Future of the Chinese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Table of Contents

1. Introduction 8

• 1.1. What is this Report About? 8
• 1.2. Definitions 8
• 1.3. Summary Methodology 10
• 1.4. About GlobalData 11

2. Executive Summary 12

3. Market Attractiveness and Emerging Opportunities 14

• 3.1. Current Market Scenario 15
  • 3.1.1. Primary threat perception 15
  • 3.1.2. Military doctrine and strategy 17
  • 3.1.3. Military fleet size 20
  • 3.1.4. Procurement programs 25
  • 3.1.5. Top procurement programs by value (US$ million) 2018-2023 28
  • 3.1.6. Social, political and economic environment and support for defense projects 29
  • 3.1.7. Political and strategic alliances 30
• 3.2. Defense Market Size Historical and Forecast 31
  • 3.2.1. Chinese defense expenditure is expected to increase at a CAGR of 7.92% over the forecast period 31
  • 3.2.2. Race over military supremacy, territorial disputes, peacekeeping missions, increasing tension with the US, and research and development are the main factors driving Chinese defense expenditure 33
  • 3.2.3. Chinese defense budget as a percentage of GDP is expected to remain stable 35
• 3.3. Analysis of Defense Budget Allocation 37
  • 3.3.1. China is expected to allocate a high share to revenue expenditure over the forecast period 37
  • 3.3.2. Defense capital expenditure is expected to increase at a CAGR of 7.92% over the forecast period 39
  • 3.3.3. Per capita defense expenditure is expected to increase substantially during the forecast period 41
• 3.4. Homeland Security Market Size and Forecast 43
  • 3.4.1. Chinese homeland security is expected to reach US$40.4 billion by 2023 43
  • 3.4.2. Organized crime, terrorist threats, and cyber protection are expected to drive Chinese homeland security expenditure 45
  • 3.4.3. China falls under the “highly affected” terrorism category 47
  • 3.4.4. China is “highly affected” by terrorism as per the Terrorism Index 48
  • 3.4.5. China has a Terrorism Index score of 5.5 50
• 3.5. Benchmarking with Key Global Markets 51
  • 3.5.1. China will be the largest defense spender in Asia over the forecast period 51
  • 3.5.2. China has the second largest defense budget in the world 53
  • 3.5.3. China allocates a lower share of GDP to defense compared to the US and other Asian countries 54
• 3.6. Market Opportunities: Key Trends and Growth Stimulators 55
  • 3.6.1. Top defense market sectors by value (US$ million) - projections over 2018-2023 55
  • 3.6.2. Missile defense systems 56
  • 3.6.3. Land-based C4ISR 57
  • 3.6.4. Physical Security 58

4. Defense Procurement Market Dynamics 59

• 4.1. Import Market Dynamics 61
  • 4.1.1. China is expected to import fewer weapons over the forecast period 61
  • 4.1.2. Russia accounts for the majority of Chinese defense imports 62
  • 4.1.3. Aircraft, engines, and naval vessels are the most imported military hardware 63
• 4.2. Export Market Dynamics 64
  • 4.2.1. Defense exports are expected to grow over the forecast period 64
  • 4.2.2. Pakistan emerged as the biggest importer of Chinese low-cost defense equipment exports 65
  • 4.2.3. Chinese aircraft and naval vessel exports expected to increase 66

5. Industry Dynamics 67

• 5.1. Five Forces Analysis 67
  • 5.1.1. Bargaining Power of the Supplier: High 68
  • 5.1.2. Bargaining Power of the Buyer: Medium 68
  • 5.1.3. Barriers to Entry: High 68
  • 5.1.4. Intensity of Rivalry: Low 69
  • 5.1.5. Threat of Substitution: High 69

6. Market Entry Strategy 70

• 6.1. Market Regulation 70
  • 6.1.1. The Chinese military-industrial complex opens up to private sector participation 70
  • 6.1.2. Defense industry remains closed to foreign direct investment 70
• 6.2. Market Entry Route 71
  • 6.2.1. Budget process 71
  • 6.2.2. Procurement policy and process 71
  • 6.2.3. Foreign technology finds its way into the Chinese defense industry through civil-military integration 71
• 6.3. Key Challenges 73
  • 6.3.1. Lack of competition and long production cycles continue to hamper the performance of the Chinese defense industry 73
  • 6.3.2. Arms embargo imposed by the US and EU 73

7. Competitive Landscape and Strategic Insights 74

• 7.1. Competitive Landscape Overview 74
  • 7.1.1. State-owned enterprises are the only major players in China’s defense industry 75
  • 7.1.2. Foreign technology enters the Chinese defense market by supplying civil use products 77
• 7.2. Key Domestic Companies 78
  • 7.2.1. China North Industries Corporation: Overview 78
  • 7.2.2. China North Industries Corporation: Products 79
  • 7.2.3. China North Industries Corporation: Recent announcements and strategic initiatives 80
  • 7.2.4. China North Industries Corporation: Alliances 81
  • 7.2.5. China North Industries Corporation: Recent contract wins 82
  • 7.2.6. China Electronics Technology Group Corporation: Overview 83
  • 7.2.7. China Electronics Technology Group Corporation: Products 83
  • 7.2.8. China Electronics Technology Group Corporation: Recent Announcements and Strategic Initiatives 84
  • 7.2.9. China Electronics Technology Group Corporation: Alliances 85
  • 7.2.10. China Electronics Technology Group Corporation: Recent contract wins 85
  • 7.2.11. Aviation Industry Corporation of China: Overview 86
  • 7.2.12. Aviation Industry Corporation of China: Products 86
  • 7.2.13. Aviation Industry Corporation of China: Recent announcements and strategic initiatives 86
  • 7.2.14. Aviation Industry Corporation of China: Alliances 88
  • 7.2.15. Aviation Industry Corporation of China: Recent contract wins 88
  • 7.2.16. China National Nuclear Corporation: Overview 89
  • 7.2.17. China National Nuclear Corporation: Services 89
  • 7.2.18. China National Nuclear Corporation: Recent Announcements and Strategic Initiatives 90
  • 7.2.19. China National Nuclear Corporation: Alliances 91
  • 7.2.20. China National Nuclear Corporation: Recent contract wins 92
  • 7.2.21. China Nuclear Engineering and Construction Corporation: Overview 93
  • 7.2.22. China Nuclear Engineering and Construction Corporation: Services 93
  • 7.2.23. China Nuclear Engineering and Construction Corporation: Recent announcements and strategic initiatives 93
  • 7.2.24. China Nuclear Engineering and Construction Corporation: Alliances 94
  • 7.2.25. China Aerospace Science and Industry Corporation: Overview 95
  • 7.2.26. China Aerospace Science and Industry Corporation: Products 95
  • 7.2.27. China Aerospace Science and Industry Corporation: Recent announcements and strategic initiatives 96
  • 7.2.28. China Aerospace Science and Industry Corporation: Alliances 96
  • 7.2.29. China Aerospace Science and Technology Corporation: Overview 97
  • 7.2.30. China Aerospace Science and Technology Corporation: Products 97
  • 7.2.31. China Aerospace Science and Technology Corporation: Recent announcements and strategic initiatives 97
  • 7.2.32. China Aerospace Science and Technology Corporation: Alliances 98
  • 7.2.33. China State Shipbuilding Corporation: Overview 99
  • 7.2.34. China State Shipbuilding Corporation: Products 99
  • 7.2.35. China State Shipbuilding Corporation: Recent announcements and strategic initiatives 100
  • 7.2.36. China State Shipbuilding Corporation: Alliances 100
  • 7.2.37. China State Shipbuilding Corporation: Recent contract wins 101
  • 7.2.38. China National Electronics Import and Export Corporation: Overview 102
  • 7.2.39. China National Electronics Import and Export Corporation: Products 102
  • 7.2.40. China National Aero-Technology Import and Export Corporation: Overview 103
  • 7.2.41. China National Aero-Technology Import and Export Corporation: Products 103
  • 7.2.42. China National Aero-Technology Import and Export Corporation: Recent announcements and strategic initiatives 104

8. Business Environment and Country Risk 105

• 8.1. Economic Performance 105
  • 8.1.1. Gross Domestic Product per Capita 105
  • 8.1.2. Gross Domestic Product (Current US$ Billion) 106
  • 8.1.3. Exports of Goods and Services in LCU 107
  • 8.1.4. Imports of Goods and Services in LCU 108
  • 8.1.5. LCU per US$ 109
  • 8.1.6. Market Capitalization of Listed Companies (US$ Billion) 110
  • 8.1.7. Market Capitalization of Listed Companies (Percentage of GDP) 111
  • 8.1.8. Goods Exports as a Percentage of GDP 112
  • 8.1.9. Goods Imports as a Percentage of GDP 113
  • 8.1.10. Services Imports as a Percentage of GDP 114
  • 8.1.11. Services Exports as a Percentage of GDP 115
  • 8.1.12. Net Foreign Direct Investment (BoP, current US$ Billion) 116
  • 8.1.13. Net FDI as a Percentage of GDP 117
  • 8.1.14. Mining, Manufacturing, Utilities Output 118

9. Appendix 119

• 9.1. About GlobalData 119