UK’s biggest defence export market looks east
Saudi Arabia has signed a strategic partnership with the China Aerospace Science and Technology Corporation (CASC) in order to establish the manufacturing of Chinese Unmanned Aerial Vehicles (UAVs) in Saudi Arabia. This announcement is significant for two reasons; first it shows that Chinese defence companies are now competing with their western peers, and second it will challenge the UK Government to become comfortable with Chinese made military hardware operating alongside UK built military aircraft.
This announcement illustrates that the dynamics within the defence industry are subtly changing. Historically, western defence companies have been the market leaders. Their technologically advanced products were designed for the own militaries and then slightly lower spec options were sold to countries in the Middle East on lucrative export contracts. Western companies were (and still are) prohibited from exporting to Russia and China, and therefore these countries developed their own defence industries and sold products between themselves.
However, in the past five years, Western defence budgets have been under pressure and so Western defence companies have been targeting more export sales to the Middle East where demand has been high due to conflict and terrorism. Middle Eastern governments have in turn become more exacting customers, wanting higher quality equipment and better value for money so exports from the West are now at the same margin as domestic sales. At the same time, China and Russia’s defence technologies have improved and so they have been touting their wares in the Middle East. Coincidentally, the US has been reluctant to allow export sales of its market leader Predator and Reaper UAVs.
This leads us to the fascinating juxtaposition we are now seeing in Saudi Arabia. US made F-15s and UK made Typhoons are sharing the same air bases and flying the same missions as Chinese made CH UAVs. As a result of the new agreement, soon Saudi engineers, some of whom may have previously worked in country for BAE on Typhoon, will be working on the CH UAVs. This situation is likely to make people in Washington and Westminster slightly nervous.
The CH family of UAVs look very similar to Predator and Reaper, and whilst a genuine comparison of their capabilities is challenging, on paper their performance is said to be similar. The CEO of Taqnia Aeronautics, the Saudi Arabian company that will manufacturer the UAVs has said that they will be used for both military and civilian purposes and will be marketed to other countries in the region. It seems the Middle Eastern defence market is no longer just a battle ground for Western defence companies, the Chinese have now joined the party and with a footprint on the ground in Saudi Arabia, China looks set to stay.
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