Procurement: China Eats Russian Lunch


March 25, 2014: Over the last five years China has displaced France as the fourth largest arms exporter in the world. Thus while Russia had a record year for arms exports in 2013, moving $13.2 billion worth of weapons, military equipment and defense services, those sales are increasingly threatened by more rapidly growing exports from China. Russian officials admitted that they did not expect to increase weapons sales over the next few years, largely because arms sales worldwide, both for export and domestic consumption is shrinking. Currently about half of Russian sales are aircraft (jets and helicopters) and 25 percent are anti-aircraft systems. Russia still gets orders because they are cheaper than Western stuff, and nearly as good. What the Russians were less willing to discuss was the growing competition from China.

The main reason for Russian forecasts of flat arms sales is China, which is becoming a major competitor. In 2012 China became the fifth largest arms exporter on the planet. In 2008-2012 China exported $11.2 billion (in 2012 dollars) worth of weapons, 55 percent of it to Pakistan and another seven percent to Burma. China, like Russia before it, got sales by selling to outcast nations (Pakistan for developing nukes and supporting terrorism, Burma for being a brutal dictatorship for decades). Russia still does that but with higher quality second-rate stuff. Plus, Russia has had India as a major customer for decades. Both Russia and China will tolerate bribe requests and all manner of bad behavior to get a sale. That often makes a difference in many countries.

Britain was displaced from the top five in 2012, leaving the United States the largest exporter followed by Russia, Germany and France. Exports are even larger if you include support and training services, which are particularly lucrative with the more complex and effective Western weapons.

Largely because of large sales to oil-rich Arab states in the Persian Gulf, arms exports hit a record $71.5 billion in 2011. The year before (2010) the total was only $32.7 billion. In 2011, 84 percent of those exports went to developing nations (mainly in the Middle East) while for the period of 2004-11 the percentage was only 69 percent. Developing nations can produce most of their own weapons but often do not because it's cheaper to buy them overseas. Even the United States does this. For example, a Norwegian firm has supplied American troops with billions of dollars' worth of remotely controlled gun turrets over the last decade. Norway in turn buys combat aircraft and anti-aircraft missiles from the United States.





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