21%

Smart home
                  Operating cost    1,772,362,386.38            5.22%   1,574,835,597.99              5.06%         12.54%
business

Robotic business Operating cost      703,671,619.41             2.07%    380,163,028.57               1.22%         85.10%

Other innovative
                 Operating cost     1,391,515,214.46            4.10%    854,122,534.83               2.74%         62.92%
businesses

Subtotal          Operating cost    3,867,549,220.25           11.39%   2,809,121,161.39              9.02%         37.68%




6) Any change in consolidation scope during the reporting period
√Yes □ No

During the reporting period, the Company has newly set up three wholly-owned subsidiaries and four holding
subsidiaries, acquired three subsidiaries, and cancelled two subsidiaries, which have caused the changes in
consolidation scope. For more details, please refer to Financial Report Note (VI) “Changes in consolidation scope”
of the financial statement.

7) Significant change or adjustment of the Company’s business, products or services during the reporting
period:
□ Applicable √ Inapplicable



                                                                                                                         100
                                                                                                   Hikvision 2020 Annual Report

8) Major customers and suppliers:
Sales to major customers of the Company

Sales to top five customers (RMB)                                                                                     1,962,348,321.68

Total sales to top five customers as a percentage of the total sales for the year (%)                                            3.09%
Total sales to the related parties in top five customers as a percentage of the total
                                                                                                                                 0.00%
sales of the year (%)


Information on top five customers
   No.           Name of Customer                       Sales Amount (RMB)                    Percentage of total sales for the year

    1                    First                                            823,238,525.43                                         1.30%

    2                  Second                                             396,030,353.38                                         0.62%

    3                   Third                                             257,714,277.63                                         0.40%

    4                   Fourth                                            251,783,014.66                                         0.40%

    5                    Fifth                                            233,582,150.58                                         0.37%

  Total                   --                                            1,962,348,321.68                                         3.09%

Other information of major customers
□Applicable √Inapplicable


Major suppliers of the Company

Total purchases from top five suppliers (RMB)                                                                         8,411,002,227.23

Total purchases from top five suppliers as a percentage of the total purchases for the year                                     23.64%
Total purchases from the related parties in the top five suppliers as a percentage of the total
                                                                                                                                  0.00%
purchases for the year

Information on top five suppliers of the Company

    No.                Supplier Name                     Purchase Amount (RMB)                Percentage of total purchase for the year

        1                      First                                      4,488,262,380.13                                       12.62%

        2                  Second                                         1,751,616,676.30                                        4.92%

        3                   Third                                           807,975,634.31                                        2.27%

        4                  Fourth                                           702,217,512.81                                        1.97%

        5                      Fifth                                        660,930,023.68                                        1.86%

   Total                         --                                       8,411,002,227.23                                       23.64%

Other information on major suppliers
□ Applicable √ Inapplicable




                                                                                                                                       101
                                                                                                  Hikvision 2020 Annual Report

3. Expenses
                                                                                                                           Unit: RMB

                                                                           Increase/decrease
                                    2020                   2019              over previous           Note of significant change
                                                                                 year
Sales expenses                  7,377,790,744.58     7,256,781,486.68                1.67% No significant changes

Administrative expenses         1,790,013,088.76     1,822,464,442.07                -1.78% No significant changes

                                                                                           Affected by foreign exchange rate
Financial expenses                 396,254,772.56     -640,068,177.19              161.91% fluctuations, foreign exchange losses

                                                                                               increased

R&D expenses                    6,378,651,762.42     5,483,811,698.36               16.32% Continue to increase R&D investments


4. R&D Investment
√Applicable □Inapplicable

     In 2020, the Company has newly added 1,270 authorized patents (including 568 patents for invention, 198
utility models and 504 product design patents), and newly added 202 software copyrights. As of the end of 2020,
the Company had accumulatively owned 4,941 authorized patents (including 1,307 invention patents, 1,246 utility
models and 2,388 product design patents), and accumulatively owned 1,240 software copyrights.


R&D investment of the Company

                                                    2020                              2019                    Change Percentage

Number of Engineers (ppl)                                         20,597                           19,065                         8.04%
Engineers as percentage of Total
                                                                  48.25%                          47.19%                          1.06%
headcount

Amount of R&D expenses (RMB)                         6,378,651,762.42                 5,483,811,698.36                        16.32%
R&D investment as a percentage of
                                                                  10.04%                           9.51%                          0.53%
operating income

Capitalized R&D expenses (RMB)                                      0.00                             0.00                         0.00%
Capitalized R&D expenses as a
                                                                  0.00%                            0.00%                          0.00%
percentage of R&D expenses

Reason of significant change of total R&D expenses as a percentage of operating income as compared to last year
□ Applicable √ Inapplicable
Reason and explanation of its reasonableness of significant change of the capitalized R&D expenses
□ Applicable √ Inapplicable




                                                                                                                                    102
                                                                                     Hikvision 2020 Annual Report

5. Cash flow
                                                                                                            Unit: RMB

                                                                                                Increase/decrease over
                Item                            2020                        2019
                                                                                                    previous year
Subtotal of cash inflows from
                                                72,871,160,858.85           64,478,744,263.94                   13.02%
operating activities
Subtotal of cash outflows from
                                                56,783,004,292.18           56,711,024,092.80                     0.13%
operating activities
Net cash flows from operating
                                                16,088,156,566.67            7,767,720,171.14                  107.12%
activities
Subtotal of cash inflows from
                                                 1,904,368,743.55             668,070,675.20                   185.05%
investing activities
Subtotal of cash outflows from
                                                 4,459,002,700.82            2,591,059,148.00                   72.09%
investing activities
Net cash flows from investing
                                                -2,554,633,957.27           -1,922,988,472.80                   -32.85%
activities
Subtotal of cash inflows from
                                                 7,057,371,569.92            9,615,811,861.82                   -26.61%
financing activities
Subtotal of cash outflows from
                                                11,617,474,855.16           15,087,164,151.74                   -23.00%
financing activities
Net cash flows from financing
                                                -4,560,103,285.24           -5,471,352,289.92                   16.65%
activities
Net increase in cash and cash
                                                 8,509,169,869.91             484,656,274.51                 1,655.71%
equivalents

Explanation of why the related data varied significantly on a YoY basis
√ Applicable □ Inapplicable
The main reason for the change in net cash flow from operating activities was the increase in sales receipts this year;
the main reason for the change in net cash flow from investment activities was the purchase of foreign exchange
forward financial products and the increase in external equity investment in the current period; the main reason for
the change in net cash flow from financing activities was the decrease in the net outflow of borrowings this year.


Explanation of reasons leading to the material difference between cash flow from operating activities during the
reporting period and net profit for the year

□ Applicable √ Inapplicable



III.      Non-Core Business Analysis

□Applicable √Inapplicable

IV. Analysis of assets and liabilities

1.     Material changes of asset items

                                                                                                         Unit:RMB




                                                                                                                     103
                                                                                                Hikvision 2020 Annual Report

                                  December 31st 2020              January 1st 2020
                                                                                            YoY
                                                  Percentage                    Percentage Change      Note of significant change
                                  Amount           of total      Amount          of total   (%)
                                                    assets                        assets

Cash and bank balances        35,459,729,108.27      39.98% 27,071,948,919.78     35.92% 4.06% Increase in sales collection

Accounts receivable           21,979,380,716.86      24.78% 21,307,927,200.28     28.28% -3.50% Increase as sales revenue grows

Inventories                   11,477,906,040.70      12.94% 10,756,027,592.41     14.27% -1.33% No significant change

Long-term equity                                                                                    Increased investment in
                                864,026,710.23        0.97%    252,165,321.49        0.33% 0.64%
investment                                                                                          associates and joint ventures

Fixed assets                   5,876,007,536.60       6.62% 5,791,218,720.87         7.68% -1.06% No significant change

                                                                                                    Increase in construction
                                                                                                    investment on Chengdu Science
                                                                                                    and Technology Park, Hangzhou
Construction in process        1,425,235,193.72       1.61%    631,555,479.06        0.84% 0.77%
                                                                                                    Innovation Industry Park and
                                                                                                    Chongqing Science and
                                                                                                    Technology Park Phase 2

                                                                                                    Increase in demands for
Short-term loans               3,999,246,634.59       4.51% 2,640,082,485.15         3.50% 1.01%
                                                                                                    temporary capital turnover

Long-term loans                1,961,167,761.30       2.21% 4,604,168,571.43         6.11% -3.90%
                                                                                                    Increase in project borrowings
Non-current liabilities due
                               3,507,680,339.78       3.95%     86,123,154.06        0.11% 3.84%
within one year


2. Assets and liabilities measured at fair value

√ Applicable □ Inapplicable
                                                                                                                         Unit: RMB
                                                  Difference Provision
                                                       on         for
                                   Profit or loss
                                                  translation decline                  Sales
                                   from change                            Purchased
                                                  of financial in value               during
      Item         Opening balance in fair value                        amount during        Other changes Closing balance
                                                  statements during                     the
                                    during the                            the period
                                                  dominated       the                 period
                                      period
                                                   in foreign current
                                                    currency    period
Financial assets


1.   Derivative
     financial                181.76 22,814,664.19 -134,999.18                                                          22,679,846.77
     assets

2.   Other non-
     current
                    312,398,267.44 69,478,784.83                           112,872,015.00             -2,810,000.00   491,939,067.27
     financial
     assets



                                                                                                                                     104
                                                                                             Hikvision 2020 Annual Report

                                                  Difference Provision
                                                       on         for
                                   Profit or loss
                                                  translation decline                  Sales
                                   from change                            Purchased
                                                  of financial in value               during
       Item        Opening balance in fair value                        amount during        Other changes Closing balance
                                                  statements during                     the
                                    during the                            the period
                                                  dominated       the                 period
                                      period
                                                   in foreign current
                                                    currency    period
3.    Receivables
      for         1,257,385,053.02                                                               702,216,142.23 1,959,601,195.25
      financing
Subtotal of
                   1,569,783,502.22 92,293,449.02 -134,999.18             112,872,015.00         699,406,142.23 2,474,220,109.29
financial assets

Financial
                           652,428.18 -6,835,239.48 -81,896.51                                                        7,405,771.15
Liabilities

Whether there were any material changes on the measurement attributes of major assets of the Company during the
reporting period:
□ Yes √ No


3. Assets right restrictions as of the end of reporting period

                                                                                                                        Unit: RMB

               Item                    Closing Book Value (RMB)                      Reasons for being restricted

          Monetary fund                             434,891,229.96 Various cash deposits and other restricted funds

         Notes receivable                           482,454,604.99 Endorsed to suppliers

         Notes receivable                              7,981,224.88 Pledge for issuance of bank acceptance

     Receivables for financing                      106,117,987.87 Pledge for issuance of bank acceptance

            Fixed assets                             45,330,337.75 Fixed assets leased through financial lease

      Long-term receivables                        1,770,160,748.25 Pledge for long-term debts

               Total                               2,846,936,133.70


V. Analysis of Investments

1. Overview
√Applicable □ Inapplicable


       Investment during 2020 (RMB)               Investment during 2019 (RMB)                      Fluctuation (%)

                            2,666,845,621.23                          2,214,804,834.61                                    20.41%


2. Significant equity investment during the reporting period

□Applicable √Inapplicable


                                                                                                                              105
                                                                                                                                                            Hikvision 2020 Annual Report


3. Significant non-equity investment during the reporting period

√ Applicable □ Inapplicable
                                                                                                                                                                                    Unit: RMB

                                                                                                                              Reasons
                                                                                                                              for not
                                                                                  Cumulative amount                           reaching
                                Fixed assets                  Investment during
                       Invest                     Project                         of investment by the Source of   Project    planned Disclosure Date
    Project name                investment or                    the current                                                                                  Disclosure Index (if applicable)
                      method                      industry                          end of reporting    funds      schedule   progress    (if applicable)
                                    not                       reporting period
                                                                                        period                                  and
                                                                                                                              expected
                                                                                                                              benefits

                                                Video                                                                                                        Announcement on Investment and
Chengdu Science and
                      Self-                     product and                                                                              September 23rd      Construction of Chengdu Science
  Technology Park                   YES                       278,695,245.67         521,626,793.33    Self-fund     26.49% None
                      built                     video                                                                                    2017                and Technology Park Project in
       Project
                                                service                                                                                                      Chengdu (No. 2017-033)

                                                Video                                                                                                        Announcement on Investment and
Hangzhou Innovation Self-                       product and                                            Specific                          September   23rd    Construction of Hangzhou
                                    YES                       224,283,067.91         337,821,702.49                  32.93% None
    Industry Park     built                     video                                                    Loan                            2017                Innovation Industry Park Project
                                                service                                                                                                      in Hangzhou (No. 2017-034)

                                                Video                                                                                                        Announcement on Investment and
 Chongqing Science
                      Self-                     product and                                                                              September   23rd    Construction of Chongqing
and Technology Park                 YES                        138,743,811.81        249,810,250.79    Self-fund     32.78% None
                      built                     video                                                                                    2017                Science and Technology Park in
   Project-phase 2
                                                service                                                                                                      Chongqing (No. 2017-035)

                                                Video
Zhengzhou Science
                      Self-                     product and
and Technology Park                 YES                         13,435,069.91           13,529,409.53 Self-fund       2.79% None                -                            -
                      built                     video
      Project
                                                service

                                                                                                                                                                                              106
                                                                                                                                                               Hikvision 2020 Annual Report
                                                                                                                                 Reasons
                                                                                                                                 for not
                                                                                     Cumulative amount                           reaching
                                 Fixed assets                    Investment during
                        Invest                        Project                        of investment by the Source of   Project    planned Disclosure Date
    Project name                 investment or                      the current                                                                                  Disclosure Index (if applicable)
                       method                         industry                         end of reporting    funds      schedule   progress    (if applicable)
                                     not                         reporting period
                                                                                           period                                  and
                                                                                                                                 expected
                                                                                                                                 benefits

                                                 Video                                                                                                          Announcement on Investment and
  Xi’an Science and
                       Self-                     product and                                                                                September 23rd Construction of Xi’an Science and
  Technology Park                    YES                           6,507,603.03          12,679,174.93    Self-fund      0.56% None
                       built                     video                                                                                       2017               Technology Park in Xi’an (2017-
       Project
                                                 service                                                                                                        031)

                                                 Video
                       Self-                     product and
EZVIZ Industry Park                  YES                             2,332,067.08           2,332,067.08 Self-fund       0.29% None                 -                           -
                       built                     video
                                                 service

        Total             --          --         --               663,996,865.41       1,137,799,398.15      --          --

Note: In accordance with the Company's Authorization Management System, Zhengzhou Science and Technology Park project and EZVIZ Industry Park were
approved by the chairman of the board of directors.


4. Financial asset investment


(1) Securities Investments

□ Applicable √ Inapplicable
There no such case in the reporting period.




                                                                                                                                                                                               107
                                                                                                                                                                   Hikvision 2020 Annual Report
(2) Derivatives Investments
√ Applicable □ Inapplicable
                                                                                                                                                                                    Unit: 0,000 RMB

                                                                                                                                                                                  Proportion
                                                                                                                                                                                  of closing
                                                                                                                                                                                  investment   Actual
                                                                                                                                             Sold
                                                         Initial                                                                                                                  amount to    gain or
 Operation                                                                                                                                 amount
               Whether Whether        Type of       investment                                            Opening    Purchased amount                  Impairment     Closing        the        loss
  party of                                                                               Termination                                        during
               Related    related    derivatives     amount of           Initial date                    investment during the reporting               provisions investment Company’s during
 derivatives                                                                                date                                             the
                party transaction investment        derivatives                                           amount           period                       (if any)      amount      net assets    the
 investment                                                                                                                                reporting
                                                    investment                                                                                                                    at the end reporting
                                                                                                                                            period
                                                                                                                                                                                    of the     period
                                                                                                                                                                                  reporting
                                                                                                                                                                                    period

                                    foreign
Commercial                                                                                 June 18th
               No        No         exchange             98,489.32   December 5th 2019                   98,489.32            717,885.03                             351,670.38       6.46% 1,291.57
bank                                                                                              2021
                                    contract

Total                                                    98,489.32            --             --          98,489.32            717,885.03                             351,670.38       6.46% 1,291.57

Capital source of derivatives investment           Company’s own fund

Prosecution (if applicable)                        Nil

Announcement date for approvals of
derivatives investment from the board of           April 20th 2019/December 25th 2019
directors (if any)

Announcement date for approvals of
derivatives investment from the general            May 16th 2020
meeting (if any)

Risk analysis and control measures (including      For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging Transactions

                                                                                                                                                                                                      108
                                                                                                                                                                  Hikvision 2020 Annual Report
but not limited to, market risk, liquidity risk,      in 2019 (NO. 2019-021) dated April    20th   2019 and the Announcement on Conducting Foreign Exchange Hedging Transactions in 2020 (NO.
credit risk, operational risk, legal risk, etc.) of   2019-065) dated December    25th   2019 of the Company
holding derivatives during the reporting period

Change of market price or fair value of
invested derivatives during the reporting             The Company’s accounting of derivatives’ fair value was mainly about the outstanding contracts signed with banks for forward exchange
period; specific methods, related assumptions         settlement during the reporting period. Held-for-trading financial assets/liabilities were determined with difference between the quoted price
and parameter setting of the derivatives’ fair       and forward exchange price in outstanding forward exchange contracts at the end of the period.
value analysis should be disclosed

During the current reporting period, whether
there was significant changes of accounting
policies and accounting principles of the             Nil
Company’s derivatives comparing to the prior
reporting period

Specific opinions on the Company’s derivatives
investments and risk control from independent Nil
directors


5. Use of raised funds

□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund


VI. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable




                                                                                                                                                                                                       109
                                 Hikvision 2020 Annual Report
2. Sale of significant equity:


□ Applicable √ Inapplicable




                                                           110
                                                                                           Hikvision 2020 Annual Report


VII. Analysis of major subsidiaries and investees

Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable


                                                        Equity acquisition and disposal method        Impact on overall
                    Company name
                                                              during the reporting period             production results
         Hangzhou Rayin Technology Co., Ltd.                      Cash contribution                 Business development

                                                                                                    Expand overseas sales
               Hikvision Morocco LLC                              Cash contribution
                                                                                                          channels

    Kunming Hikvision Digital Technology Co., Ltd.                Cash contribution                 Business development

       Hangzhou Microimage Software Co., Ltd.                     Cash contribution                 Business development

 Hangzhou Microimage Intelligent Technology Co., Ltd.             Cash contribution                 Business development

      Jinan Hikvision Digital Technology Co., Ltd.                Cash contribution                 Business development

                                                                                                    Expand overseas sales
                  EZVIZ Europe B.V.                               Cash contribution
                                                                                                          channels

                                                                                                    Expand overseas sales
                    BK Grup UAB                               Transfer of equity in cash
                                                                                                          channels

                                                                                                    Expand overseas sales
              BK EESTI AKTSIASELTS                            Transfer of equity in cash
                                                                                                          channels

                                                                                                    Expand overseas sales
                   SIA “BK Latvia”                          Transfer of equity in cash
                                                                                                          channels

     Hainan Hikvision System Technology Co., Ltd.             Liquidation & cancellation               Reorganization

 Hangzhou Hikvision Investment Management Co., Ltd.           Liquidation & cancellation               Reorganization


VIII. Structural entities controlled by the Company

□ Applicable √ Inapplicable

IX. Outlook for the Future Development of the Company


1. Industry developing trends

      (1) Pursuant to the observation on the following aspects: 1) the development of multi-dimensional perception

technology and market demands brought by the fusion of various detector technology; 2) rapid implementation of

AI technology and market demands brought by the emerging of big-data technology applications; 3) market

demands brought by improved awareness and understanding of users towards smart cities and digitalization

transformation of enterprises; we believe that the industry remains a large development potential.

                                                                                                                           111
                                                                                  Hikvision 2020 Annual Report

     (2) As business models of perception, data and application are not limited by specific industry features, the

Company current businesses has covered over 70 industries. With the further division and maturity of industrial

solutions, the Company has opportunities to provide products, solutions and services to more industries.

     (3) With the accumulation and development in the past 20 years, the Company is able to lay a solid foundation

on software-hardware fusion, cloud-edge fusion, IoT-information network fusion and big data-AI fusion, which

facilitates the Company meeting users’ needs by ample software and hardware products, solutions and applications,

further drives the development of the Company through technology innovation, and strengthens and enlarges the

competitive advantages.




2. The Company's development strategy

     Hikvision is committed to become a provider of Intelligent IoT solutions and big data services with video as

its core competence. The Company adheres to the business philosophy of "professionalism, honesty, and integrity”

and the core corporate values of “dedicated to customers’ continual success, adding value to companies and

communities, acting with honesty and integrity, pursuing excellence in every endeavor”. Through continuous

innovation, it provides global customers with high-quality products and services and creates value for customers.

     With the corporate mission “to explore innovative ways to better perceive and understand the world, to

empower vision for decision-makers and practitioners, and work together to enhance safety and advance sustainable

development around the world”, the Company is committed to empower vision for the security and development of

the world.



3. Key Operation Priorities in 2021

     (1) Continue to consolidate R&D work on technologies, products and solutions based on technology innovation.

     (2) Continue to promote the construction of sales and services network centering on cities domestically and

centering on nations overseas, empower local business teams, and drive the new growth of the Company.

     (3) Maintain a solid and practical inventory management strategy, to maintain a diversified supply structure

and ensure the safety of supply chains.

     (4) Continue to propel the process reform and management reform, improve the cooperative ability between

the Company’s organizations and business strategies, and enhance operational efficiency.


                                                                                                               112
                                                                              Hikvision 2020 Annual Report

     (5) Comply with laws and regulations, strengthen internal education and propaganda on compliance, and

continue to advance the construction of global compliance system.




X. Reception of activities including research, communication and interviews during the report period
1. Registration form for reception of research, communication, interviews and other activities during the
reporting period
√ Applicable □ Inapplicable




                                                                                                            113
                                                                                                                                                                        Hikvision 2020 Annual Report
                                                                          Type of                                       The main content of
                                      Location of      Method of
     Time of reception                                                   reception            Reception object         the discussion and the              Index of basic situation of the research
                                       reception        reception
                                                                           object                                       information provided

                                     Headquarters
                                                    Site Research and                   14 investors including Citic The Company's
From December          23rd   2019   meeting room                       Institutional                                                           CNINF, Investor Relations Activity Record: From December
                                                       telephone                        Construction Securities-Shi operating conditions
to January    3rd   2020                of the                           investors                                                              23rd 2019 to January 3rd 2020
                                                     communication                      Zeyu, etc.                    and future prospects
                                      Company
                                     Headquarters                                                                     The Company's
                                                    Site Research and
From January        6th   2020 to    meeting room                       Institutional 44 investors including Naito operating conditions         CNINF, Investor Relations Activity Record: From January
                                                       telephone
January   17th   2020                   of the                           investors      Securities- Seijiro Naito, etc. and future prospects    6th 2020 to January 17th 2020
                                                     communication
                                      Company
                                     Headquarters                                                                     The Company's
From February 10th 2020 to meeting room                Telephone        Institutional 421 investors including         operating conditions      CNINF, Investor Relations Activity Record: From February
February 21st 2020                      of the       communication       investors      Efund-Feng Bo, etc.           and future prospects      10th 2020 to February 21st 2020
                                      Company
                                     Headquarters                                                                     The Company's
                                                                                        214 investors including
From February        24th   2020 to meeting room       Telephone        Institutional                                 operating conditions      CNINF, Investor Relations Activity Record: From February
                                                                                        Hongcheng Investment -
March   6th   2020                      of the       communication       investors                                    and future prospects      24th 2020 to March 6th 2020
                                                                                        Zhang Tao, etc
                                      Company
                                     Headquarters                                                                     The Company's
                                                                                        24 investors including
From March       9th   2020 to       meeting room      Telephone        Institutional                                 operating conditions      CNINF, Investor Relations Activity Record: From March 9th
                                                                                        Everbright Asset
March 25th 2020                         of the       communication       investors                                    and future prospects      2020 to March 25th 2020
                                                                                        Management-Xu Deren, etc.
                                      Company

                                     Headquarters                                                                     The Company's
                                                      Performance       Institutional
                                     meeting room                                       1,097 investors including     operations in 2019 and
April 25th 2020                                     result conference    investors;                                                             CNINF, Investor Relations Activity Record: April 25th 2020
                                        of the                                          CICC-Feng Da, etc.            the first quarter of
                                                          call          individuals
                                      Company                                                                         2020

From April 27th 2020 to              Headquarters      Telephone        Institutional 96 investos including APS-      The Company's             CNINF, Investor Relations Activity Record: From April 27th
May 9th 2020                         meeting room    communication       investors      Zhang Qing,etc.               operating conditions      2020 to May 9th 2020

                                                                                                                                                                                                        114
                                                                                                                                                                       Hikvision 2020 Annual Report
                                                                        Type of                                      The main content of
                                   Location of       Method of
       Time of reception                                               reception             Reception object       the discussion and the               Index of basic situation of the research
                                    reception        reception
                                                                         object                                      information provided

                                      of the                                                                        and future prospects
                                    Company

                                  Headquarters Site Research and                      81 investors including East   The Company's
From May 11th 2020 to May meeting room               telephone        Institutional Securities Asset                operating conditions      CNINF, Investor Relations Activity Record: From May 11th
22nd   2020                           of the      communication        investors      Management-Wang Yanfei,       and future prospects      2020 to May 22nd 2020
                                    Company                                           etc.

                                  Headquarters Site Research and                                                    The Company's
                                                                                      144 investors including
From May       23rd   2020 to June meeting room      telephone        Institutional                                 operating conditions      CNINF, Investor Relations Activity Record: From May 23rd
                                                                                      CITIC Securities HuYe
5th 2020                              of the      communication        investors                                    and future prospects      2020 to June 5th 2020
                                                                                      Qianwen, etc.
                                    Company
                                  Headquarters Site Research and                                                    The Company's
                                                                                      61 investors including
From June 8th 2020 to June        meeting room       telephone        Institutional                                 operating conditions      CNINF, Investor Relations Activity Record: From June 8th
                                                                                      Founder Securities-Luo
24th   2020                           of the      communication        investors                                    and future prospects      2020 to June 24th 2020
                                                                                      Yiyang, etc.
                                    Company
                                  Headquarters
                                                    Performance       Institutional                                 The Company's
                                  meeting room                                        559 investors including GF
July   25th   2020                                result conference    investors;                                   operations in the first   CNINF, Investor Relations Activity Record: July 25th   2020
                                      of the                                          Fund-Tian Wenzhou,etc.
                                                        call          individuals                                   half of 2020
                                    Company
                                  Headquarters Site Research and                                                    The Company's
From July      27th   2020 to     meeting room       telephone        Institutional 190 investors including IDG operating conditions          CNINF, Investor Relations Activity Record: From July 27th
August 10th 2020                      of the      communication        investors      Capital-Yun Nan, etc.         and future prospects      2020 to August 10th 2020
                                    Company
                                  Headquarters Site Research and                                                    The Company's
From August 11th 2020 to          meeting room       telephone        Institutional 80 investors including China operating conditions         CNINF, Investor Relations Activity Record: From August
August 21st 2020                      of the      communication        investors      Huitianfu Yuan Jianjun, etc. and future prospects       11th 2020 to August 21st 2020
                                    Company

                                                                                                                                                                                                       115
                                                                                                                                                                       Hikvision 2020 Annual Report
                                                                         Type of                                       The main content of
                                     Location of      Method of
     Time of reception                                                  reception            Reception object         the discussion and the              Index of basic situation of the research
                                      reception       reception
                                                                          object                                       information provided

                                    Headquarters Site Research and                                                    The Company's
                                                                                       15 investors including ABC
From August    24th   2020to        meeting room      telephone        Institutional                                  operating conditions      CNINF, Investor Relations Activity Record: From August
                                                                                       Life Insurance and Feng
September   4th    2020                of the      communication        investors                                     and future prospects      24th 2020to September 4th 2020
                                                                                       Anming, etc.
                                     Company
                                    Headquarters Site Research and                                                    The Company's
                                                                                       61 investors including
From September       7th   2020 to meeting room       telephone        Institutional                                  operating conditions      CNINF, Investor Relations Activity Record: From September
                                                                                       Guotai Jun’an Securities-
 September   25th    2020              of the      communication        investors                                     and future prospects      7th 2020 to September 25th 2020
                                                                                       Junan Feng Dingcheng
                                     Company
                                    Headquarters
                                                     Performance       Institutional 670 investors including          The Company's
                                    meeting room                                                                                                CNINF, Investor Relations Activity Record: October 24th
October 24th 2020                                  result conference    investors; Baoyin Investment-Zhou             operations in the third
                                       of the                                                                                                   2020
                                                         call          individuals Junkai, etc.                       quarter of 2020
                                     Company
                                    Headquarters Site Research and                                                    The Company's
                                                                                       295 investors including
From October       26th   2020 to   meeting room      telephone        Institutional                                  operating conditions      CNINF, Investor Relations Activity Record: From October
                                                                                       China Industrial Securities-
November    6th   2020                 of the      communication        investors                                     and future prospects      26th 2020 to November 6th 2020
                                                                                       Yao Kang, etc.
                                     Company
                                    Headquarters Site Research and                                                    The Company's
                                                                                       25 investors including
From November        9th   2020 to meeting room       telephone        Institutional                                  operating conditions      CNINF, Investor Relations Activity Record: From November
                                                                                       Hillhouse Capital-Liang
 November    20th    2020              of the      communication        investors                                     and future prospects      9th 2020 to November 20th 2020
                                                                                       Din, etc.
                                     Company
                                    Headquarters Site Research and                                                    The Company's
                                                                                       22 investors including
From November        23rd   2020    meeting room      telephone        Institutional                                  operating conditions      CNINF, Investor Relations Activity Record: From November
                                                                                       Peshan Investment-Jiang
 to December 7th 2020                  of the      communication        investors                                     and future prospects      23rd 2020 to December 7th 2020
                                                                                       Jianbo, etc.
                                     Company
From December 8th 2020 to           Headquarters Site Research and Institutional 44 investors including               The Company's             CNINF, Investor Relations Activity Record: From December
December    21st   2020             meeting room      telephone         investors      Cathay Pacific Fund-Zhang operating conditions           8th 2020 to December 21st 2020

                                                                                                                                                                                                          116
                                                                                                                                                                 Hikvision 2020 Annual Report
                                                                        Type of                                   The main content of
                                    Location of      Method of
     Time of reception                                                 reception             Reception object    the discussion and the             Index of basic situation of the research
                                     reception        reception
                                                                         object                                  information provided

                                      of the       communication                      Yang, etc.                 and future prospects
                                    Company
                                   Headquarters                                                                  The Company's
                                                  Site Research and                   106 investors including
From December        22nd   2020   meeting room                       Institutional                              operating conditions     CNINF, Investor Relations Activity Record: From December
                                                     telephone                        China Life-Feng Guanlan,
to January   11th   2021              of the                           investors                                 and future prospects     22nd 2020 to January 11th 2021
                                                   communication                      etc.
                                    Company




                                                                                                                                                                                               117
                                                                                      Hikvision 2020 Annual Report




                                    Section V Significant Events

I.         Profit distribution of ordinary shares and capitalization of capital reserves

Profit distribution policy of ordinary shares in the reporting period, especially the formulation, implementation
and adjustment of cash dividend policy
□Applicable √Inapplicable


Profit distribution policy (proposal) and capitalizing of capital reserves policy (proposal) in last three years
(including the current reporting period)
     (1)       Profit distribution for the year 2018:Based on the Company’s total share capital of 9,348,465,931
               shares on the date of equity registration when the Company implements the distribution plan, the
               Company distributed cash dividend of RMB 6 (tax inclusive) per each 10 shares to all shareholders,
               bonus share and share distribution from capital reserve is nil.

     (2)       Profit distribution for the year 2019:Based on the Company’s total share capital of 9,345,010,696
               shares on the date of equity registration when the Company implements the distribution plan, the
               Company distributed cash dividend of RMB 7 (tax inclusive) per each 10 shares to all shareholders,
               bonus share and share distribution from capital reserve is nil.

     (3)       Profit distribution proposal for the year 2020:Based on the Company’s current total share capital of

               9,343,417,190 shares, the Company proposed to distribute cash dividend of RMB 8 (tax inclusive)

               per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil.




                                                                                                                    118
                                                                                                                                                               Hikvision 2020 Annual Report
Cash dividend of ordinary shares in last 3 years (including the current reporting period)
                                                                                                                                                                                        Unit: RMB

                                                                                                                                                                                   The ratio of total
                                                                                                                                                                                     cash dividends
                                                                                                                                                                                    (including other
                                                                                                                                                                                    methods) to the
                                                     Net profit attributable to Ratio of net profit attributable    Amount of cash                                Total cash
                                                                                                                                            Ratio of cash                               net profit
                                Cash dividends        shareholders of listed    to shareholder of Company in       dividends in other                             dividends
          Year                                                                                                                            dividends in other                         attributable to
                                (including tax)      Company in consolidated        consolidated financial         methods (Such as                            (including other
                                                                                                                                               methods                                  common
                                                           statements                   statements (%)             share repurchase)                               methods)
                                                                                                                                                                                    shareholders of
                                                                                                                                                                                   listed companies
                                                                                                                                                                                  in the consolidated
                                                                                                                                                                                        statement

         2020                     7,474,733,752.00          13,385,526,714.15                           55.84%                     0.00               0.00%    7,474,733,752.00              55.84%


         2019                     6,541,507,487.20          12,414,587,690.45                           52.69%                     0.00               0.00%    6,541,507,487.20              52.69%


         2018                     5,609,079,558.60           11,352,869,241.32                          49.41%                     0.00               0.00%    5,609,079,558.60              49.41%

During the reporting period, the company was profitable and the distributable profits to ordinary shareholders of the parent company was positive, but the Company
did not propose a cash dividend distribution plan of ordinary shares.
□ Applicable √ Inapplicable




                                                                                                                                                                                                 119
                                                                                                    Hikvision 2020 Annual Report


II. Profit distribution and capitalizing of capital Reserves for the current reporting period
Bonus issue per 10 shares (share)                                                                                                        0

Cash dividend per 10 shares (RMB) (tax
                                                                                                                                       8.00
inclusive)
Additional shares converted from capital reserves
                                                                                                                                         0
for 10 shares (share)
Total capital shares as the basis for the distribution
                                                                                                                             9,343,417,190
proposal (share)

Total cash dividend (RMB) (tax inclusive)                                                                                  7,474,733,752.00

Distributable profits (RMB)                                                                                               31,327,891,058.77

Percentage of cash dividends in the total
                                                                                                                                    23.86%
distributed profit (%)
                                                         Cash dividend policy:

The Company is in the development stage and has a substantial plan of cash expenditure. In the current profit distribution, cash
dividends shall account for at least 20%.

                    Details about the plan for profit distribution and capitalizing capital reserves into share capital

As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, in 2020, the parent company of the Company realized
net profit of RMB 12,671,388,440.50, the statutory surplus reserve is nil, adding the undistributed profit of the parent company at the
beginning of the year of RMB 25,196,894,651.27, deducting the cash dividends of RMB 6,541,507,487.20 in 2019, adding back
RMB 1,115,454.20 of the unpaid dividends for the repurchased restricted shares, as of December 31st 2020, the profits distributable
to shareholders of the parent company amounted to RMB 31,327,891,058.77. As of December 31st 2020, the profits distributable to
shareholders in the consolidated statement were RMB 35,806,523,826.37 (consolidated). To sum up, according to the principle of
“whichever is lower”, the profits distributable to shareholders this year was RMB 31,327,891,058.77.


Based on the Company’s current total share capital of 9,343,417,190 shares, the Company proposed to distribute cash dividend of
RMB 8 (tax inclusive) per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil. The above
scheme will distribute a total cash dividend of RMB 7,474,733,752.00, and the remaining undistributed profits will be transferred to
the next year.




                                                                                                                                        120
                                                                                                                                                 Hikvision 2020 Annual Report
III. Performance of commitments


    1.    Complete and incomplete commitments of the Company and its actual controller, shareholders, related parties, acquirers, and other related

          parties for the commitments by the end of the reporting period.
√ Applicable □ Inapplicable
                                                  Commitment type                                                                       Date of         Term of
  Commitments              Giver of commitments                                           Details of commitments                                                    Performance
                                                                                                                                      commitments     commitments

                                                                       1. Commitments in non-competition within the industry: In
                                                                       the period as controlling shareholders of the Hikvision,
                                                                       CETHIK and its controlling subsidiaries (excluding
                                                                       Hikvision and its subsidiaries, the same below) will not be
                                                                       engaged in such business that is competitive to Hikvision
                                                                       and its subsidiaries directly or indirectly.
                                                                       2. Commitments in decrease and regulation of transactions
                                                                       with related party: Zhejiang Haikang Group Co., Ltd
                                                                       (hereinafter referred to as Haikang Group or actual
                                                                       controller) as the controlling shareholders of Hangzhou
                                                  Commitments          Hikvision Digital Technology Co., Ltd (hereinafter referred
Commitments in                                    regarding horizontal to as "Hikvision" or "Listed Company") are commited as
offering documents                                competition and      below for the transactions with Hikvsion:                      October 29th                  Strict
                   CETHIK Group Co., Ltd.                                                                                                            Long-term
or shareholding                                   related party        (1) Haikang Group will not make use of the controlling         2013                          performance
alterations                                       transactions         power to offer more favorable conditions to Hikvision than
                                                                       those to any independent third party in any fair market
                                                                       transactions in the cooperation with Hikvision.
                                                                       (2) Haikang Group will not make use of the controlling
                                                                       power to obtain the prior right to complete the transaction
                                                                       with Hikvision.
                                                                       (3) Haikang Group will not deal with Hikvsion in not fair
                                                                       terms comparing to the market prices to prejudice the
                                                                       Company’s interests.
                                                                        For unavoidable related transactions, the Company will
                                                                       observe the principles of justice and fairness to deterimine
                                                                       prices according to the market on the basis of equality,
                                                                                                                                                                              121
                                                                                                                                  Hikvision 2020 Annual Report
                                     Commitment type                                                                       Date of       Term of
Commitments   Giver of commitments                                        Details of commitments                                                     Performance
                                                                                                                         commitments   commitments

                                                       voluntarily. The Company will obey the Articles of
                                                       Association and other regulatory documents related to the
                                                       avoiding of issues about related transactions. The related
                                                       transactions will go through approval procedures in
                                                       accordance with related rules and complete legal procedures,
                                                       fulfilling the information disclosure obligations in respect to
                                                       the related transactions
                                                       3. Commitment to the maintenance of the independence of
                                                       the listed Company
                                                       3.1 Commitment to Personnel Independence of the listed
                                                       Company
                                                       (1) Commitment that our general manager, deputy general
                                                       manager, chief financial officer, secretary of the board and
                                                       other members of senior management shall not assume any
                                                       positions other than directors and supervisors or get any
                                                       remuneration in CETHIK and/or any of its controlled
                                                       entities; (2) Commitment in keeping the management of
                                                       labor, human resources and issues related to remuneration of
                                                       the listed Company independent from that of CETHIK;
                                                       3.2 Commitment to the independence of the asset of the
                                                       listed Company
                                                       (1) Commitment to independent and complete asset of the
                                                       listed Company
                                                       (2) Commitment free of unlawful use of cash and asset of the
                                                       listed Company by the controlling shareholders
                                                       3.3 Commitment to financial independence of the listed
                                                       Company
                                                       (1) Commitment to an independent finance department with
                                                       a team and accounting system;
                                                       (2) Commitment to a regulated, independent accounting
                                                       system and financial management system of the branches
                                                       and subsidiaries
                                                       (3) Commitment to maintaining accounts with banks
                                                       independently of and not sharing any bank account with our
                                                                                                                                                              122
                                                                                                                                Hikvision 2020 Annual Report
                                     Commitment type                                                                     Date of       Term of
Commitments   Giver of commitments                                        Details of commitments                                                   Performance
                                                                                                                       commitments   commitments

                                                       controlling shareholders
                                                       (4) Commitment that the financial staff shall not assume any
                                                       positions in CETHIK
                                                       (5) Commitment to paying taxes independently according to
                                                       the law;
                                                       (6) Commitment to implementing financial decisions
                                                       independently
                                                       3.4 The Company has set up an independent organizational
                                                       structure which maintains its independent operations which
                                                       is independent from that of CETHIK.
                                                       3.5 Commitment to business Independence of the listed
                                                       Company
                                                       (1) The Company has the asset, personnel, aptitude and
                                                       management capability for independent and complete
                                                       business operation. The Company has the ability to operate
                                                       independently in the market.
                                                       (2) Commitment in independence in both business and
                                                       operations
                                                       4. Regarding plans for the development and relevant
                                                       commitment for the listed Company, Haikang Group has
                                                       committed as below for the subsequent development of
                                                       Hikvsion according to the Securities Acts and relevant laws
                                                       and rules,
                                                       4.1 Currently the Company has no plan to change or make
                                                       significant adjustments for principal business in the next 12
                                                       months;
                                                       4.2 Currently the Company has no plan to sell, merge or
                                                       operate with another Company for the assets and business of
                                                       the listed Company or its subsidiaries in the next 12 months.
                                                       4.3 Currently the Company has no plan to alter the Board of

                                                                                                                                                            123
                                                                                                                                                       Hikvision 2020 Annual Report
                                                       Commitment type                                                                        Date of        Term of
  Commitments             Giver of commitments                                                Details of commitments                                                      Performance
                                                                                                                                            commitments    commitments

                                                                           the Directors and senior management and no agreement with
                                                                           other shareholders about the appointment and removal of the
                                                                           directors or senior management. The team of Board of
                                                                           Directors and senior management will remain unchanged for
                                                                           the foreseeable future.
                                                                           4.4 Currently the Company has no plan to make significant
                                                                           changes to the Articles of Association for the listed
                                                                           Company.
                                                                           4.5 Currently the Company has no plan to make significant
                                                                           changes to the existing employee recruitment for the listed
                                                                           Company.
                                                                           4.6 Currently the Company has no plan to make significant
                                                                           changes for the dividend distribution plan for the listed
                                                                           Company.
                                                                           4.7 Currently the Company has no plan to make significant
                                                                           changes for business and organizational structure for the
                                                                           listed Company.

                                                                           During Hu Yangzhong, Wu Weiqi, JiangHaiqing, Zhou
                                                                           Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo,
                  Hangzhou Weixun Investment                               Hu Dan,、Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen
                  Management Limited Partnership                           Junke’s tenure of the Company’s board of directors,
Commitments in                                         Share restriction                                                                    May 17th                     Strict
Initial Public    (later renamed as Xinjiang Weixun                       supervisors and senior management personnel, the annual                        Long term
                                                       commitment                                                                           2010                         performance
Offering or re-   Investment Management Limited                            transfer of Hikvision’s total shares should not exceed 25% of
financing         Partnership)                                            total number of shares held under Weixun; within 6 months
                                                                           after abovementioned personnel’s dimission, should not
                                                                           transfer Hikvision’s shares held under Weixun.

                  Hangzhou Pukang Investment Limited   Share restriction   During Hu Yangzhong, Wu Weiqi, Gong Hongjia’s tenure of May 17th              Long term      Strict
                                                                                                                                                                                   124
                                                                                                                                                          Hikvision 2020 Annual Report
                                                      Commitment type                                                                         Date of          Term of
Commitments            Giver of commitments                                                  Details of commitments                                                         Performance
                                                                                                                                            commitments      commitments

              Partnership(later renamed as Xinjiang commitment           the Company’s board of directors, supervisors and senior         2010                           performance
              Pukang Investment Limited                                   management personne, the annual transfer of Hikvision’s
              Partnership)                                               total shares should not exceed 25% of total number of shares
                                                                          held under Pukang; whithin 6 months after abovementioned
                                                                          personnel’s dimission, should not transfer Hikvision’s shares
                                                                          held under Pukang.

              The Company's directors, supervisors                        During their tenure of the Company’s board of directors,
              and executive: HuYangzhong,Wu                               supervisors and senior management personnel, the annual
              Weiqi, Jiang Haiqing, Zhou Zhiping, Share restriction      shares transfer should not exceed 25% of total number of          May 17th                       Strict
                                                                                                                                                            Long term
              Xu Lirong, Cai Dingguo, He Hongli,   commitment             shares held under Weixun; whthin 6 months after their             2010                           performance
              Zheng Yibo, Hu Dan, Jiang Yufeng, Liu                       dimission, they should not transfer their shares held under
              Xiang, Wang Ruihong, Chen Junke                             Weixun.

                                                                          During their tenure of the Company’s board of directors,
                                                                          supervisors and senior management personnel, the annual
              Directors, executive officers of the
                                                      Share restriction   shares transfer should not exceed 25% of total number of          May 17th                       Strict
              Company:                                                                                                                                      Long term
                                                      commitment          shares held under Pukang; whthin 6 months after their             2010                           performance
              Hu Yangzhong, Wu Weiqi
                                                                          dimission, they should not transfer their shares held under
                                                                          Pukang.

                                                                          During Gong Hongjia’s tenure of the Company’s board of
                                                                          directors, supervisors and senior management personnel,
              The Company’s director Gong            Share restriction   Chen’s annual shares transfer should not exceed 25% of total May 17th                           Strict
                                                                                                                                                            Long-term
              Hongjia’s spouse, Chen Chunmei         commitment          number of shares held under Pukang; whthin 6 months after 2010                                   performance
                                                                          the dimission of Gong Hongjia,Chen should not transfer her
                                                                          shares held under Pukang.

              China Electronics Technology Group      Commitment to       To avoid any loss of the Company and other shareholders           September                      Strict
                                                                                                                                                            Long term
              Corporation(later renamed as China     avoid horizontal    arising from any competing business, China Electronics            18th   2008                    performance

                                                                                                                                                                                     125
                                                                                                                                                          Hikvision 2020 Annual Report
                                                             Commitment type                                                                     Date of        Term of
  Commitments                Giver of commitments                                                  Details of commitments                                                      Performance
                                                                                                                                               commitments    commitments

                    Electronics Technology Group Co.,        competition        Technology Group Corporation, the actual controller of the
                    Ltd.)                                                      Company, issued Letters of non-competition on 18
                                                                                September, 2008.

                    Gong Hongjia;                           Commitment to
                    Hangzhou Weixun Investment               avoid horizontal
                                                             competition        To avoid any loss of the Company and other shareholders
                    Management Limited Partnership
                                                                                arising from any competing business, Gong Hongjia,
                    (later renamed as Xinjiang Weixun
                                                                                Hangzhou WeiXun Investment Management Limited
                    Investment Management Limited
                                                                                Partnership, ZheJiang Orient Holdings Co., Ltd and
                    Partnership);                                                                                                                                           Strict
                                                                                Hangzhou KangPu Investment Management Limited                             Long term
                    Hangzhou Pukang Investment Limited                          Partnership, the promoters of the Company, issued          July 10th 2008                     performance
                    Partnership(later renamed as Xinjiang                      Commitment Letters of non-competition in the same industry
                    Pukang Investment Limited                                   on 10 July, 2008.

                    Partnership);ZheJiang Orient
                    Holdings Co., Ltd.

                                                                                Within six months after 15 trading days from the date of the
Other
                                                                                disclosure of the Announcement on Pre-Disclosure of
commitments to                                                                                                                                               Six months       Completed on
                                                             Share reduction    Shareholdings by Shareholders on May 23rd 2020, Gong           May 23rd
the Company's       Gong Hongjia                                                                                                                             starting from    September 4th
                                                             commitment         Hongjia will reduce his holdings of shares not exceeding 2% 2020
minority                                                                                                                                                     June 15th 2020   2020
                                                                                of the Company's total share capital by means of centralized
shareholders
                                                                                bidding.

Whether the
commitments is                                                                                       Yes
fulfilled in time




                                                                                                                                                                                         126
                                                                                     Hikvision 2020 Annual Report

2. Where any profit forecast was made for any of the Company’s assets or projects and the current reporting
period is still within the forecast period, the Company shall explain whether the performance of the asset or
project reaches the profit forecast and why:

□ Applicable √ Inapplicable


IV. The Company’s funds used by the controlling shareholder or its related parties for non-
operating purposes.

□ Applicable √ Inapplicable
No such case duiring the reporting period.


V. Explanation given by the board of directors, supervisory committee and independent directors
(if applicable) regarding the “non-standard auditor’s report” issued by the CPA firm for the
current reporting period

□ Applicable √ Inapplicable


VI. For changes in accounting policies, accounting estimates and accounting methods as compared

to the financial report for the prior year
√ Applicable □Inapplicable


     Starting from January 1st 2020, the Company has adopted the Accounting Standards for Business Enterprises
No. 14 – Revenue (hereinafter referred to as the “New Revenue Standard”, the revenue standard before the
amendment is referred to as the "Original Revenue Standard") modified by the Ministry of Finance in 2017. The
New Revenue Standard has introduced the 5-step method for recognition and measurement of revenue and added
more instructions on specific transactions or events. For details of the accounting policies for recognition and
measurement of revenue of the Company, please refer to Note (III). 26 to the financial statements. The New Revenue
Standard requires the entity to adjust the retained earnings and the amounts of other relative items in the financial
statements at the beginning of initial adoption (i.e. January 1st 2020) of the new standards for the cumulative amount
of impact, and not to adjust information in comparable period. In adopting the New Revenue Standard, the Company
only adjusts the cumulative impact of contracts that have not been completed on the first execution date. For changes
in contract incurred before the beginning of adoption of New Revenue Standard, the Company will make simplified
treatment, namely, the Company will identify the fulfilled and unfulfilled performance obligations, determine
transaction price and allocate the transaction price between the fulfilled and unfulfilled performance obligations
according to the final arrangement of contract changes.


     The New Revenue Standard has no significant impact on the revenue recognition of various businesses of the
Company. Details of the impact of the adoption of the New Revenue Standard by the Company on January 1st 2020
are set out in Note (III) 32.2 to the financial statements.




                                                                                                                  127
                                                                                            Hikvision 2020 Annual Report

VII. Explanation for retrospective restatement of major accounting errors during the reporting

period

□ Applicable √ Inapplicable
No such case during the reporting period.



VIII. Explanation for changes in scope of the consolidated financial statements as compared to the

financial report for the prior year

√ Applicable □ Inapplicable

     During the reporting period, the Company has newly set up three wholly-owned subsidiaries and four holding

subsidiaries, acquired three subsidiaries, liquidated and cancelled two subsidiaries, which have caused the change

in consolidation scope. For more details, please refer to Financial Report Note (VI) “Changes in consolidation scope”

of the financial statement.


IV. Engagement and disengagement of the CPA firm


CPA firm engaged at present

Name of the domestic CPA firm                              Deloitte Touche Tohmatsu Certified Public Accountants LLP

Remuneration for the domestic CPA firm (RMB’0000)                                     365

Consecutive years of the audit service provided by the
                                                                                        5
domestic CPA firm
Name of the certified public accountants from the
                                                                          Tang Lianjiong, Zhang Shushu
domestic CPA firm
Consecutive years of the audit service provided by the   Tang Lianjiong has provided audit service for 2 consecutive year;
certified public accountants from the domestic CPA
firm                                                     Zhang Shushu has provided audit service for 4 consecutive years.

Whether the CPA firm was changed in the current period
□ Yes √ No
Whether to reappoint a CPA firm during the audit
□ Yes √ No
Engagement of internal control audit CPA firm, financial advisor or sponsor
□ Applicable √ Inapplicable


X. Listing suspension and termination after disclosure of this annual report


□ Applicable √ Inapplicable

                                                                                                                             128
                                                                                    Hikvision 2020 Annual Report

XI. Bankruptcy and restructuring

□ Applicable √ Inapplicable

No such case during the reporting period.


XII. Material litigation and arbitration

□ Applicable √ Inapplicable
No such case during the reporting period.

XIII. Punishments and rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.

XIV. Integrity of the Company and its controlling shareholders and actual controllers

□ Applicable √ Inapplicable


XV. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other incentive

plans


√Applicable □Inapplicable

     During the reporting period, the Company completed the second unlocking, repurchasing and cancelling shares

for 2016 Restricted Share Incentive Scheme.

     On December 24th 2019, Resolution for the Fulfillment of the Unlocking Conditions of the Second Unlock

Period for the 2016 Restricted Share Incentive Schemes was approved by the 14th meeting of the fourth Board.

Authorized by the second extraordinary general meeting for 2016, a total of 21,836,266 restricted shares of 2,726

grantees were vested and circulated on January 20th 2020. Meanwhile, 1,593,506 restricted shares held by a portion

of grantees not fulfilling the incentive conditions were repurchased and cancelled. On December 16th 2020,

repurchase and cancelation process of the restricted shares was complete.

     For details, please refer to in the Indicative Notice of Listing the Unlocked Shares during the Second Unlocking

Period of 2016 Restricted Share Incentive Schemes (No. 2020-002) and the Notice of the Completion of the Second

Repurchase and Cancelation of Restricted Shares that Already Granted for 2016 Restricted Share Incentive Schemes

(No. 2020-062) issued on January 17th 2020 and December 17th 2020 respectively.

     By the end of the reporting period, the Company has a total of 143,170,198 granted and restricted shares,


                                                                                                                 129
                                                                                     Hikvision 2020 Annual Report

accounts for 1.53% of the Company’s total share capital.

     The Company followed the Accounting Standard for Business Enterprises No. 11 – Share-based Payment and

other accounting standards in relation to accounting treatment for Restricted Share Incentive Schemes. Costs in

relation to the shares granted under 2016 Restricted Share Incentive Schemes and 2018 Restricted Share Incentive

Schemes are amortized over the waiting period for vesting.

     During the reporting period, costs amortized in relation to the shares granted under the 2016 Restricted Share

Incentive Schemes and shares granted under 2018 Restricted Share Incentive Schemes of the Company have no

material impact on the financial position and operating results of the Company. For details, please refer to Footnnote

(XI) - Share-based Payments.




                                                                                                                  130
                                                                                                                                                                  Hikvision 2020 Annual Report

XVI. Significant related-party transaction

1. Related-party transactions arising from routine operation
√Applicable □Inapplicable
                                                                                                               Proportion      Approved Whether
                                                                                    Pricing       Trading
                                                      Type of      Content of                                     to the        trading     exceed
                                                                                 principles for   Amount                                               Settlement     Disclosure      Disclosure
    Related party                Relationship         related        related                                    amount of       quota        the
                                                                                 related party    (0’000                                               method            date        reference
                                                    transaction    transaction                                   similar        (0’000    approved
                                                                                 transactions     RMB)
                                                                                                               transactions.   RMB)        quota

                                                                                                                                                                                   Announcement on
                                                                                                                                                                                   increasing the
                         Under the common                                                                                                                                          projections on
Subsidiaries or
                         control of the                                                                                                               Payment on    July   25th    2020 related-party
research institutes of                              Procurement                                       82,684         2.32%        90,000     No
                         Company’s actual                                                                                                            delivery      2020           transactions
CETC
                         controller.                                                                                                                                               arising from
                                                                                                                                                                                   routine operations
                                                                                                                                                                                   (No:2020-045)
                                                                                  Reference
                         The Company’s                           Procurement,
                                                                                 market price;
                         shareholder who holds                     receiving
                                                                                  Agreed on
                         more than 5% of the                        services
                                                                                     price
Shanghai Fullhan         Company’s shares, The                                                                                                       Payment on    April 25th
                                                    Procurement                                       24,390         0.69%        50,000      No
Micro Co., Ltd.          Company’s director,                                                                                                         delivery      2020
                         Gong Hongjia is the
                         director of the related
                         party
Maxio Technology         Wu Weiqi, director of                                                                                                                                     Announcement on
                                                                                                                                                      Payment on
(Hangzhou) Co., Ltd. the Company, served as Procurement                                                2,035         0.06%        13,000      No                                   projections on
                                                                                                                                                      delivery
and its subsidiaries     director of this company                                                                                                                                  2020 related-party

                                                                                                                                                                                                    131
                                                                                                                                                                  Hikvision 2020 Annual Report
                                                                                                               Proportion      Approved Whether
                                                                                 Pricing       Trading
                                                    Type of     Content of                                        to the        trading     exceed
                                                                              principles for   Amount                                                  Settlement     Disclosure      Disclosure
    Related party            Relationship           related       related                                       amount of       quota        the
                                                                              related party    (0’000                                                  method          date          reference
                                                  transaction   transaction                                      similar        (0’000    approved
                                                                              transactions     RMB)
                                                                                                               transactions.   RMB)        quota

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                                                                                                                                                                                   arising from
                                                                                                                                                                                   routine operations
                                                                                                                                                                                   (No:2020-017)
Wuhu Sensor
                       Wu Weiqi, director of
Technology Co.,                                                                                                                                       Payment on
                       the Company, served as Procurement                                           6,171            0.17%        14,000      No
Ltd.and its                                                                                                                                           delivery
                       director of this company
subsidiaries
Zhiguang Hailian Big
Data Technology Co., An associated company                                                                                                            Payment on
                                                  Procurement                                             14         0.00%         1,000      No                          -                -
Ltd. and its           held by the company                                                                                                            delivery
subsidiaries
                       A joint venture company Procurement
                       held by the company;
Zhejiang Haishi
                       The Company’s senior                                                                                                          Payment on
Huayue Digital                                                                                        174            0.00%           200      No                          -                -
                       management is                                                                                                                  delivery
Technology Co., Ltd.
                       appointed as this
                       company’s chairman
Shenzhen Hikvision                                Procurement
City Service           A joint ventures held by                                                                                                       Payment on
                                                                                                          36         0.00%           100      No                          -                -
Operation Co., Ltd.    the company                                                                                                                    delivery
and its subsidiaries




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