The Venezuelan Defense Industry - Market Opportunities and Entry Strategies Analyses and Forecasts to 2015

Synopsis

• Top level overview of the Venezuelan defense industry
• A breakdown of the Venezuelan defense industry by spend pattern valued from 2006 through 2010 and forecasted from 2011 through 2015
• A breakdown of the markets by segment valued from 2006 through 2010 and forecasted from 2011 through 2015
• Details of top companies active across the Venezuelan defense industry
• Emerging trends and opportunities in the Venezuelan defense industry in the last 12 months

Summary

This report offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original equipment manufacturers) to gain a market share in the Venezuelan defense industry. In particular, it offers in-depth analysis of the following:

• Market opportunity and attractiveness: detailed analysis of the current industry size and growth expectations during 2011–2015, including highlights of the key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
• Procurement dynamics: trend analysis of imports and exports, together with its implications and impact on the Venezuelan defense industry.
• Industry structure: five forces analysis to identify various power centers in the industry and how these are likely to develop in the future.
• Market entry strategy: analysis of possible ways to enter the market, together with detailed descriptions of how existing players have entered the market, including key contracts, alliances, and strategic initiatives.
• Competitive landscape and strategic insights: analysis of 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.
• Business environment and country risk: a range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.

Scope

Analysis of Defense industry market size from 2006 through 2010 and forecasts till 2015
Analysis of defense budget allocation
Benchmarking with key global markets
Market opportunities
Defense procurement dynamics
Industry dynamics
Market entry strategy
Competitive landscape and strategic insights
Business environment and country risk

Reasons To Buy

• Gain insight into the Venezuelan defense industry with current, historic and forecast market values
• Get insight on market opportunity and attractiveness
• Get insight on industry procurement dynamics
• Gain insight on industry structure
• Gain insight into the regulations governing the Venezuelan defense industry and the potential market entry strategies with an expert analysis of the competitive structure
• Identify top companies of the Venezuelan defense industry along with profiles of all those companies

Key Highlights

Venezuelan defense expenditure grew at a CAGR of 7.98% during the review period and is expected to value US$2.4 billion in 2011. Modernization and border disputes drove expenditure during the review period and are expected to continue to do so throughout the forecast period. Defense expenditure in Venezuela is anticipated to register a CAGR of 7.98% and reach a value of US$3.2 billion by 2015. As a percentage of gross domestic product (GDP) the Venezuelan defense budget stood at 0.7% in 2010 and is expected to increase to 1.1% of GDP by 2015, largely due to the expected increase in defense expenditure.
The capital expenditure allocation of the Venezuelan defense budget, which stood at 32.3% during the review period, is expected to decline to 30.1% during the forecast period, as a result of a reduced budget allocation for equipment purchases. Consequently, revenue expenditure is likely to increase from 67.7% in the review period to 69.9% in the forecast period.

Contents

1 INTRODUCTION

1.1 About this Report
1.2 Definitions
1.3 Methodology
  1.3.1 Secondary research
  1.3.2 Primary research
  1.3.3 Conventions
1.4 ICD Research Intelligence Terrorism Index
1.5 About ICD Research Defense Intelligence Center
1.6 About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)

2 EXECUTIVE SUMMARY

3 MARKET ATTRACTIVENESS AND EMERGING OPPORTUNITIES

3.1 Defense Market Size and Forecast
  3.1.1 Venezuelan defense expenditure expected to register higher growth during the forecast period
  3.1.2 Modernization and border disputes 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 decline during the forecast period
  3.2.3 Per-capita defense expenditure expected to decline during the forecast period
  3.2.4 Capital expenditure budget expected to register a higher CAGR growth in 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 HLS Market Size and Forecast
  3.3.1 HLS budget projected to decline in the forecast period
  3.3.2 Cybercrime, drug trafficking and organized crime to drive the HLS market
  3.3.3 Venezuela considered at ‘some risk’ of 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 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 Demand for jet trainer and light attack aircraft to increase
  3.5.2 Military utility helicopters and fighter aircraft will provide attractive market opportunities
  3.5.3 Demand for battle tanks expected to increase
  3.5.4 Su-30MK2 fighters will provide attractive market opportunities
  3.5.5 Demand for armored fighting vehicles to increase
  3.5.6 Submarines and ships will provide attractive market opportunities
  3.5.7 Demand for S-300 air defense missile system components to increase

4 DEFENSE PROCUREMENT MARKET DYNAMICS

4.1 Import Market Dynamics
  4.1.1 Limited capability of domestic defense market drives imports
  4.1.2 Defense imports expected to increase in the forecast period
  4.1.3 Russia and China account for the majority of Venezuela’s defense imports
  4.1.4 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

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
  5.1.3 Barriers to entry: medium
  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 Arms embargo against Venezuela makes market entry difficult for foreign defense companies

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 Industrias Militares (CAVIM): products and services
  7.2.3 CA Venezolana de Industrias Militares (CAVIM): recent announcements and strategic initiatives
  7.2.4 CA Venezolana de Industrias Militares (CAVIM): alliances
  7.2.5 CA Venezolana de Industrias Militares (CAVIM): recent contract awards
  7.2.6 CA Venezolana de Industrias Militares (CAVIM): financial analysis
  7.2.7 UCOCAR CA: overview
  7.2.8 UCOCAR CA: products and services
  7.2.9 UCOCAR CA: recent announcements and strategic initiatives
  7.2.10 UCOCAR CA: alliances
  7.2.11 UCOCAR CA: recent contract awards
  7.2.12 UCOCAR CA: financial analysis
  7.2.13 Diques y Astilleros Nacionales CA (DIANCA): overview
  7.2.14 Diques y Astilleros Nacionales CA (DIANCA): products and services
  7.2.15 Diques y Astilleros Nacionales CA (DIANCA): recent announcements and strategic initiatives
  7.2.16 Diques y Astilleros Nacionales CA (DIANCA): alliances
  7.2.17 Diques y Astilleros Nacionales CA (DIANCA): recent contract awards
  7.2.18 Diques y Astilleros Nacionales CA (DIANCA): financial analysis

8 BUSINESS ENVIRONMENT AND COUNTRY RISK

8.1 Business Confidence
  8.1.1 Market capitalization trend – Caracas stock exchange
  8.1.2 FDI inflows
8.2 Economic Performance
  8.2.1 GDP at constant prices (US dollars)
  8.2.2 GDP per capita at constant prices (US dollars)
  8.2.3 GDP at current prices (US dollars)
  8.2.4 GDP per capita at current prices (US dollars)
  8.2.5 GDP split by key segments
  8.2.6 Agriculture net output at current prices (Venezuelan Bolivar)
  8.2.7 Agriculture net output at current prices (US dollars)
  8.2.8 Agriculture net output at current prices as a percentage of GDP
  8.2.9 Manufacturing net output at current prices (Venezuelan Bolivar)
  8.2.10 Manufacturing net output at current prices (US dollars)
  8.2.11 Manufacturing net output at current prices as a percentage of GDP
  8.2.12 Mining, manufacturing and utilities net output at current prices (Venezuelan Bolivar)
  8.2.13 Mining, manufacturing and utilities at current prices (US dollars)
  8.2.14 Mining, manufacturing and utilities at current prices, as a percentage of GDP
  8.2.15 Construction net output at current prices (Bolivar)
  8.2.16 Construction net output at current prices, (US dollars)
  8.2.17 Construction net output at current prices as a percentage of GDP
  8.2.18 Crude steel production
  8.2.19 Crude oil consumption
  8.2.20 Inflation rate
  8.2.21 Fiscal balance as a percentage of GDP
  8.2.22 Current account balance as a percentage of GDP
  8.2.23 Exports as a percentage of GDP
  8.2.24 Imports as a percentage of GDP
  8.2.25 Exports growth
  8.2.26 Imports growth
  8.2.27 Annual average exchange rate US$–VEB
  8.2.28 End-of-period exchange rate US$–VEB
8.3 Infrastructure Quality and Availability
  8.3.1 Total airports and sea ports
  8.3.2 Roadways
  8.3.3 Automotive components exports trend
  8.3.4 Automotive components imports trend
  8.3.5 Passenger car penetration
  8.3.6 Total installed capacity for electricity generation
  8.3.7 Installed capacity for the generation of conventional thermal electricity
  8.3.8 Electricity production
  8.3.9 Installed capacity for hydroelectricity generation
  8.3.10 Installed capacity for renewable electricity generation
  8.3.11 Electricity consumption
  8.3.12 Electricity exports
  8.3.13 Electricity imports
  8.3.14 Healthcare expenditure
  8.3.15 Healthcare expenditure as percentage of GDP
  8.3.16 Healthcare expenditure per capita
  8.3.17 Total internet subscribers
  8.3.18 Broadband internet subscribers
  8.3.19 Personal computer penetration rate
  8.3.20 Mobile phone penetration rate
8.4 Labor Force
  8.4.1 Labor force
  8.4.2 Unemployment rate
8.5 Demographics
  8.5.1 Annual disposable income
  8.5.2 Annual per-capita disposable income
  8.5.3 Annual consumer expenditure on food
  8.5.4 Total population
  8.5.5 Urban and rural population
  8.5.6 Female percentage of population
  8.5.7 Male percentage of population
  8.5.8 Mean age of population
  8.5.9 Median age of population
  8.5.10 Population density
  8.5.11 Age distribution of the total population
  8.5.12 Age distribution of the male population
  8.5.13 Age distribution of the female population
  8.5.14 Number of households
8.6 Political and Social Risk
  8.6.1 Political stability
  8.6.2 Terrorism index
  8.6.3 Transparency index

9 APPENDIX

9.1 Contact Us
9.2 About ICD Research
9.3 Disclaimer

LIST OF TABLES

Table 1: ICD Research Intelligence Terrorism Index
Table 2: UCOCAR CA: Recent Contract Wins
Table 3: Diques y Astilleros Nacionales CA (DIANCA): Alliances
Table 4: Diques y Astilleros Nacionales CA (DIANCA): Recent Contract Wins

LIST OF FIGURES

Figure 1: Venezuelan Defense Market Size and Forecast (US$ Billion), 2006–2015
Figure 2: Venezuelan Defense Expenditure Allocation for Capital and Revenue Expenditure (%), 2006–2015
Figure 3: Venezuelan Defense Expenditure as a Percentage of GDP, 2006–2015
Figure 4: Venezuelan Per-Capita Defense Expenditure (US$), 2006–2015
Figure 5: Venezuelan Defense Budget Allocation for Capital Expenditure (US$ Billion), 2006–2015
Figure 6: Venezuelan Defense Budget Allocation for Revenue Expenditure (US$ Billion), 2006–2015
Figure 7: Venezuelan Revenue Expenditure Breakdown (%), 2006–2015
Figure 8: Venezuelan HLS Budget (US$ Billion), 2006–2015
Figure 9: Venezuelan HLS Budget Breakdown (%), 2006–2015
Figure 10: ICD Research Intelligence Terrorism Heat Map, 2010
Figure 11: ICD Research Intelligence Terrorism Index, 2010
Figure 12: Benchmarking with Key Global Markets: Historical vs. Expected Defense Budget Growth
Figure 13: Defense Expenditure of Countries with the Highest Global Military Expenditure (US$ Billion), 2010 and 2015
Figure 14: Defense Expenditure as a Percentage of GDP of Countries with the Highest Military Expenditure (%), 2010
Figure 15: Venezuelan Defense Imports (US$ Million), 2006–2010
Figure 16: Venezuelan Defense Imports by Country (US$ Million), 2006–2010
Figure 17: Venezuelan Defense Imports by Country (%), 2006–2010 and 2010
Figure 18: Venezuelan Defense Imports by Category (%), 2006–2010 and 2010
Figure 19: Venezuelan Defense Exports (US$ Million), 2006–2010
Figure 20: Venezuelan Defense Exports by Category and Country (%), 2006–2010
Figure 21: Industry Dynamics–Porter’s Five Forces Analysis
Figure 22: Caracas Stock Exchange Market Capitalization (US$ Billion), 2003–2009
Figure 23: Venezuelan Net FDI Inflows (US$ Billion), 2003–2009
Figure 24: Venezuelan GDP at Constant Prices (US$ Billion), 2003–2015
Figure 25: Venezuelan GDP Per Capita at Constant Prices (US$), 2003–2015
Figure 26: Venezuelan GDP at Current Prices (US$ Billion), 2003–2015
Figure 27: Venezuelan GDP Per Capita at Current Prices (US$), 2003–2015
Figure 28: Venezuelan GDP Split by Key Segments (%) 2003 and 2009
Figure 29: Venezuelan Agriculture Net Output at Current Prices (VEB Billion), 2003–2015
Figure 30: Venezuelan Agriculture Net Output at Current Prices (US$ Billion), 2003–2015
Figure 31: Venezuelan Agriculture Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 32: Venezuelan Manufacturing Net Output at Current Prices (VEB Billion), 2003–2015
Figure 33: Venezuelan Manufacturing Net Output at Current Prices (US$ Billion), 2003–2015
Figure 34: Venezuelan Manufacturing Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 35: Venezuelan Mining, Manufacturing and Utilities Net Output at Current Prices (VEB Billion), 2003–2015
Figure 36: Venezuelan Mining, Manufacturing and Utilities Net Output at Current Prices (US$ Billion), 2003–2015
Figure 37: Venezuelan Mining, Manufacturing and Utilities Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 38: Venezuelan Construction Net Output at Current Prices (VEB Billion), 2003–2015
Figure 39: Venezuelan Construction Net Output at Current Prices (US$ Billion), 2003–2015
Figure 40: Venezuelan Construction Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 41: Venezuelan Crude Steel Production (Million Metric Tons), 2003–2015
Figure 42: Venezuelan Crude Oil Consumption (Million Tons), 2003–2015
Figure 43: Venezuelan Inflation Rate (%), 2003–2015
Figure 44: Venezuelan Fiscal Balance as a Percentage of GDP (%), 2003–2009
Figure 45: Venezuelan Current Account Balance as a Percentage of GDP (%), 2003–2009
Figure 46: Venezuelan Exports as a Percentage of GDP (%), 2003–2015
Figure 47: Venezuelan Imports as a Percentage of GDP (%), 2003–2015
Figure 48: Venezuelan Exports Growth (%), 2003–2015
Figure 49: Venezuelan Imports Growth (%), 2003–2015
Figure 50: Venezuelan Annual Average Exchange Rate US$–VEB, 2003–2009
Figure 51: Venezuelan End of the Period Exchange Rate US$–VEB, 2003–2009
Figure 52: Venezuelan Airports and Sea Ports (Number of), 2009
Figure 53: Venezuelan Roadways (Kilometers), 2009
Figure 54: Venezuelan Automotive Components Exports (US$ Million), 2003–2015
Figure 55: Venezuelan Automotive Components Imports (US$ Billion), 2003–2015
Figure 56: Venezuelan Passenger Car Penetration (per 1,000 people), 2003–2015
Figure 57: Venezuelan Total Installed Capacity for Electricity Generation (Gigawatt Electric), 2003–2015
Figure 58: Venezuelan Installed Capacity for the Generation of Conventional Thermal Electricity (Million Kilowatts), 2003–2015
Figure 59: Venezuelan Electricity Production (Billion Kilowatt Hours), 2003–2015
Figure 60: Venezuelan Installed Capacity for the Generation of Hydroelectricity (Million Kilowatts), 2003–2015
Figure 61: Venezuelan Installed Capacity for the Generation of Renewable Electricity (Million Kilowatts), 2003–2015
Figure 62: Venezuelan Electricity Consumption (Billion Kilowatt Hours), 2003–2015
Figure 63: Venezuelan Electricity Exports (Billion Kilowatts Hours), 2003–2015
Figure 64: Venezuelan Electricity Imports (Billon Kilowatts Hours), 2003–2015
Figure 65: Venezuelan Healthcare Expenditure (US$ Billion), 2003–2015
Figure 66: Venezuelan Healthcare Expenditure as a Percentage of GDP (%), 2003–2015
Figure 67: Venezuelan Per-Capita Healthcare Expenditure (US$), 2003–2015
Figure 68: Venezuelan Internet Subscriptions (Millions), 2003–2015
Figure 69: Venezuelan Broadband Internet Subscriptions (Millions), 2003–2015
Figure 70: Venezuelan Personal Computer Penetration Rate (per 100 people), 2003–2015
Figure 71: Venezuelan Mobile Phone Penetration (%), 2003–2015
Figure 72: Venezuelan Size of Labor Force in 15–59 Age Group (Million), 2003–2015
Figure 73: Venezuelan Unemployment Rate (%), 2003–2015
Figure 74: Venezuelan Annual Disposable Income (US$ Billion), 2003–2015
Figure 75: Venezuelan Annual Per-Capita Disposable Income (US$), 2003–2015
Figure 76: Venezuelan Consumer Expenditure on Food (US$ Billion), 2003–2015
Figure 77: Venezuelan Total Population (Million), 2003–2015
Figure 78: Venezuelan Urban and Rural Population (%), 2003–2015
Figure 79: Venezuelan Females as a Percentage of Population (%), 2003–2015
Figure 80: Venezuelan Males as Percentage of Population (%), 2003–2015
Figure 81: Venezuelan Mean Age of Population (Years), 2003–2015
Figure 82: Venezuelan Median Age of Population (Years), 2003–2015
Figure 83: Venezuelan Population Density (per Square Kilometer), 2003–2015
Figure 84: Venezuelan Population Distribution by Age (%), 2003–2015
Figure 85: Venezuelan Male Population Distribution by Age (%), 2003–2015
Figure 86: Venezuelan Female Population Distribution by Age (%), 2003–2015
Figure 87: Venezuelan Households, Number of (Million), 2003–2015
Figure 88: Global Terrorism Heat Map, 2009
Figure 89: Venezuelan Transparency Index, 2003–2009 Skip to top