Future of the venezuelan defense industry - Reports Corner

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Future of the Venezuelan Defense Industry - Market
Attractiveness, Competitive Landscape and Forecasts to 2018

DescriptionDescription
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Product Synopsis
This report is the result of SDI's extensive market and company
research covering the Venezuelan defense industry, and provides
detailed analysis of both historic and forecast defense industry
values, including key growth stimulators, analysis of the leading
companies in the industry, and key news.

Brief SummaryBrief Summary
Product Synopsis
This report is the result of SDI's extensive market and company
research covering the Venezuelan defense industry, and provides
detailed analysis of both historic and forecast defense industry values,
including key growth stimulators, analysis of the leading companies in
the industry, and key news.
Introduction and Landscape
Why was the report written?
The Future of the Venezuelan Defense Industry - Market
Attractiveness, Competitive Landscape and Forecasts to 2018 offers
the reader an insight into the market opportunities and entry strategies
adopted by foreign original equipment manufacturers (OEMs) to gain a
market share in the Venezuelan defense industry.

What is the current market landscape and what is changing?
Venezuelan defense expenditure recorded a CAGR of 7.82% during
the review period and is expected to value US$5.7 billion in 2013.
Modernization activities and border disputes drove expenditure during
the review period, and both factors are expected to continue to be
drivers throughout the forecast period. Defense expenditure in
Venezuela is expected to register a CAGR of 11.37% and reach a
value ofUS$8.0 billion by 2018. As a percentage of gross domestic
product (GDP) the Venezuelan defense budget stood at 1.64% in 2013,
and is expected to increase to 2.08% of GDP by 2018, largely due to
the expected increase in defense expenditure. The capital expenditure
allocation of the Venezuelan defense budget, which stood at 41.6%
during the review period, is expected to increase to 68.9% during the
forecast period, as a result of increased budget allocation for
equipment purchases. Consequently, revenue expenditure is likely to
decrease from 58.4% in the review period to 31.1% in the forecast
period.

Key opportunities for equipment suppliers are expected in the areas of
fighter and multi-role aircrafts, transport and utility aircraft, and attack
aircraft. Other areas expected to provide opportunities for equipment
suppliers are the purchase of main battle tanks, diesel electric
submarines, as well as surface-to-air and surface-to-surface missiles.
What are the key drivers behind recent market changes?
Modernization, border disputes and development of domestic defense
industry to drive defense expenditure in the forecast period.
What makes this report unique and essential to read?
The Future of the Venezuelan Defense Industry - Market
Attractiveness, Competitive Landscape and Forecasts to 2018 provides
detailed analysis of the current industry size and growth expectations
from 2014 to 2018, including highlights of key growth stimulators.

It also benchmarks the industry against key global markets and
provides a detailed understanding of emerging opportunities in specific
areas.
Key Features and Benefits
The report provides detailed analysis of the current industry size and
growth expectations from 2014 to 2018, including highlights of key
growth stimulators, and also benchmarks the industry against key
global markets and provides a detailed understanding of emerging
opportunities in specific areas.
The report includes trend analysis of imports and exports, together with
their implications and impact on the Venezuelan defense industry.
The report covers five forces analysis to identify various power centers
in the industry and how these are expected to develop in the future.

The report allows readers to identify possible ways to enter the market,
together with detailed descriptions of how existing companies have
entered the market, including key contracts, alliances, and strategic
initiatives.
The report helps the reader to understand the competitive landscape of
the defense industry in Venezuela. It provides an overview of key
defense companies, both domestic and foreign, together with insights
such as key alliances, strategic initiatives, and a brief financial analysis.
Key Market Issues
In 2013, Venezuela recorded a defense budget of US$5.7 billion, which
was low compared to some other Latin American countries.
Furthermore, during the review period, capital expenditure accounted
for 41.6% of Venezuela's total defense budget, expected to increase to
68.9% over the forecast period.

This increase in capital expenditure translates into a higher budget
allocation for the purchase of equipment, and hi-tech arms and
ammunition. Nevertheless, a relatively smaller defense budget has
become a barrier to entry for foreign companies, despite the country
maintaining an open economy. The Venezuelan defense industry
comprises only of state-owned companies with little specialization in
weapon categories, this results in a lack of advanced defense
technology and means that foreign weapon suppliers, who intend to
conduct business in Venezuela, face infrastructure challenges.
Although foreign suppliers can bring advanced technology into the
country, this can result in technology imports without offset incentives.
At the same time, as the country plans to develop its domestic defense
industry, it might encourage domestic suppliers to produce more
defense equipment, ending a reliance on foreign companies.

Corruption has become a major obstacle for foreign companies aiming
to enter the Venezuelan defense market, as it can result in unfair
contract awards. According to Transparency International's corruption
perceptions index, Venezuela is a highly corrupt country with a score of
19, and the country ranks 165th out of 174 countries. Government
tenders are often unreliable in Venezuela because the process
frequently lacks transparency; in May 2010, the former Venezuelan
defense minister was sentenced to nearly eight years in prison for
misappropriating state funds while in office. As part of the anti-
corruption drive initiated by the Venezuelan government, in June 2013,
a senior tax official was arrested on charges of corruption. The
authorities had previously apprehended senior officials from
government ministries, state companies and other organizations on
charges of corruption.

Key Highlights
Although Venezuela allows 100% FDI in its defense industry, its
underdeveloped defense market, lack of advanced technology, and
small defense budget mean many foreign OEMs prefer to enter the
industry through direct selling. High corruption levels, increasing
government intervention, and economic and political instability also
make the Venezuelan defense industry unattractive to foreign
investment. A large proportion of military procurement is undertaken
through government-to-government, or government-to-supplier deals.

In May 2006, the US judged that Venezuela had not been fully co-
operating in counter terrorism efforts and announced an arms embargo
against the country, banning the export and re-export of US originated
defense equipment to Venezuela. Consequently, the country started to
import defense equipment from Russia and Spain, who were prepared
to export to Venezuela. During 2007-2011, Venezuela imported around
US$2.0 billion of arms from Russia, including 24 Sukhoi fighter jets,
over 100 T72 tanks, dozens of combat helicopters, and air defense
systems. China is also an important import partner for the country, and
during the review period Venezuela purchased long-rage surveillance
radar systems and fighter jets from China. Other import partners
include the Netherlands, Switzerland, Ukraine, Germany, and Italy.
Venezuela purchased naval patrol boats from Spain, and radar
systems from the Netherlands. Over the review period, Venezuela
imported weapons worth US$11.0 billion from Russia.

Table of ContentsTable of Contents
1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Venezuelan defense expenditure expected to register higher growth during the forecast period
3.1.2. Modernization, border disputes and development of domestic defense industry to drive defense
expenditure in the forecast period
3.2. Analysis of Defense Budget Allocation
3.2.1. Revenue expenditure accounts for the majority of the Venezuelan defense budget
3.2.2. Defense budget as a percentage of GDP expected to increase during the forecast period

3.2.3. Per-capita defense expenditure expected to increase during the forecast period
3.2.4. Capital expenditure budget is expected to increase during the forecast period
3.2.5. Revenue expenditure expected to grow more quickly in the forecast period
3.2.6. Personnel expenditure accounts for the majority of the revenue expenditure budget
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security (HLS) budget projected to increase in the forecast period
3.3.2. Cybercrime, drug trafficking, civil unrest, the threat of terrorism and organized crime to drive the
HLS market
3.3.3. Venezuela considered to be at 'some risk' from terrorist attack
3.3.4. Venezuela experienced low levels of terrorist activity during the review period
3.4. Benchmarking with Key Global Markets
3.4.1. Venezuela's defense budget expected to increase in the forecast period
3.4.2. Venezuela's military expenditure is limited compared to the countries with the highest defense
expenditures
3.4.3. Venezuela allocates a low percentage of GDP to defense

3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Fighters and Multirole
3.5.2. Transport and Utility aircraft
3.5.3. Main Battle Tanks
3.5.4. Diesel Electric Submarines
3.5.5. Surface-to-surface Missiles
4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limited capability of domestic defense market drives imports
4.1.2. Russia, China and Spain account for the majority of Venezuela's defense imports
4.1.3. Aircraft, missiles and sensors are the most imported military hardware
4.2. Export Market Dynamics
4.2.1. Defense exports increased in the review period
4.2.2. Ecuador was the largest importer of Venezuelan aircraft parts and missiles in the review period
4.2.3. Aircraft were the largest exported defense equipment in the review period

5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low to high
5.1.2. Bargaining power of buyer: medium to low
5.1.3. Barriers to entry: medium to low
5.1.4. Intensity of rivalry: low to medium
5.1.5. Threat of substitution: low to medium
6 Market Entry Strategy
6.1. Market Regulation
6.1.1. Venezuela does not disclose any offset obligations
6.1.2. Venezuela allows 100% FDI in defense industry
6.2. Market Entry Route
6.2.1. Direct selling is the preferred market entry route for foreign OEMs

6.3. Key Challenges
6.3.1. Small defense budget and limited technological capability limits market entry for foreign companies
6.3.2. Corruption acts as an obstacle for market entry
6.3.3. The arms embargo against Venezuela makes market entry difficult for foreign defense companies
6.3.4. Economic and political instability
7 Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. CA Venezolana de Industrias Militares (CAVIM): overview
7.2.2. CA Venezolana de IndustriasMilitares (CAVIM): products and services
7.2.3. CA Venezolana de IndustriasMilitares (CAVIM): recent announcements and strategic initiatives
7.2.4. UCOCAR CA: overview
7.2.5. UCOCAR CA: products and services
7.2.6. UCOCAR CA: recent announcements and strategic initiatives

7.2.7. UCOCAR CA: recent contract awards
7.2.8. Diques y AstillerosNacionales CA (DIANCA): overview
7.2.9. Diques y AstillerosNacionales CA (DIANCA): products and services
7.2.10. Diques y Astilleros Nacionales CA (DIANCA): alliances
7.2.11. Diques y AstillerosNacionales CA (DIANCA): recent contract awards
8 Business Environment and Country Risk
8.1. Demographics and Social Statistics
8.1.1. Total Rural Population
8.1.2. Total Urban Population
8.1.3. Number of Households
8.2. Economic Performance
8.2.1. GDP Per Capita
8.2.2. GDP, Current Prices (US$ Billion)
8.2.3. GDP Per Capita
8.2.4. Imports of Goods and Services (current US$ billion)

8.2.5. Gross National Disposable Income (US$ billion)
8.2.6. Manufacturing Output, (US$ billion)
8.2.7. Consumer Price Index
8.2.8. Wholesale Price Index
8.2.9. Local Currency Unit per US$ (period average)
8.2.10. Local Currency Unit per EUR (period average)
8.2.11. Lending Rate
8.2.12. Deposit Rate
8.2.13. Real Interest Rate
8.2.14. Market Capitalization of Listed Companies
8.2.15. Market Capitalization of Listed Companies (% of GDP)
8.2.16. Goods Export as % of GDP
8.2.17. Goods Imports as % of GDP
8.2.18. Goods Balance as % of GDP

8.2.19. Service Imports as % of GDP
8.2.20. Service Exports as % of GDP
8.2.21. Service Balance as % of GDP
8.2.22. Foreign Direct Investment
8.2.23. Net Foreign Direct Investment as % of GDP
8.2.24. International Reserves, including gold
8.2.25. External Debt as % of GDP
8.3. Energy and Utilities
8.3.1. Conventional Thermal Electricity Net Generation
8.3.2. Hydroelectricity Net Generation
8.3.3. Nuclear electricity Net Generation
8.3.4. Conventional Thermal Electricity Installed Capacity
8.3.5. Electricity Exports
8.3.6. Proved Natural Gas Reserves
8.3.7. Petroleum Consumption

8.3.8. Crude Oil Proved Reserves
8.4. Infrastructure
8.4.1. Air transport, freight
8.4.2. Overall Construction
8.5. Minerals
8.5.1. Mining, Manufacturing, Utilities Output
8.6. Technology
8.6.1. Patents Granted
8.7. Telecommunications
8.7.1. Telephone Lines
8.7.2. Telephone Lines Penetration Rate
9 Appendix
9.1. About SDI
9.2. Disclaimer

For more informationFor more information
For more information please visit our website
https://www.reportscorner.com/reports/27223/Future-of-the-Venezuelan-Defense-
Industry---Market-Attractiveness,-Competitive-Landscape-and-Forecasts-to-2018/

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Future of the venezuelan defense industry - Reports Corner