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US Continues To Dominate The Global Arms Industry, China Ranks Second

December 10, 2020: The US continues to dominate the global arms industry as per the Stockholm Peace Research Institute (SIPRI) based in Sweden, China ranks second. SIPRI recently released its data set on the arms sales of the world’s largest arms companies.

Created in 1989, SIPRIs Arms Industry Database contains information on arms-producing and military services companies (‘arms companies’), including public and private companies. The database is compiled using open information from company annual reports and articles in journals and newspapers. It defines ‘arms sales’  as sales of military goods and services to military customers domestically and abroad.

The top five arms companies were all based in the United States namely, Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics. 12 US companies appear in the top 25 for 2019, accounting for 61 per cent of the combined arms sales of the top 25. The influence of trade between US and China reflects in the rise of AVIC of China, pointing to sustained push for independence in the electronics segment.

China is second behind the US in the arms manufacturing industry with the second largest share of 2019 arms sales by the top 25 arms companies, at 16 per cent. With four companies in top 25, the Chinese companies have outstripped the Russian and European arms industry. Three companies, Aviation Industry Corporation of China (AVIC; ranked 6th), China Electronics Technology Group Corporation (CETC; ranked 8th) and China North Industries Group Corporation (NORINCO; ranked 9th) are in top 10. According to the report, the combined revenue of these four Chinese companies grew by 4.8 per cent between 2018 and 2019. Chinese arms industry deals mainly with the countries that have been decidedly refused equipment by Western countries. According to experts at SIPRI, the Chinese industry has benefited from military modernization programmes for the People’s Liberation Army (PLA).

For the first time, a Middle Eastern firm ranked in top 25. EDGE, a UAE based company ranked at number 22 and accounted for 1.3 per cent of total arms sales of the top 25. EDGE Group  is a UAE based company formed in 2019 by merging around 25 smaller companies including government-owned Emirates Defence Industries Company. The company is a reflection of UAE’s efforts to build self sufficiency in defence capabilities. UAE is one of the top buyers of US weapons. 

The report also highlights that the Global South is becoming integrated into the global arms industry. Through majority-owned subsidiaries, joint ventures and research facilities, 15 countries have presence in 49 countries. However the penetration into these countries is dominated by US and Western European firms. Thales and Airbus are the two most internationalized companies with presence in 24 countries. Boeing (21 countries) and Leonardo (21 countries) come next. Better access to growing markets, collaborative weapon programmes, or policies in the host countries tying arms purchases to technology transfers might reflect the reasons of this trend.