Procurement: Everyone But China Is Doomed

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March 21, 2020: China and Russia have been rivals in selling weapons since the 1990s. Over the two previous decades China had slowly been catching up to, and now passing Russia in quality. The Chinese always offered lower prices. One thing the Chinese did not offer was financing. With the collapse of the Soviet Union in 1991, the Russians were no longer able to offer generous financing arrangements to obtain sales. Those deals were one of the reasons the Soviet Union collapsed. By 1991 the Soviet Union was bankrupt and billions of dollars in bad loans for arms exports were one of the reasons. China had long sought to replace Russia as the best source of second-rate but much cheaper modern weapons. The post-1991 economic situation the Russians stumbled into was seen as a major opportunity but the Chinese did not, as many expected, emulate the discredited Russian “make the sale at any cost” approach. China was doing it differently by modeling their arms development and sales practices after Western defense firms. China wanted to get paid.

Long-term this posed a greater threat to Russian arms sales, and more of a threat to Western defense firms than Russia ever posed. The Chinese plan took the long view and aimed to keep arms sales profitable while eventually surpassing Russia, and then the West, in arms quality. After 1991 Russia adopted the Chinese policy on arms sales terms, if only because it had to. If the customer cannot pay Russia is not interested. Russia was surprised at how old customers, who used to stall until Russia offered the long-term payment plans, were now willing to abide by the more demanding Chinese and Western sales terms. China had always believed the Cold War Russian sales techniques were foolish. By the 1980s this Russian financing method had turned into a disaster as more and more of those long-term loans turned bad. Worse, the collapse of the Soviet Union discredited the quality of Russian weapons even more. Since the 1960s, as Russian weapons got more and more opportunities to prove their worth in combat, Western weapons regularly bested the latest Russian stuff. This surprised a lot of arms buyers and not just those who saw their state-of-the art Russian weapons get cut to pieces by less impressive, visually and on paper, Western weapons.

Russia was dismayed but not discouraged in the 1990s and sold the Chinese whatever they wanted after 1991 and often at higher prices than before. For over a decade China was the top Russian customer for weapons. There was one catch that the Russians chose to ignore at first; the Chinese were blatantly copying the Russian tech and incorporating it in their new “designed and developed in China” weapons. Since the Chinese were a decade ahead of Russia in adopting Western production techniques and business management practices, the Chinese were actually able to improve the Russian systems they plagiarized. After 1991 Russia finally accepted Western practices regarding patents and IP (Intellectual Property).

China had already accepted, officially at least, respect for patent and trademark law. But in the meantime, China was carrying out a more successful technology theft campaign. This was unacknowledged and illegal but it took the West a while to catch on. The Russians were quicker to notice the theft of their tech because the Russians had pioneered the practice during the Cold War. In the 1990s the Russians complained but could not turn down the Chinese orders for modern warplanes and air defense systems. The Chinese were keeping key Russian defense industries alive with those large purchases. After the 1990s the Russians were less dependent on those Chinese sales but by then the Chinese were catching up and starting to surpass Russia in some areas. By 2020 China was producing jet and helicopter engines they long earlier only obtain from Russian or Western suppliers. Before 1991 Russia believed China would take a lot longer to do this but now Russia is feeling the heat from Chinese competition.

The latest example of this is China openly taking advantage of the fact that the most modern Russian systems have been used a lot in combat, and found wanting. China turned the scant combat experience of their own modern systems into an advantage by noting that Chinese systems took a Western approach in design, development and testing. The implication was that Chinese weapons, when put to the test, would perform more like Western ones which, for over fifty years have consistently defeated their Russian counterparts.

An example of this was seen in early 2020 when articles in Chinese state-controlled media came right out and said the Russian S-300 air defense system did not work and that the Chinese should know because they bought the system from Russia and fixed the problems by developing their own, improved version of the S-300 called the FD-2000. This system is available for export, to just about anyone can pay, including Iran or Syria. But Russia insisted S-300 was just as good and offered a better price, along with some freebies. Neither the S-300 nor FD-2000 have yet to prove themselves in combat, at least not officially. The Chinese were alluding to the reports that the S-300 systems used by Syria and Iran had regularly been bested by Western systems. In Syria, the winners were usually Israelis who also used Israeli developed systems that were respected as equal if not superior to similar American tech. That was one reason American and Israeli defense firms openly and legally cooperated with each other in developing some systems. The Russians seem aware of all this as well, even though they won’t admit it. An example of this is Russia delivering S-300 air defense batteries to Syria to help the Syrians halt the growing number of Israeli airstrikes. Russia delivered these systems over a year ago, and trained Syrian operators, but does not allow the S-300s to operate freely. The reason for that is the failure of S-300 radars to effectively detect and track Israeli airstrikes. For the same reason, Russia is reluctant to use the S-400 systems they brought in to protect its own troops. Some of the less elaborate Russian air defense systems have been vividly exposed as ineffective. In February, when Turkish forces went to war with the Syrian Army in northwestern Syria, the Turks made it clear that Syrian air defenses were apparently not very effective. Turkish UAVs captured on video their missiles destroying several of the Russian Pantsir air defense vehicles (equipped with radar, missiles and autocannon). Earlier Russian officials went public trying to explain how Israeli aircraft regularly defeated Pantsir and even Russians with inside knowledge had gone in the Internet with these complaints.

The Chinese saw an opportunity here and made the most of it. Meanwhile the Chinese are hustling to upgrade their own military gear for the eventual combat test. The Chinese are more serious about this than the Russians ever were. China adopted Western methods for continually testing and tweaking combat systems. China has already demonstrated this works for them because a growing number of their warships are staying a sea for longer periods where the crews gain experience while putting Chinese naval tech to the test. Officers and sailors on Western warships or in surveillance aircraft are noting the improvement. Not quite the same as combat but close. The same with aircraft. China tests its warplanes using the more exactly Western methods and trains its pilots the same way. Chinese combat pilots get more air time than their Russian counterparts and demonstrate more skill in realistic exercise.

One of the first victims of all these Chinese efforts was Russian arms sales and the Russians acknowledge this by becoming much more accommodating and generous when their chief competitor for a sale is China. This doesn’t bother the Chinese because so far the Chinese strategy is working and they believe the Russians, and then the West, are doomed.

 


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