Improved Competitiveness likely to upsurge Chinese Defense Industry: Ken Research
The
report provides detailed analysis of both historic and forecast Chinese defense
industry values, factors influencing demand, the challenges faced by industry
participants, analysis of industry leading companies, and key news. This report
offers detailed analysis of the Chinese defense industry with market size
forecasts covering the next five years. This report will also analyze factors
that influence demand for the industry, key market trends and challenges faced
by industry participants.
Over
the last few years, China's defense industry has been cherishing the most
productive and lucrative years in its history. The growth of the Chinese Defense
industry can be attributed toample state funding, suppressed domestic demand,
and access to and development of critical technological know-how on equipment,
aircrafts, shipbuilding, missiles etc.
The country's total defense expenditure during the forecast period i.e. 2016 to 2021 is expected to be USD 1007.1 billion. The average share of capital expenditure is expected to be 32.8% over the forecast period.
While China’s current exports
constitute approximately 2.8% of total global defense exports, up from 2.1% in
2009- its total exports are estimated to be just under USD70 billion in 2013-it
is clearly very competitive with recognized Western defense exporting nations,
such as Spain, Italy, Sweden, and Canada and is closing the gap on Israel,
Germany, and the United Kingdom. This improved competitiveness and upward movement
in position as a defense exporter is likely to be continued over the next five
years and beyond and will, therefore enable China to become a consistent
competitor in the global arms market.
China’s export activity has focused
primarily on secondary and tertiary defense export markets that are under US or
Western export sanctions (Iran, for example) or simply cannot afford or do not
need the most expensive Western and Russian platforms and systems. These
markets seek to balance “good enough” military technologies with cost,
forgiving payment terms and, in a growing number of cases, a strong desire to
build or enhance indigenous defense industry through production work-share and
technology transfer programs.
On the contention front, the China defense industry is
dominated by several large conglomerates including the AVIC Group, China
Shipbuilding Industry Corporation, China State Shipbuilding Corporation etc. Two
state-owned Chinese firms effectively have joined the ranks of the world’s 10
largest defense companies in a sign of changing military budgets and export markets, according to
a new report on the global arms industry. China North Industries Corp. and
Aviation Industry Corp. of China sit atop as many as four other domestic
producers in the global top 20. China North Industries, better known as
Norinco, is the largest of 10 Chinese aerospace and defense holding companies
atop a sprawling array of subsidiaries, some of which are listed in Hong Kong.
Key Macroeconomic Trends Expected to Drive Growth of China
Defensive Industry
Many factors are
predicted to drive China's Defense Industry, among those increasing military
expenditure of China, reducing import reliance, increasing economic growth and
rising exports are believed to be the key factors. Some of the remarkable
developments of this industry include increasing asset injections, changes in
pricing models and management incentives as a part of the SOE reforms,
increasing modernization of the PLA. However, the growth of respective industry
is hindered by the lower profitability and lack of global competences.The key
areas of investment are expected to be fighter and multi-role aircraft,
submarines, helicopter, naval vessels, and missile defense systems.
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Ken Research
Ankur Gupta, Head Marketing &
Communications
+91-124-4230204
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