Procurement: Sri Lanka and the Chinese Warehouse

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June 2, 2007: Sri Lanka has ended a long (since 1993) relationship with Chinese arms manufacturer Norinco. For most of that period, business was conducted via the Norinco Bonded Warehouse, located at a port complex near the Sri Lankan capital. There, Norinco stored a large supply of weapons and ammo. Sri Lankan military personnel, once authorized by their commanders, could come and get whatever they needed. Whatever was not in the Norinco facility, would quickly be brought in from China. But to get this service, Sri Lanka was obliged to buy a wide range of weapons and ammo only from Norinco. The deal was subject to renewal every two years. Sri Lanka has made new arrangements with another Chinese supplier, Poly Technologies, as well as non-Chinese firms. Sri Lanka still owes Norinco $200 million, and the deal with Poly requires 25 percent up front and a strict payment schedule. Poly Technologies, founded 23 years ago, has closer ties with the Chinese government than Norinco. For the last two decades, Sri Lanka has been fighting a rebellion by its Tamil minority. Sri Lanka is not a rich country, and has constantly sought the lowest cost provider for weapons and ammo.

 


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