Is China’s and Russia’s Defense Industry growth a threat to Boeing and Lockheed Martin’s dominance in military hardware and software? Although China’s Communist Party utilizes State propaganda to control the country’s working-age population numbering over 1 billion workers that it now has the military power to take over the Asia Pacific countries, China’s naval force in the Asia Pacific is small and not a threat.  

However, Russia and China are gaining in the global arms export markets. The reality is that Russia’s eleven major defense contractors yielded $40.9 billion in revenues in 2014, according to a report on arms production and delivery published by the Stockholm International Peace Research Institute (SIPRI). The revenues of eleven major Russian defense contractors grew by 48.4% in 2014, year on year, to reach 10.6% of the world’s arms sales, the report said. The producers of Russia’s S-300 and 400 is (AA) Almaz-Antey.  AA remains as the biggest Russian defense contractor in 2014. Its arms sales grew by $800 million from 2013 to $8.84 billion. The manufacturer’s total revenues equaled $9.208 billion, with arms sales making up 96%. Following closely behind Almaz-Antey in revenue are United Aircraft-Manufacturing Corporation, United Ship-Building Corporation (Zvezdochka Shipyard /Admiralty Wharves Shipyard), United Instrument-Making Corporation, Tactical Missiles Corporation, Precision Systems Enterprisem, Radio-Electronic Technologies Enterprise, Uralvagonzavod, Radio-Technical and Information Systems Enterprise, Russian Helicopters rotorcraft manufacturer, and United Instrument-Making Corporation. All of these Russian firms as seen in China, still follow the FSU’s organizational top-down model; for example (UAMC) United Aircraft Manufacturing Corporation but Sukhoi Aircraft Manufacturer are all part of UAMC. United Engine-Making Corporation controls Sozvezdiye Enterprise. United Aircraft-Manufacturing Corporation controls Irkut Aircraft Company and Tactical Missiles Corporation

Lockheed Martin Corporation and  the Boeing Corporation  are still the major Western arms makers, but technology hacking has reduced them to “struggling players” in the global arms industry. Part of the problem has been the Obama’s Administration policies to de-emphasize defense over political growth strategies to increase their pool of  voters. Due to the senseless extension of sanctions by the US and EU’s ruling political manager, the military budgets of both China and Russia have raced ahead in double digit expansion. China North Industries Corporation (NORINCO $65 billion in sales) and Aviation Industry Corporation of China (AVIC) are the two Communist State owned defense companies that gained military technology in the 1990s from France, Germany, and Israel, to challenge the United States’ dominance.

Norinco is China’s main supplier of land-based weaponry such as tanks and missile. Norinco also exports cheap handguns and assault rifles to the US and the EU. This company is well-diversified into oil, mining, logistics, explosives and demolition. AVIC has a goal of compete with Boeing and Lockheed Martin as it exports military planes such as the JF-17 sold to Pakistan. In Africa it has sold the L-15 training plane and the Y-12 twin-turboprop. As China ramps up its aggressive naval action in Asia Pacific, Japan and South Korea are rapidly getting into the arms manufacturing industry.  With the dollar appreciated, the US is exporting lower-end weapons and high end weapons such as the F-35 fighter aircraft. The noted consultant Pierre Chao at Renaissance Strategic Advisers stated that “The international markets are going to be a tough play for [U.S. companies] for a whole bunch of reasons.” 

DowJones’s Wall and Cameron were sources for this story.