BUSINESS
Date Posted: 06-Jul-2010
Jane's Defence Weekly
Russia stalls on contract to supply China with fighter engines
Keri Wagstaff-Smith Jane's Industry Reporter - London
Key Points
Head of MiG and Sukhoi said a deal with Russian state-owned Rosoboronexport would encourage competition from cheaper Chinese FC-1 fighter
MiG-29s are currently competing with FC-1s in an Egyptian tender
Russia has suspended the signing of a contract to supply 100 RD-93 jet engines to China following protests from the head of Russian fighter manufactures MiG and Sukhoi, according to reports.
Citing Russian business daily Kommersant , a 5 July report by the Hindustan Times said that the contract to sell the engines to China was due to be signed with China in May this year.
According to a separate report by Russian state news service RIA Novosti, Mikhail Pogosyan, the director general of both MiG and Sukhoi protested against the sale - by state-owned arms exporter Rosoboronexport - of the jet engines to China, saying it would lead to stronger competition from China's cheaper FC-1 fighters, which are direct competitors of the MiG-29 Fulcrum aircraft.
"A Russian aircraft industry source said the FC-1 is inferior to MiG-29 in performance, but sells for about USD10 million, while the price of a MiG-29 is about USD35 million," said RIA Novosti.
It added that Pogosyan said the re-export of technologies must be approved by the original manufacturers to avoid unfair competition. However, Rosoboronexport said that a decision to allow the re-export of technology "could be made only by the government", and that the manufacturers have "never been consulted on the issue".
The FC-1 Xiaolong ('Fierce Dragon') is a single-engine multi-role fighter aircraft developed jointly by China and Pakistan. It is designated JF-17 'Thunder' by the Pakistan Air Force.
MiG-29s are currently competing with FC-1s in an Egyptian tender on the delivery of 32 fighters, according to the report. In addition, Egypt has launched negotiations with Pakistan on the licensed production of FC-1 aircraft.
The Russian Federal Service for Military-Technical Cooperation approved the re-export of RD-93 engines to Egypt as part of the FC-1 fighter package in November 2007.
RIA Novosti noted that Russian weapons manufacturers are facing increasing competition from China. For example, Russian S-300 and Chinese HQ-9 surface-to-air missile systems have been competing in a Turkish tender since 2007, while Russian and Chinese armoured personnel carriers competed in an Indonesian tender in 2007.
Jane's has previously reported that China's military aircraft industry has been steadily developing a line of products that would allow it to compete with Russia and other countries on world markets. There have also been commensurate advancements in China in weapon systems, radars and sensors, avionics and state-of-the-art 'glass' cockpit configurations.
In November 2009, executives from China's National Aero-Technology Import & Export Corporation said they were unhappy with the unwillingness of Russia to sell them some of its latest products, such as the Sukhoi Su-35.
COMMENT
Despite the competition and apparent cooling of relations between the two countries, China remains an important market for the export of Russian defence equipment, as well as for business centred around civilian nuclear energy.
Russia is likely to remain China's main source of military technology for the immediate future and has previously taken advantage of Western trade sanctions against Beijing, securing contracts to supply the Chinese military with high-technology combat equipment to China, including Su-27 long-range interceptor jet aircraft, in-flight refuelling tankers and conventional submarines.
According to Jane's Sentinel Country Risk Assessments , a series of military equipment systems that Moscow has allowed China to produce under licence include the Kilo-class submarine, the Su-27 combat aircraft and the Il-76 transport aircraft.
However, for some time, Russia has looked to securing a strong presence in other markets such as north Africa and Latin America - for example, by taking advantage of the United States' decision in 2007 to impose an arms embargo on Venezuela - in anticipation of a decline in exports to China and India. Both those countries accounted for about 60 per cent of export sales each year in the middle of the past decade, compared to only 20-30 per cent of sales at present.
Jane's has previously noted that significant challenges for Russia in terms of meeting export orders lie in whether or not it has the ability to modernise its defence industrial base.
This latest development apparantly does not effect the delivery of the RD-93 engines which power the FC-1 (designated JF-17 in Pakistan) being co-produced by China and Pakistan.
