Escalating global conflicts could create opportunities for China’s private defence companies as customers, both at home and abroad, seek affordable and reliable military equipment, according to industry insiders.
“The international landscape is highly favourable for our private enterprises’ participation in the defence industry,” said Li Yi, a researcher with Beihang University’s Shenzhen Research Institute. Li made the comments on Monday at a military exhibition in the southern city of Shenzhen.
Li, a former member of the People’s Liberation Army armaments department, said the Russia-Ukraine war and the India-Pakistan conflict in May had accelerated the development of new equipment and forces.
“These developments have created a broad stage and ample space for private firms to contribute to the military sector,” he said at a forum during the exhibition.
While China’s major state-owned defence conglomerates continue to dominate weapons development, private companies have increasingly entered the sector in recent years under the country’s military-civil fusion strategy, which seeks to deepen integration between civilian and defence industries.
The strategy is a core pillar of China’s ambition to build a modern military by 2035 and a “world-class” force by 2049.
This practice is common in other countries as well. In the US, private contractors fill in the technology gaps for the military, including developing drones and using artificial intelligence (AI) to recognise strike targets. The Defence Innovation Unit, under the US Department of Defence, is also focused on helping the US military adopt commercial technologies faster.
The 13th China Military-Civilian Dual Use Technology and Equipment Expo in Shenzhen aims to “enhance the nation’s strategic science and technology capabilities and comprehensively display the latest achievements in dual-use technologies”, according to a social media post by the event’s organiser on Monday.
This year’s exhibition featured 400 defence enterprises, including those specialising in electronic components, intelligent weapon systems and unmanned platforms.
The displays caught the attention of trading and consulting companies there to check for new equipment and parts for their customers in other countries.
Gokce Kayalar, general manager of the Hong Kong-based Pacific Access Limited, which provides production, sourcing and supply chain management services for global retailers, said he was there to look for defence industry components for customers in Turkey. At the exhibit, he showed interest in batteries.
“There’s a lot of edge in China, from the quality, price and availability point of view,” he said. But he added that there was a small market for Chinese defence products abroad, and while demand was not decreasing, it was not increasing either and was “not big like furniture”.
Foreign companies were also interested in drones. Milton Riano, international business manager at Colombia-based Seguridad Nueva Era, said he was specifically looking for anti-drone technology and drones, saying China was “the world’s leading authority on technology and its advancement”.
Chinese private firms at the event were eyeing overseas markets, encouraged by growing global demand for affordable weaponry.
A representative from Shandong Xinxing Defence Manufacturing, who declined to be named, said the company had exported products abroad and its offerings remained competitive due to their relatively low cost. The company’s products include helmets, face shields and body armour.
Li, the researcher, said that tensions in the Taiwan Strait could also spur equipment demand.
“The security situation created by Taiwan independence forces colluding [with external forces] has driven the development of our equipment needs,” he said.
He referred to the remarks made on November 7 by Japanese Prime Minister Sanae Takaichi, who stated that Tokyo could deploy its military forces in the event of a conflict in the Taiwan Strait. It was the first such comment by a sitting Japanese leader.
“We must focus on being able to fight and win wars, and this is where our [private companies’] opportunity emerges – namely, how our new equipment can be applied in operations involving Taiwan,” Li said.
Beijing has issued a series of retaliatory measures following Takaichi’s remarks, including travel warnings for Japan, cancelling Japanese shows and concerts and suspending official cultural exchanges.
Beijing sees Taiwan as part of China to be reunited by force if necessary. Most countries, including the US and Japan, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.
China has also doubled down on efforts to strengthen its military’s combat readiness and develop new combat forces to cope with modern warfare.
The country’s latest five-year plan, covering 2026–2030, calls for accelerating the development of advanced combat capabilities, strengthening strategic deterrence forces, and speeding up the development of unmanned and intelligent warfare capabilities and countermeasures.
Despite the momentum, the private sector’s involvement in the defence sector has faced hurdles, including US restrictions, intense domestic competition and bureaucratic red tape in the procurement process, according to company representatives at the exhibition.
A representative from the Hangzhou-based Raysengine, also known as Light Cloud, which specialises in graphics rendering technologies, said the firm had been affected since it was added to the US entity list in October 2023.
In recent years, Washington has placed a range of export controls on Chinese companies accused of supporting the PLA, targeting firms from semiconductor and AI developers to drone manufacturers. — SOUTH CHINA MORNING POST