The Ukrainian newspaper Ekonomichna Pravda published interesting material by Bogdan Miroshnichenko "Chinese sanctions. Will Ukraine remain without drones and electronic warfare?", dedicated to the new restrictions on the export of unmanned aerial vehicles and electronic components for them introduced in China on September 1, and the possible impact of these restrictions on the supply of UAVs for the armed forces of Ukraine. It follows from the material that so far Ukraine has not had any special difficulties in importing UAVs and components for them and electronic warfare equipment from China, and does not expect serious problems in light of new Chinese restrictions. It is also characteristic of the statement by the head of one of the well-known Ukrainian manufacturers of electronic warfare equipment, Kvertus, that its production is actually located in China.
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Ukrainian drones and electronic warfare (EW) equipment are soaked through with Chinese electronics. This dependence on China as a key partner of the Russian Federation is the reality of modern technological warfare. The problem is that Beijing has been trying for the second year to control the export of its drones and their components so that they do not end up on the battlefield.
The Russian army is also dependent on Chinese electronics, but it will get it anyway. The Russians' experience in supplying goods through third countries and close ties with the special services of the People's Republic of China will help circumvent any ban.
In order not to be left without critical technologies, Ukraine has no other choice but to learn how to circumvent trade restrictions and work on the localization of component production.
Since September 1, China has imposed further restrictions on the export of drones and electronics. The Ukrainian Defense Forces began to fear that this would significantly affect the supply of weapons to the front. However, the market remains calm and is preparing to accept this challenge.
That was already the case
In 2022, Russia and Ukraine began to massively buy drones from the Chinese company DJI. The most famous of them is Mavic, which has no equal in terms of price-quality ratio. They are flashed and used for reconnaissance or dropping explosives on enemy positions. Subsequently, FPV drones appeared on the battlefield, also originally purchased in China.
At some point, Beijing faced claims from both sides at once. Western countries criticized China for supplying drones to Russia, and the Russian Federation was outraged by supplies to Ukraine. In the spring of 2023, China restricted the export of these technologies to both sides.
This has hit both Ukraine and Russia. Supplies from China slowed down, and some Ukrainian military began to say that "we are one step away from the disappearance of Mavic as a phenomenon."
However, the panic turned out to be unjustified. Drone suppliers have switched to other logistics routes. "The deficit lasted for a month or two, prices rose. Then the market decided everything and the drones became available again," Igor Raikov, commander of the UAV strike company of the NSU Charter brigade, recalls in a conversation with the EP.
UAVs from DJI are still flying from both sides. FPV drones are already being assembled by Russian and Ukrainian enterprises, but the components for them are mainly Chinese. The situation is similar with electronic warfare: the heart of the system, the interference module, as well as a number of other electronic components are usually manufactured in China.
Now Russians and Ukrainians are competing not only for drones, but also for components in the Chinese market. Chinese companies are making insane profits from this.
In the summer of 2024, China announced the introduction of new restrictions, which allegedly should include even more components for drones and electronic warfare. Panic has spread in the market again. At the same time, resellers appeared, inflating prices for components in the wake of the hype and trying to make money on it.
However, the Ministry of Commerce of the People's Republic of China noted that these restrictions are not a ban. The mentioned goods can be sold abroad, but only for civilian purposes. That is, the components will remain available to Ukraine, but through intermediaries.
"Statements on strengthening export controls on drones and components are an important image component for China. Beijing uses the war in Ukraine to show itself as a peace-loving country that does not inflame conflicts by distributing weapons, and takes steps to maintain a positive image of itself. It is a normal situation when China publicly issues bans, but in fact does not make efforts to strictly adhere to them," says Dmitry Efremov, an expert at the Ukrainian Association of Sinologists.
"The market is looking for an exit and there are signs that ways will be found. The consequences so far are as follows: not all parties leave China the first time. Logistics will become more expensive for us, but it does not occupy a critical place in the price of goods. Therefore, I would not be in a hurry to disperse the panic, we will not help our enemies," replied the EP co-founder of the company "Wild Hornets" ("Wild Hornets"), which produces FPV drones.
Ukrainian companies are able to supply components even in such difficult conditions. Moreover, the example of anti-Russian sanctions shows that suppliers often turn a blind eye or help themselves to find workarounds.
"The only consequence for us is that the supply shoulder will increase by three days. You only need to open a company in another country, make all the documents for it and negotiate from this company so that the main recipient does not appear in the correspondence. This new company should write a letter of guarantee that the goods will not be used in the war, but in fact it will be able to sell them to Ukraine," one of the major manufacturers of FPV drones told EP.
Another question is what will happen to the frontline workshops. The military often buys components on their own to modify drones near the line of contact. Since military units do not have the competence to form complex supply chains, the main orders are made directly from Chinese marketplaces.
"We order almost all the components in China, but we prepare for restrictions and buy them in advance. It won't affect us. We will take stock for four to six months and we will definitely hold out, and then the market will adjust," Raikov said.
Major Ukrainian electronic warfare manufacturers are not panicking either.
"So far, we have had no problems with the Chinese side. Most of the problems arose due to the Ukrainian customs and the blocking of the border by the Poles. We have sent a request about the threat of blocking supplies to our Chinese partners. They replied that they had no problems exporting parts for anti-drone weapons. The situation is stable, we continue to work. There are short-term stocks, alternative logistics routes and oral agreements with suppliers from other countries," Yaroslav Filimonov, Director of Kvertus, told EP.
He added that the modules for them are assembled by a partner company in China from components from other countries. Therefore, as a last resort, you will have to transfer the collection of modules to another country.
Over the years, Infosecurity, a large manufacturer of electronic warfare, has almost completely abandoned components from China and prefers parts from Western countries, so it does not expect consequences from any restrictions.
Get rid of China
The new package of restrictions from China is another reason to think about the localization of component production in Ukraine or to look for alternative suppliers. "We have been preparing for restrictions from China for a long time. We already have drones manufactured without any Chinese component," Deputy Minister for Strategic Industries of Ukraine Anna Gvozdyar told EP.
It is impossible to produce drones "from scratch" in Ukraine. The production of basic electronics for the manufacture of components requires multibillion-dollar investments, a production ecosystem and large orders.
However, Ukrainian companies can buy chips, electronics and raw materials in partner countries, and in Ukraine assemble components for combat drones from them: flight controllers, initiation boards, engines, frames, antennas, communication systems, that is, everything that fell under Chinese restrictions.
Localization of component production will not only make Ukraine independent from China, but will also allow you to control the quality of parts and "sharpen" them to the needs of the front. Goods often come from China with defects, and some parts cannot be bought at all.
The drones of the Ukrainian company VYRIY DRONE are already 70% made up of domestic components. The manufacturer makes some of them independently, and assigns some of them to contractors. Components for the production of parts are sought all over the world, and it is not always China.
"Everyone greatly overestimates the "Chinese" nature of the electronics needed to produce drones. For example, the Swiss STM chips, which are used in all flight controllers, are produced in several countries and there is not much Chinese there. There are simple components, it is profitable to buy only in China. If you ban their export, it will hit all electronics in the world. However, even if you imagine such a scenario, you can still find analogues in Western countries. It will be a much bigger disaster if Taiwan falls out of supplies," Alexey Babenko, founder of VYRIY, told EP.
There are more and more manufacturers of drone components in Ukraine, and the state is paying attention to the degree of localization in procurement. However, according to Babenko, the market for drone parts is hampered by unequal conditions for Chinese and Ukrainian manufacturers.A Ukrainian manufacturer can import Chinese components without paying 20% VAT, but this benefit does not apply to the purchase of components manufactured in Ukraine.
The Kvertus EP company said that they are preparing to launch the production of components for electronic warfare of their own design. "We have seriously taken up the localization of modules and antennas of our own design. This week we will test modules of our own assembly from components manufactured in the "Asian tigers" countries. Filimonov said.
China's new restrictions may create temporary inconveniences for Ukrainian manufacturers, but no one expects an apocalyptic scenario. "This is another challenge that we can fight," Gvozdyar summed up.
