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China battles fierce competition and quality issues in fight for weapons sales

The biennial Airshow China expo in Zhuhai, which starts on Tuesday, will showcase many advanced, Chinese-made weapons to potential customers in Asia and Africa.

More than 900 Chinese weapons will be on display, according to the organiser of the six-day show, which will feature more than 700 exhibitors from more than 42 countries and regions – with more than 400 exhibitors from China alone.

But while military experts say the quality of cheaper Chinese weapons has improved, Chinese manufacturers are still struggling to build brands in an international market dominated by competitors from the United States and Russia.

At September’s Africa Aerospace and Defence air show in Pretoria, South Africa, Chinese exhibitors struggled to find buyers even though Beijing tried hard to secure sales of its L-15 Falcon trainer and JF-17 fighter, Andrei Chang, the founder of military magazine Kanwa Asian Defence, told the South China Morning Post.

He said Cameroon had received four Harbin Z-9 attack helicopters from China after Beijing offered a US$100 million loan last year, but one of them had crashed soon after being handed over. Cameroon was still negotiating with China over the accident and had no any plans to buy any more Chinese weapons due to quality concerns, Chang said.

Professor Jonathan Holslag, head of research at the Brussels Institute of Contemporary China Studies, said financial problems were causing many countries, including South Africa, to be more hesitant and cautious when purchasing new arms.

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“There is also fierce competition and many countries are willing to make offers at knockdown prices,” Holslag said, adding that many of Beijing’s previous clients harboured quality concerns.

“Military sales come with important maintenance and training services and China has still a way to go in this regard,” he said.

Chinese arms manufacturers may find it even more challenging to make sales following the reported failure of Chinese-made C-705 anti-ship missiles to hit their targets during an Indonesian exercise in September that was watched by Indonesian President Joko Widodo.

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IHS Jane’s reported that two C-705 missiles failed to hit their targets after being fired from two of the Indonesian navy’s KCR-40-class missile attack craft during the large-scale Armada Jaya 2016 exercise in the Java Sea on September 14.

Indonesia had acquired a licence that would allow state-owned aircraft maker PT Dirgantara Indonesia to produce C-705 missiles locally by 2017 or 2018, according to an earlier report in The Jakarta Post.

It is not clear whether the licence contract will be affected by the failed launch, but Chinese military experts said the poor performance of the C-705, a high-subsonic missile guided by the US Global Positioning System (GPS) or Russian Global Navigation Satellite System (GLONASS), might have an adverse short-term impact on international sales of Chinese-made weapons.

“It’s impossible to make sure all missiles can hit any targets accurately,” said military observer Zhou Chenming, who previously worked for a subsidiary of China Aerospace Science and Technology Corporation, the main state-owned contractor for the country’s space programme, and is now a researcher at the Knowfar Institute for Strategic and Defence Studies, a non-government think tank in Jiangyin, Jiangsu province. “Normally, a manufacturer would note a general kill probability at 90 to 95 per cent during range tests.

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“When a missile is fired, human factors play the key role during the intermediate operations to decide whether it will hit its designated target, including a series of reference data such as what altitude it needs to ascend to in the first stage and when it needs to turn.”

Zhou said the capabilities of the C-705 missile and the shorter-range C-701 and C-704 models had been proven in recent attacks by Iranian-backed Houthi rebels in Yemen on United Arab Emirates vessels that were part of a Saudi Arabian-backed coalition supporting the Yemeni government.

Beijing-based naval expert Li Jie said local weather, and whether the Indonesian missiles operators had followed all the necessary procedures, would also affect the launch result.

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“Weapons are made with various metals and other sensitive materials, so local weather like temperature, humidity, salinity may cause problems,” Li said, adding that the climate in China was very different from that in Indonesia.

Li cited the example of at least six crashes by Russian Sukhoi Su-30 series jet fighters in India from 2009 to 2015, whereas similar problems were not encountered by the Vietnamese and Indonesian air forces or China’s People’s Liberation Army Air Force.

A comprehensive report in June last year by the Russian website Russia Beyond the Headlines said that India’s harsh climate, different training requirements and problematic maintenance systems were all key reasons behind the crashes.

The report said Sukhoi kept a close eye on products sold overseas as part of its after-sales service.

Military experts said that was something Chinese arms producers would need to emulate in the longer term if they hoped to build up brand names for their weapons in the international market.

“Many countries decide to buy weapons from the US and Russia just because of the security guarantees, similar to an alliance, which China is so far is incapable of giving to its African and Asian clients,” Zhou said.

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Dr Rajeev Ranjan Chaturvedy, a research associate at the Institute of South Asian Studies at the National University of Singapore, said China’s defence industry was getting bigger but the quality of the weapons it produced was not the best.

“I do not think that China has built its brand in the field of global weapon exports … but in recent years, China has been paying a lot of attention on research and innovation,” he said.

“Certainly, cutting-edge technology will be very critical in shaping the global arms market. The US and some other countries are way ahead of China in defence research and manufacturing … another important factor is that major importers of arms lack the required political trust in China, and China doesn’t figure at the top of many countries’ priority lists for arms procurement.”

Zhou said political trust was a key factor behind the new Sri Lankan government’s reluctance to commit to Chinese arms purchase agreements signed by its predecessor.

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Last month’s Chinese-language Kanwa Defence Review also reported that Sri Lankan President Maithripala Sirisena, who assumed office in January last year, might renege on Chinese weapons deals.

In an exclusive interview with Chang, Air Chief Marshal Kolitha Gunathilake, Sri Lanka’s Chief of Defence Staff, denied rumours it had signed a JF-17 contract with China or Pakistan and said Sri Lanka had decided against making such a purchase.

“I didn’t make final decision, so far I’ve just watched a demonstration of the JF-17’s flight simulator on the ground,” he said.

Gunathilake said Sri Lanka did need to buy new generation aircraft to replace its ageing Chinese J-7s and Russian MiG-27s and was considering buying second-hand F-16s from the US.

“The problem is it’s too expensive,” he said.

Li said that in order to compete with American and Russian arms manufacturers, Chinese firms would have to offer long-term security assurances,training services and other after-sales services to customers.

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“China’s advantage is focused on ‘hardware’ – making weapons,” he said. “The ‘software’ related to after-sales service will take longer to come up with a comprehensive system.

“Creating a weapons brand is challenging, but it’s the ultimate goal and necessary for a country to further perfect its military-industrial complex.”

More than two-thirds of African countries are using Chinese military equipment according to The Military Balance 2016 report published in February by the London-based International Institute for Strategic Studies (IISS). It described Africa as an increasingly important market for China’s defence exports, with Nigeria, Uganda and Djibouti among 10 countries that had become “emergent customers” for Beijing’s arms exports since 2005.

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But China still accounted for only 5.9 per cent of global arms exports from 2011-2015, according to a recent report on global arms transfers by the Stockholm International Peace Research Institute (SIPRI), well behind the US and Russia, the world’s two largest arms exporters.

The SIPRI report said China had supplied major arms to 37 states between 2011 and 2015, but 75 per cent of its exports were to states in Asia and Oceania. Pakistan was the main recipient of Chinese exports, accounting for 35 per cent of the total, followed by Bangladesh (20 per cent) and Myanmar (16 per cent).

The PLA Daily reported recently that China had spared no efforts to expand overseas markets, with submarines, missiles and fighter jets being among the sophisticated weapons exported to neighbours. It added that Beijing would be transferring at least 13 submarines worth a total of about US$6.2 billion in the coming years, with eight going to Pakistan, three to Thailand and two to Bangladesh.

The 11 modified diesel-electric attack submarines destined for Pakistan and Thailand, which analysts speculate will be a lighter, export version of the PLA Navy’s Type 041 Yuan-class conventional attack submarine, might feature air-independent propulsion (AIP) systems allowing the submarines to stay submerged for longer.

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According to earlier PLA Daily reports, China has also provided missiles and tanks to Pakistan, which established diplomatic relations with Beijing in 1950, becoming one of the first countries to switch recognition from Taipei. Pakistan is also the co-developer of China’s JF-17 fighter.

Chaturvedy said the close relationship between China and Pakistan had caused India to enhance its defence cooperation with Japan, import more weapons from Russia and other countries, and develop more home-made arms.

“Russia was the dominant supplier of arms for India, but in recent years India has diversified its sources,” he said. “The US, Israel, and some European countries including France have become very important in this regard. Gradually, Russia’s importance will be reduced due to policy changes and the willingness of major countries to strengthen relations with India.

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“India will also give top priority to a new category of procurement known as indigenous design, development and manufacturing. The ‘Make in India’ programme is an attempt to transform the indigenous defence industry through the public-private partnership model. In the case of global procurement, India is keen on technology transfer rather than just buying arms.”