US, Israeli drone makers keep wary eye on rising Chinese

Cheaper Chinese military drones are chipping away at U.S. and Israeli domination of the industry, fuelling a new race as companies predict a rise in demand especially in regions such as Asia.

Chinese cut-rate versions of American armed drones like the MQ-9 Reaper have begun showing up in smaller African, Middle Eastern and Central Asian countries, signaling the country’s ambitions to take market share from incumbents such as General Atomics Aeronautical Systems and Israel Aerospace Industries.

At the Singapore Airshow here, state contractor China National Aero-Technology Import & Export Corporation (CATIC) showed off two versions of its Wing Loong reconnaissance and strike unmanned aerial system (UAS). It was the drone's first public appearance in Southeast Asia, according to trade media, and the booth drew military personnel from countries such as Myanmar and Malaysia.

These Chinese drones cost about $5 million versus up to $100 million for a U.S.-made system, making them especially attractive to less affluent militaries, said Ben Moores, a senior analyst for defense and aviation at Jane’s by IHS Markit.

“The factors are moving in China’s favor on a daily basis,” he said, adding that the Chinese option was also attractive to countries with less than cordial relations with the United States and Israel.

For instance, he said: “Global customers are very put off by (U.S. President Donald) Trump. Even though he is removing restrictions, any customer is going to think twice about buying American equipment because if you buy it and he decides he doesn’t like you for any reason, he cuts off your spares and you can’t run your platform.”

CATIC, a unit of Chinese state giant Aviation Industry Corporation of China, declined multiple requests for interviews at the airshow held this week.

In February last year, Chinese state news agency Xinhua said that the country’s domestically developed military drones had won their largest ever overseas order from an undisclosed buyer, boosting the Chinese arms industry’s efforts to increase export volumes.

But Moores cautioned there was often a disconnect between what China says it has sold, and what has actually changed hands.

“We’ve not seen any developed leading military get anywhere near to buying Chinese UAVs,” he said, referring to unmanned aerial vehicles.

NO SHORTCUTS
To be sure, analysts say that China has not yet taken away any business from U.S. and Israeli drone manufacturers and has so far just sold to customers who are unable to afford American and Israeli products.

Western manufacturers at the airshow acknowledged the growing presence of their Chinese rival. But they said that customers would not overlook their many years of experience for a cheaper and less reliable alternative.

Jane’s by IHS Markit predicts that countries such as Sri Lanka, Kazakhstan and the Philippines could be in the market for Chinese drones, with Malaysia potentially seeking 24 units and Indonesia looking at 20.

“If you look at the Wing Loong, it looks just like our airplane, I don’t know why they did it that way but they have cheap labor, they can just copy things,” said Joseph Song, vice president for international strategic development at General Atomics Aeronautical Systems, maker of the MQ-9 Reaper.

“At the end of the day anybody can make an airplane. What’s important is what do you do with that platform?,” he said. “We’ve flown 5 million hours on this airplane (the MQ-9). That’s more than all the UAVs combined in the world.”

Israel’s Aeronautics said it had a 40-year track record with 70 clients across 55 countries, which meant its drones had, unlike the Chinese, been tested through many development cycles and been proven in combat.

“You cannot shortcut 40 years to five years,” said Dany Eshchar, Aeronautic’s deputy chief executive for marketing and sales.

“I believe that the customer appreciates good product and is willing to pay a little more. When you buy Chinese for now, you pay less, you get less. Less by reliability, less by safety,” he said.

Still, these manufacturers said they are not sitting back, citing how quickly their Chinese competitors have been able to adapt and how the country has already made great strides in the civil drone sector.

The United States government, which has come under heavy pressure from American manufacturers, is working, for instance, on relaxing domestic regulations on drone sales to select allies.

“We’re competing on technology and price and sometimes we win, sometimes we lose,” said Eli Alfassi, executive VP of marketing at Israel Aerospace Industries, Israel’s largest defense contractor.

“But are not sitting quiet for even one second. We’re always thinking about the next technology and the next generation... to see how we can improve the system.”

Hope You Will Like My Post!!!!!

Thank You.