This report is the result of SDI/ICD Research's extensive market and company research covering the Chinese defense industry. It provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news
Introduction and Landscape
Why was the report written?
The Chinese Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 offers the reader insights into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) in order to gain market share in the Chinese defense industry.
What is the current market landscape and what is changing?
The Chinese defense market registered significant growth during the review period and is expected to retain this positive growth rate during the forecast period. The Chinese defense budget, which valued US$104.62 billion in 2012, is the largest defense budget in the Asia-Pacific region. Defense expenditure grew at a CAGR of 11.5% during the review period. Due to the rapid growth of the country's defense budget, the Chinese army is now capable of rivaling the leading military powers of Western European countries.
What are the key drivers behind recent market changes?
China is expected to spend US$722.4 billion in the fulfillment of its defense requirements. Factors such as Sino-US relations, asymmetric warfare and the threat from Taiwan to its territorial integrity are expected to stimulate defense expenditure during the forecast period. China's emphasis on the import of technology rather than in the import of finished equipment will continue to lead the development of domestic defense firms.
What makes this report unique and essential to read?
The Chinese Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas of defense market.
Key Features and Benefits
The report provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
The report includes trend analysis of imports and exports, together with its implications and impact on the Chinese defense industry.
The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
The report helps the reader to understand the competitive landscape of the defense industry in China. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Key Market Issues
Despite structural reforms, the Chinese defense industry remains under state control and contains very little competition. Barring a few industrial enterprises, the majority of organizations fail to compete with each other, which impedes the development of China's modern indigenous defense industry as there is no incentive for companies to innovate.
Following the 1989 Tiananmen Square massacre, an arms embargo was imposed by the US and other European countries. During the review period, some European states have proposed lifting the arms ban, but the US and Japan have opposed this proposal due to fears that it will enable China to enhance its military capabilities. As a result, China's defense industry is unable to acquire sophisticated military hardware from the US or Western European countries.
Key Highlights
Chinese defense expenditure, estimated at US$104.62 billion during 2012, grew at a CAGR of 11.5% during the review period. During the forecast period, it is expected to record a CAGR of 8.49% and reach US$174.9 billion by 2017. Over the next five years the country's defense expenditure is expected to be driven by factors such as Sino-US relations, asymmetric warfare and the threat from Taiwan to its territorial integrity.
During the review period, aircraft and armored vehicles were the main categories in defense exports by China. In 2011, China exports defense products to 36 countries with a total value of US$1.35 billion. With the rapid grow of domestic defense companies, defense exports are expected to remain high during the forecast period.
Table of Contents
1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Chinese defense expenditure to grow at a CAGR of XX% during the forecast period
3.1.2. Desire to emerge as a global superpower drives China's defense expenditure
3.1.3. Chinese defense expenditure driven by economic growth
3.2. Analysis of Defense Budget Allocation
3.2.1. Capital expenditure allocation expected to remain at an average of XX%
3.2.2. Per capita defense expenditure expected to increase during the forecast period
3.2.3. China will spend US$XX billion over the forecast period on military hardware
3.3. Homeland Security Market Size and Forecast
3.3.1. Chinese homeland security worth US$XX billion in 2012
3.3.2. Political instability will drive the Chinese homeland security spending
3.3.3. China falls under "low risk" of terrorism category
3.4. Benchmarking with Key Global Markets
3.4.1. China is second-fastest-growing defense budget among the largest defense spenders globally
3.4.2. China has the second-largest defense budget in the world
3.4.3. China allocates lower share of GDP for defense compared to US and other European countries
3.4.4. China faces minimal threat from foreign terrorist organizations
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Communications network improvements would drive joint ventures with foreign firms
3.5.2. Demand for missiles expected to increase
3.5.3. Increased demand for helicopters and aircraft
3.5.4. Naval modernization to drive the demand for maritime weaponry
3.5.5. China plans to upgrade its command, control and intelligence capabilities
3.5.6. Modernization of existing defense equipment will create demand for personnel training
3.5.7. Authoritarian regime will drive the surveillance technology market in China
3.5.8. Transformation of defense companies into an industrial base dependent on foreign technology
4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. China acquires civilian technologies from foreign OEMs which could be used to improve its defense systems
4.1.2. Defense imports are expected to remain low during the forecast period
4.1.3. Russia account for the majority of Chinese defense imports
4.1.4. Missiles, aircraft and air defense systems are most imported military hardware
4.2. Export Market Dynamics
4.2.1. Chinese arms sales continue to rise
4.2.2. China strengthens its hold in emerging markets by offering low-cost defense equipment
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low to high
5.1.2. Bargaining power of buyer: medium to high
5.1.3. Barriers to entry: high
5.1.4. Intensity of rivalry: low
5.1.5. Threat of substitution: low
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. The Chinese military-industrial complex opens up to private sector participation
6.1.2. Defense industry remains closed to direct foreign investment
6.2. Market Entry Route
6.2.1. Foreign technology finds its way into Chinese defense industry through the dual base economy
6.3. Key Challenges
6.3.1. Lack of competition and cooperation among firms, as well as barriers to innovation, continues to hamper the performance of the Chinese defense industry
6.3.2. Arms embargo imposed by the US and European countries
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.1.1. State-owned enterprises are the only major players in China's defense industry
7.1.2. Foreign technology enters the Chinese defense market by supplying civil use products
7.2. Key Domestic Companies
7.2.1. Aviation Industry Corporation of China: overview
7.2.2. Aviation Industry Corporation of China: products and services
7.2.3. Aviation Industry Corporation of China: recent announcement and strategic initiatives
7.2.4. Aviation Industry Corporation of China: alliances
7.2.5. China Electronics Technology Group Corporation: overview
7.2.6. China Electronics Technology Group Corporation: products and services
7.2.7. China Electronics Technology Group Corporation: recent announcement and strategic initiative
7.2.8. China Electronics Technology Group Corporation: alliances
7.2.9. China Electronics Technology Group Corporation: recent contract wins
7.2.10. China National Nuclear Corporation: overview
7.2.11. China National Nuclear Corporation: products and services
7.2.12. China National Nuclear Corporation: recent announcement and strategic initiatives
7.2.13. China National Nuclear Corporation: alliances
7.2.14. China National Nuclear Corporation: recent contract wins
7.2.15. China Xinshidai Company: overview
7.2.16. China Xinshidai Company: products and services
7.2.17. China Xinshidai Company: recent announcement and strategic initiatives
7.2.18. China Xinshidai Company: alliances
7.2.19. China Nuclear Energy and Construction: overview
7.2.20. China Nuclear Energy and Construction: products and services
7.2.21. China Nuclear Energy and Construction: recent announcement and strategic initiatives
7.2.22. China Nuclear Energy and Construction: alliances
7.2.23. China North Industries Corporation: overview
7.2.24. China North Industries Corporation: products and services
7.2.25. China North Industries Corporation: recent announcement and strategic initiatives
7.2.26. China North Industries Corporation: alliances
7.2.27. China North Industries Corporation: recent contract wins
7.2.28. China Aerospace Science and Industry Corporation: overview
7.2.29. China Aerospace Science and Industry Corporation: products and services
7.2.30. China Aerospace Science and Industry Corporation: recent announcement and strategic initiatives
7.2.31. China Aerospace Science and Technology Corporation: overview
7.2.32. China Aerospace Science and Technology Corporation: products and services
7.2.33. China Aerospace Science and Technology Corporation: recent announcement and strategic initiatives
7.2.34. China Aerospace Science and Technology Corporation: alliances
7.2.35. China State Shipbuilding Corporation: overview
7.2.36. China State Shipbuilding Corporation: products and services
7.2.37. China State Shipbuilding Corporation: recent announcement and strategic initiatives
7.2.38. China National Electronics Import and Export Corporation: overview
7.2.39. China National Electronics Import and Export Corporation: products and services
7.2.40. China National Aero-Technology Import and Export Corporation: overview
7.2.41. China National Aero-Technology Import and Export Corporation: products and services
7.2.42. China National Aero-Technology Import and Export Corporation: recent announcement and strategic initiatives
8. Business Environment and Country Risk
8.1. Demographics & Social Statistics
8.1.1. Population - Female
8.1.2. Population - Male
8.2. Economic Performance
8.2.1. Current Account Balance as Percentage of GDP
8.2.2. Deposit Interest Rate
8.2.3. Exports of goods and services, current prices
8.2.4. External debt as percentage of GDP (%)
8.2.5. Foreign Direct Investment
8.2.6. GDP at Purchasing Power Parity
8.2.7. GDP, Constant Prices (Local Currency)
8.2.8. GDP, Constant Prices (US$)
8.2.9. GDP, Current Prices (Local Currency)
8.2.10. GDP, Current Prices (US$)
8.2.11. General Government Final Consumption Expenditure
8.2.12. Gross Fixed Capital Formation, Current Prices
8.2.13. Imports of goods and services
8.2.14. Inflation, average consumer prices
8.2.15. Interest Rate (Lending)
8.2.16. Manufacturing Output, Current Prices (Local Currency Bn)
8.2.17. US$- Exchange Rate (Annual Average)
8.4. Energy and Utilities
8.4.1. Crude Oil Distillation Capacity
8.4.2. Electricity Exports.
8.4.3. Electricity Imports
8.4.4. Electricity Installed Capacity
8.4.5. Fossil Fuels Proved natural gas reserves
8.4.6. Fossil Fuels- Proved oil reserves
8.4.7. Hydroelectricity Installed Capacity
8.4.8. Natural Gas Consumption
8.4.9. Natural Gas Imports
8.4.10. Natural Gas Production
8.4.11. Net Conventional Thermal Electricity Generation
8.4.12. Net Geothermal, Solar, Wind, and Wood Electric Power Generation
8.4.13. Net Hydroelectric Power Generation
8.4.14. Nuclear Electricity Net Generation
8.4.15. Petroleum, Consumption
8.4.16. Petroleum, Production
8.5. Labour Force
8.5.1. People Employed in R & D
8.6. Minerals
8.6.1. Coal Consumption
8.6.2. Coal Production
8.7. Social & Political Risk
8.7.1. Political Stability Index
8.7.2. Transparency Index
9. Appendix
9.1. Contact Us
9.2. About SDI
9.3. Disclaimer
List of Tables
Table 1: Chinese Defense Expenditure (US$ Billion), 2008-2012
Table 2: Chinese Defense Expenditure (US$ Billion), 2013-2017
Table 3: Chinese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2008-2012
Table 4: Chinese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2017
Table 5: Chinese Defense Budget Split Between Capital and Revenue Expenditure (%), 2008-2012
Table 6: Chinese Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2017
Table 7: Chinese per capita defense expenditure (US$), 2008-2012
Table 8: Chinese per capita defense expenditure (US$), 2013-2017
Table 9: Chinese Defense Capital Expenditure (US$ Billion), 2008-2012
Table 10: Chinese Defense Capital Expenditure (US$ Billion), 2013-2017
Table 11: Chinese Homeland Security Budget, 2008-2012
Table 12: Chinese Homeland Security Budget, 2013-2017
Table 13: Benchmarking with Key Markets - 2007-2011 vs. 2012-2016
Table 14: SDI Terrorism Index
Table 15: Chinese Military-Industrial Complex - Competitive Landscape
Table 16: Aviation Industry Corporation of China - Product focus
Table 17: Aviation Industry Corporation of China - Alliances
Table 18: China Electronics Technology Group Corporation - Product focus
Table 19: China Electronics Technology Group Corporation - Alliances
Table 20: China Electronics Technology Group Corporation - Recent Contract Wins
Table 21: China National Nuclear Corporation - Product focus
Table 22: China National Nuclear Corporation - Alliances
Table 23: China National Nuclear Corporation - Recent Contract Wins
Table 24: China Xinshidai Company - Product focus
Table 25: China Xinshidai Company - Alliances
Table 26: China Nuclear Energy and Construction - Product focus
Table 27: China Nuclear Energy and Construction - Alliances
Table 28: China North Industries Corporation - Product focus
Table 29: China North Industries Corporation - Alliances
Table 30: China North Industries Corporation - Recent Contract Wins
Table 31: China Aerospace Science and Industry Corporation - Product focus
Table 32: China Aerospace Science and Technology Corporation - Product focus
Table 33: China Aerospace Science and Technology Corporation - Alliances
Table 34: China State Shipbuilding Corporation - Product focus
Table 35: China National Electronics Import and Export Corporation - Product focus
Table 36: China National Aero-Technology Import and Export Corporation - Product focus
List of Figures
Figure 1: Chinese Defense Expenditure (US$ Billion), 2008-2012
Figure 2: Chinese Defense Expenditure (US$ Billion), 2013-2017
Figure 3: Chinese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2008-2012
Figure 4: Chinese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2017
Figure 5: Chinese Defense Budget Split Between Capital and Revenue Expenditure (%), 2008-2012
Figure 6: Chinese Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2017
Figure 7: Chinese per capita defense expenditure (US$), 2008-2012
Figure 8: Chinese per capita defense expenditure (US$), 2013-2017
Figure 9: Chinese Defense Capital Expenditure (US$ Billion),2008-2012
Figure 10: Chinese Defense Capital Expenditure (US$ Billion), 2013-2017
Figure 11: Chinese Homeland Security Budget, 2008-2012
Figure 12: Chinese Homeland Security Budget, 2013-2017
Figure 13: SDI Terrorism Heat Map, 2011
Figure 14: SDI Terrorism Index, 2011
Figure 15: Benchmarking with Key Markets - 2007-2011 vs. 2012-2016
Figure 16: Defense Expenditure of the World's Largest Military Spenders (US$ Billion),
Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2011
Figure 18: Chinese Defense Import Trend, 2007-2011 (TIV values)
Figure 19: Chinese Defense Imports by Country (%), 2007-2011
Figure 20: Chinese Defense Imports by Category (%), 2007-2011
Figure 21: Chinese Defense exports by Category (%),2007-2011
Figure 22: Chinese Defense Imports by Country (%), 2007-2011
Figure 23: Industry Dynamics Porter's Five Forces Analysis
Figure 24: Chinese Population - Female (In Millions), 2008-2017
Figure 25: Chinese Population - Male (In Millions), 2008-2017
Figure 26: Chinese Current Account Balance as Percentage of GDP, 2008-2017
Figure 27: Chinese Deposit Interest Rate, 2001-2010
Figure 28: Chinese Exports of goods and services, current prices (US$ Billion), 2001-2010
Figure 29: Chinese External Debt as a percentage of GDP (%), 2001-2010
Figure 30: Chinese Foreign Direct Investment (US$ Billion), 2001-2010
Figure 31: Chinese GDP at Purchasing Power Parity (US$ Billion), 2006-2015
Figure 32: Chinese GDP at Constant Prices (Local Currency Billion), 2006-2015
Figure 33: Chinese GDP at Constant Prices (US$ Billion), 2006-2015
Figure 34: Chinese GDP at Current Prices (Local Currency Billion), 2006-2015
Figure 35: Chinese GDP at Current Prices (US$ Billion), 2006-2015
Figure 36: Chinese General Government Final Consumption Expenditure (US$ Billion) , 2001-2010
Figure 37: Chinese Gross Fixed Capital Formation, Current Prices (US$ Billion), 2001-2010
Figure 38: Chinese Imports of goods and services (current US$ Billion), 2001-2010
Figure 39: Chinese Inflation, average consumer prices, 2008-2017
Figure 40: Chinese Lending Interest rate, 2001-2010
Figure 41: Chinese Manufacturing Output, Current Prices (Local Currency Billion), 2001-2010
Figure 42: Chinese US$- Exchange Rate (Annual Average), 2002-2011
Figure 43: Chinese Crude Oil Distillation Capacity (Thousand Barrels Per Cal Day), 2000-2009
Figure 44: Chinese Electricity Exports (Billion Kilowatt hours), 2001-2010
Figure 45: Chinese Electricity Imports (Billion Kilowatt hours), 2001-2009
Figure 46: Chinese Electricity Installed Capacity (Million Kilowatts), 2000-2009
Figure 47: Chinese Fossil Fuels Proved natural gas reserves (Trillion Cubic Feet), 2002-2011
