A Brief Overview of the Aerospace and Defense Industry
—Data Comparison and Reflections Prompted by Three Rankings

Tags: industrialists, asset holders, the “Industrial Party,” military enthusiasts, amateur scientists, and keyboard warriors;
Total word count: 5,000 words,
Reading time: approximately 12 minutes;
Reflection and annotation time: approximately 30 minutes;

U.S.-listed companies’ fiscal years span calendar years, running from July of one year to June of the following year.
For example, in the comprehensive rankings, the highly authoritative Forbes typically waits for listed companies to release their annual reports, then collects and compiles the relevant financial data—primarily revenue and profit—and publishes its annual Global 2000 list.
Furthermore, several reviews indicate that the two magazine brands—“Fortune Forum” and “Fortune 500”—continue to wield dominant influence in the financial media landscape.
U.S. magazines Fortune and Forbes, BusinessWeek, and the UK’s Financial Times all publish annual rankings of the Top 500 companies.
We will not elaborate on this year’s overall ranking, nor on the China-specific ranking, the U.S. ranking, and so on.
In brief: Chinese firms are growing at a faster pace and with a larger margin of expansion than their U.S. counterparts, while the global landscape is characterized by a seesaw dynamic—both China and the United States are expanding, but China’s growth rate is higher.

Today’s writing theme is:
2021 Fortune Global 500 Sector Rankings: Aerospace and Defense
Original article link: www.fortunechina.com/fortune500/c/2021-08/02/content_394586.htm
On this list, Forbes has identified 13 companies whose primary business is aerospace and defense: six from China, five from the United States, and two from Europe (France’s Airbus and the United Kingdom’s BAE Systems).

Every year, there are also some industry-specific rankings that are typically released a bit later;
A primary source of information for the aerospace and defense sector is Defense News’ annual Top 100 Defense Companies ranking.
In addition, Brand Finance of the United Kingdom has released the Biennial Ranking of the World’s 25 Most Valuable Aerospace and Defence Brands (Aerospace & Defence 25 Biennial).
Stay tuned for a more comprehensive Top 100 Defense Companies 2021 ranking around August 15; I’ll follow up with another article then.

All rankings are designed to reflect current competition and the present situation, as well as to project future developments.
The subsequent logic involves induction, comparison, and forecasting—such as projecting the upper and lower bounds of the track based on a time-axis vertical axis and a ranking-horizontal axis with curve-based projections.

Content analysis: U.S.–China relations, the P5, BRICS, and industrialized countries;
For well-known reasons, after the founding of the People’s Republic, the construction of the industrial system relied on Soviet aid (albeit for a brief period). Amid tumultuous historical changes, the country entered a protracted phase of self-reliance, during which, building on a weak foundation and limited experience, it successfully developed the “two bombs and one satellite”—the nation’s strategic weapons. In doing so, it achieved parity with other nations in these critical areas.
Subsequently, as China aligned itself with the international community—through its admission to the United Nations and restoration of its lawful seat, the establishment of diplomatic relations with the United States, arms control efforts, the household contract responsibility system for land, the reform and opening-up policy, and accession to the World Trade Organization—it made certain advances in the areas of people’s livelihood and in the conventional industrial and commercial sectors, thereby partially achieving the goal of the Four Modernizations.
The subsequent rise of China (its resurgence) will continue to encounter both obstacles and driving forces; let us briefly elaborate on the underlying rationale.
1. The energy and environmental footprint: if we were to adopt the current lifestyles of developed countries—particularly those in the United States and Europe—an American-style lifestyle would require five times the energy and environmental resources, while a European-style lifestyle would require three times as much.
2. Due to geographical and historical constraints, Asia—where we live—has resource and population carrying capacities that are 3 to 5 times those of the United States and Europe, despite its relatively limited land and marine area. Moreover, Asia’s late start in geographic expansion, industrial development, and technological advancement has resulted in certain disadvantages stemming from this latecomer status.
3. By looking to the future from the past, to the past from the future, and by envisioning both the future and the past from the present, we should all have the ability and the confidence to do a good job in matters concerning China and Asia; the road ahead is long and arduous, and it is up to our generation to strive for self-improvement without ceasing.

Regularization Question
Group 1: U.S.–China comparison, Five Constants comparison;
1.1: The “Fortune 500 Aerospace and Defense Sub-Rank” includes 13 companies—six from China, five from the United States, and two from Europe (France’s Airbus and the United Kingdom’s BAE Systems). Of course, the Fortune 500 is a comprehensive ranking, and its perspective is somewhat biased, placing greater emphasis on the broader business, industrial, and societal spheres.
1.2: “Top 100 Defense Companies 2020”: China has 7 firms, the United States 50, and Europe 24 (21 in Western Europe and 3 in Eastern Europe). The full list also includes 3 firms from Japan in East Asia and 4 from South Korea (do not underestimate South Korea—despite its many shortcomings, it remains a formidable player).
In South Asia, there are two in India; in Southeast Asia, one in Singapore; in the Middle East, three in Israel and two in Turkey (consider the cooperation between Pakistan and Turkey), plus one in the United Arab Emirates. The remaining locations are one each in sparsely populated, vast countries such as Canada, Australia, and Brazil.
Europe’s 24 institutions can also be considered a substantial number: among the P5, the United Kingdom has 7, France 5, core EU member Germany 2, Italy and Spain each 2, and the Nordic countries—Netherlands, Sweden, and Norway—each 1. This assessment is purely quantitative, however.
          
Another important aspect of this form is the breakdown of main business revenue into defense-related revenue and total main business revenue, as well as the proportion of defense-related revenue within total main business revenue. The summary is as follows:

Company Name Country 2020 Defense Revenue 2020 Total Revenue
China Defense Sector (7 State-Owned Enterprises) China 95,626.82 350,109.82 27.31%
U.S. Defense Sector (among the Top 50) United States 307,330.02 618,829.78 49.66%
U.S. Defense Sector (Top 8 Companies) United States 229,093.37 303,110 75.58%,

In China’s defense sector—comprising seven state-owned enterprises (two from the ground forces, one from the air force, two from the space domain, one from the navy, and one in the electronics industry)—the share of military-industrial business is only about 27%, whereas the top eight U.S. defense contractors exhibit a 75% concentration in their core businesses.
Of course, this is due to historical reasons. After the 1960s and 1970s, China’s overall strategic focus shifted to improving people’s livelihoods, leading to military downsizing and the consolidation and streamlining of the defense industry—such as the repeated reorganization of the six machinery ministries, which were eventually all merged into the Ministry of Industry and Information Technology, as well as the failure to establish an effective external economic loop, among other factors.
Even from today’s perspective, our defense-industrial enterprises still have a long way to go; U.S. defense firms and the share of military spending in their respective national budgets both account for roughly 50% of the global total, whereas China’s defense-industrial output and its share of military expenditure remain relatively modest for now, placing it behind Russia and France in the international arms market.
The gap remains, with relentless pursuers closing in behind. South Korea and Turkey, leveraging their geopolitical advantages, industrial specialization, and rising national consciousness, continue to expand into markets such as the Middle East and Southeast Asia. Thus, it is repeatedly emphasized that the road ahead is long and arduous—especially as defense ministry orders surge.
Competitiveness in the international market demands relentless, minute-by-minute effort; if we can effectively foster both internal and external circulation in the defense industry, it will further bolster technological advancement, economic scale, and economic returns in the aerospace and defense sectors.
    
1.3 “Top 25 Most Valuable Aerospace & Defence Brands,” Brand Finance, a UK-based brand valuation firm
This is a biennial ranking, published in 2018, 2020, and so on. For our basic analysis, we will focus on the 2020 edition. The ranking centers on the foundational markets of aerospace and defense, with 25 brands selected for each edition.
Brand value assessments were conducted for the top 10 companies, along with evaluations of their brand value trends. In both 2018 and 2020, AviChina Technology Co., Ltd. made the list, improving its ranking from 20th to 19th.
The 2020 ranking is shown in the figure: 14 U.S. companies, 3 French firms, 2 British firms, 1 German firm, and 1 each from Canada, Brazil, Italy, Sweden, and China; Russia’s Aeroflot did not make the list this time.
Among the top 10 brand valuations, six are from the United States, three from France, and one from the United Kingdom.
Since this ranking focuses on brand value, it essentially reflects word-of-mouth and the market realities of actual production and purchasing. While the Top 100 Defense list remains the definitive benchmark, it nonetheless offers valuable insights into the core competitive strengths of defense-related enterprises.

1.4 This is the central thesis of this paper; the most critical task is to conduct a forward-looking analysis: What will the situation look like over the next 3–5 years, the next 10–20 years, and even further out—over the next 20–50 years or 100–200 years?
A. Among domestic industry research firms and securities brokers, China International Capital Corporation (CICC), which enjoys a relatively broad outlook, published a series of research reports around 2018 titled “Military Industry Overseas Mapping Series.”
Of course, this is a quintessential client-facing research report: the data are predominantly drawn from financial markets, with distinctions made among industries, markets, and market capitalizations. I define the time horizon as 3 to 5 years, which is still preferable to the typical 0.2 to 2-year horizon used in most such reports.
Its focus is on leading, publicly listed companies; its benchmarking against peer firms and performance metrics is fairly solid, and it has largely clarified the industry and product landscape. However, the background and underlying rationale still require substantial strengthening, and, more importantly, the strategic vision needs to be significantly enhanced.
Mapping (a mathematical term) simply means mirroring (a physical term), which is rather an oversimplification.
The future scenario analysis for defense-industry enterprises is undoubtedly a highly strategic博弈, involving strategic steadfastness, strategic opportunities, hard-won experience, the Thucydides Trap, and the Prisoner’s Dilemma. These topics will be further explored in subsequent articles in this series.
 
B. Looking at this issue over the longer time horizons of 20 to 50 years, or even 100 to 200 years, it may sound far-fetched—but in fact, it is already unfolding around us.
Let’s still organize this along the logical sequence of principle (hypothesis) – exploration (trial and error) – practice – engineering.
In 1964, Soviet astronomer Nikolai Kardashev proposed a classification scheme for extraterrestrial civilizations, broadly dividing them into three types: Type I—planet-based civilization; Type II—stellar-system-based civilization; and Type III—galactic-system-based civilization.
Based on this preliminary theory, Michio Kaku, an American-Japanese theoretical physicist, suggests that by the year 2100, human civilization will have crossed the threshold into a Type II civilization—the planetary-system civilization.
Therefore, progress in space is the single most important stepping stone for humanity’s further advancement—there is no other. From this perspective, we must refocus our attention on areas such as energy, energy conversion, and interstellar travel—fields that lie at the very frontier of what humanity currently knows.
On the frontier of space, for example, Elon Musk’s SpaceX has reduced the cost of launching cargo into space to between $3,500 and $4,000 per kilogram—compared with the $20,000 to $50,000 per kilogram when humanity first entered the space domain.
Costs have been reduced by roughly fivefold, and I am confident that, within the limited time ahead, this cost will drop even further—to $3,000 per kilogram, or even $2,000 per kilogram—because China’s price-disruption engine has yet to fully kick in.

C. Based on the foregoing points A and B, China’s strategic outlook for the medium term—particularly over the next 10 to 50 years—must remain balanced: strengthening foundational capabilities and achieving breakthroughs at the cutting edge are two complementary pillars that must advance in tandem if China is to lead the way into the future.
Recently, one of China’s three major think tanks—the journal of the Chinese Academy of Engineering, “Chinese Journal of Engineering”—reprinted an earlier article titled “Key Indicators for Building a Manufacturing Powerhouse.” I believe that most of the arguments in this article focus on strengthening the foundational infrastructure.
After conducting research on the models, indicator systems, and weight distributions involved, a systematic article could be prepared specifically for the aerospace and defense industries.
Regarding breakthrough innovations, is continuing to follow the approaches of Roscosmos and NASA too slow in terms of timeline? From another perspective, could we adopt a “small steps, rapid iteration” approach like SpaceX?
This issue is highly complex, involving products, capital, institutional frameworks, and more, and would require numerous specialized articles to fully explain.

To be continued in the next episode.