Chinese Clones of Russian Fighter Jets, A Warning for Today’s Tech Deals?

The Wall Street Journal’s excellent new China reporter Jeremy Page – former Reuters, Times of London and veteran China hand and foreign correspondent – offers a glimpse of what the future may hold for technology companies now doing “indigenous innovation” technology deals in which they transfer technology to their China partner under the condition that the technology can only be used in China and not exported. Chinese fighter jets that have “assimilated” Russian technology that came in under similar deals are now hitting the international arms market.

I watched the birth of China’s military-industrial complex during the early 1990s Gulf War. The masses bicycling home from work would stop and block the street in front of the Beijing train station as they watched  the evening news broadcast on the city’s first large outdoor TV screen. With open-mouthed awe, laobaixing watched US fighters launch “smart bombs” that steered their way down Bagdad smokestacks and into government buildings. That is when the Chinese leadership in Zhongnanhai just a few blocks away decided that advanced technology not hordes of peasant soldiers was the only way forward for warfare.

The excerpt:
After decades of importing and reverse-engineering Russian arms, China has reached a tipping point: It now can produce many of its own advanced weapons—including high-tech fighter jets like the Su-27—and is on the verge of building an aircraft carrier. Not only have Chinese engineers cloned the prized Su-27’s avionics and radar but they are fitting it with the last piece in the technological puzzle, a Chinese jet engine. In the past two years, Beijing hasn’t placed a major order from Moscow.

Now, China is starting to export much of this weaponry, undercutting Russia in the developing world, and potentially altering the military balance in several of the world’s flash points. This epochal turnaround was palpable in the Russian pavilion at November’s Airshow China in the southern city of Zhuhai. Russia used to be the star of this show, wowing visitors with its “Russian Knights” aerobatic team, showing off fighters, helicopters and cargo planes, and sealing multibillion dollar deals on the sidelines.

This year, it didn’t bring a single real aircraft—only a handful of plastic miniatures, tended by a few dozen bored sales staff. China, by contrast, laid on its biggest commercial display of military technology—almost all based on Russian know-how. “We used to be the senior partner in this relationship—now we’re the junior one,” said Ruslan Pukhov, of the Russian Defense Ministry’s Public Advisory Council, a civilian advisory body to the military.
Russia’s predicament mirrors that of many foreign companies as China starts to compete in global markets with advanced trains, power-generating equipment and other civilian products based on technology obtained from the West……

Beijing’s breakthrough came in 1996, when it paid Russia $2.5 billion for a license to assemble another 200 Su-27s at the Shenyang Aircraft Company.
The agreement stipulated that the aircraft—to be called the J-11—would include imported Russian avionics, radars and engines and couldn’t be exported. But after building 105, China abruptly canceled the contract in 2004, claiming the aircraft no longer met its requirements, according to Russian officials and defense experts.
Three years later, Russia’s fears were confirmed when China unveiled its own version of the fighter jet—the J-11B—on state television.
“When the license was sold, everyone knew they would do this. It was just a risk that was taken,” said Vassily Kashin, a Russian expert on the Chinese military. “At that time it was a question of survival.”

The J-11B looked almost identical to the Su-27, but China said it was 90% indigenous and included more advanced Chinese avionics and radars. Only the engine was still Russian, China said. Now it is being fitted with a Chinese engine as well, according to Zhang Xinguo, deputy president of AVIC, which includes Shenyang Aircraft.

“You cannot say it’s just a copy,” he said. “Mobile phones all look similar. But technology is developing very quickly. Even if it looks the same, everything inside cannot be the same.”

The link:
http://tinyurl.com/35fapwh

Advertisements

About James McGregor
James McGregor is an American author, journalist and businessman who has lived in China for more than 25 years. Currently, he is chairman of APCO Worldwide, Greater China. A professional speaker and commentator who specializes in China’s business, politics and society, he regularly appears in the media to discuss China-related topics. McGregor is the author of the books "No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism" (2012) and "One Billion Customers: Lessons from the Front Lines of Doing Business in China" (2005). He also wrote the 2010 report "China’s Drive for ‘Indigenous Innovation’ – A Web of Industrial Policies." From 1987 to 1990 McGregor served as The Wall Street Journal’s bureau chief in Taiwan, and from 1990 to 1994 as the paper’s bureau chief in Mainland China. From 1994 to 2000, he was chief executive of Dow Jones & Company in China. After leaving Dow Jones, he was China managing partner for GIV Venture Partners, a $140 million venture capital fund specializing in the Chinese Internet and technology outsourcing. In 1996, McGregor was elected as chairman of the American Chamber of Commerce in China. He also served for a decade as a governor of that organization. He is a member of the Atlantic Council, Council on Foreign Relations, National Committee on US-China Relations and International Council of the Asia Society. He serves on a variety of China-related advisory boards.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: