The Washington Post-How one Chinese machine tool maker is helping Russias war against Ukraine

2024-07-18T03:02:18.779Z

When NATO this month accused China of being a “decisive enabler” of Russia’s war in Ukraine, the bloc wasn’t referring to Chinese tanks, or ammunition, or troops.

The statement instead pointed to Chinese transfers of “dual use” equipment, like sophisticated machine tools, that have been used to make Russian weapons. China’s exports of those machine tools more than doubled last year, according to trade data collated by the United Nations.

One of the companies that has benefited from Russia’s hunger for these goods is a midsize laser machine tool company called Shandong Oree Laser Technology Co. — one of dozens of Chinese companies that the U.S. Treasury Department sanctioned last month.

The Washington Post reviewed company records, videos, advertising materials and other open-source material to sketch a profile of Oree Laser, offering a glimpse into the myriad ways the Russian war effort relies on Chinese industry.

Oree Laser is emblematic of the vital and increasing support that Chinese companies are providing to Russia: It makes fiber laser cutters, which have civilian applications but are also used in the production of military drones, a weapon that has defined the war in Ukraine.

Beijing confirmed this week that it will not supply weapons to Russia, Ukrainian President Volodymyr Zelensky said Wednesday after his foreign minister, Dmytro Kuleba, met his Chinese counterpart, Wang Yi.

But analysts say that Chinese exports to Russia — not just in sectors like machine tools, but also specialized electronic equipment and other high-end technology components — enable Moscow to expand its military productive capabilities and evade global efforts to end the war in Ukraine, which will enter its 900th day next month.

Oree Laser was one of the dozens of Chinese companies that the U.S. Treasury sanctioned last month in an effort to curb “Russia’s ability to benefit from access to foreign technology, equipment, software, and IT services.”

The Treasury said Oree Laser has shipped metalworking and other related equipment to Russia, and sanctioned it under the category of “PRC-based suppliers to Russian Military-Industrial Base.”

A review of the United Nations’ Comtrade database following NATO’s unprecedented assertion this month showed that China exported more than $245 million worth of laser machine tools to Russia last year and $162 million in 2022, according to the latest available U.N. Comtrade data. Russia invaded Ukraine on Feb. 24, 2022. In 2021, Chinese exports of laser machine tools to Russia totaled only $90 million, according to the database.

China also separately exported $390 million in metalworking machines to Russia in 2023, up from $94 million the year before.

Russia “has become completely dependent from supplies of all types of machine tools and their parts from China,” said Pavel Luzin, a visiting scholar at Tufts University and an expert on the Russian armed forces.

Luzin estimates that 90 percent of imported machine tools come from China, and even those made in Russia are produced with Chinese components, parts and engines.

Beijing has not officially, on a state level, provided military support to Russia in a substantial way, and it has dismissed U.S. and NATO accusations that it is supporting the Russian war machine, calling these politically motivated and groundless.

Still, analysts say Beijing, which tightly controls its private sector, has allowed companies to continue doing any business it wants with Russia — a relationship that is working for both Russia and China.

“[Russia] knows that its strategic partnership with China will likely be a lasting one, which gives it confidence to focus on its confrontation with NATO,” said Cheng Chen, a professor of political science and an expert on Russia-China ties at the University at Albany, SUNY.

‘Welcome Russian customers’

Oree Laser’s business dealings with Russia predate Moscow’s invasion of Ukraine, with the company posting videos taken before 2022 showing Russian customers posing next to their machines with a thumbs-up sign, saying it had their “trust and praise.”

But the business relationship appears to have deepened after the invasion and Russia’s increasing isolation.

Oree Laser is privately held and does not release financial statements or trade data, but says on an advertising page that it ships the products it makes — laser machine tools — to 100 countries, including Russia.

Oree Laser did not respond to a request for an interview or to emailed questions sent Tuesday about its business in Russia, if it knows the end use of its equipment there, and the recent sanctions. It has not commented publicly on the Treasury designation.

The company has leaned heavily into business with Russian clients after the war, including by hiring more Russian speakers and participating in major Moscow-based trade fairs.

Oree Laser posted ads last August looking for salespeople who spoke Russian, and it separately advertised for employees to be stationed in the country to join the nine fluent Russian speakers it says it has there for “good customer service.”

An Oree employee last July uploaded a video to Douyin, the Chinese version of TikTok, enthusiastically giving Russian clients a tour of the factory and a demonstration of its machines. “Welcome Russian customers,” the employee wrote in a caption. “We hope that our cooperation will be smooth and that our customers will not regret their visit!”

The company has made other accommodations to adapt to the needs of Russian clients. At the trade fair in Moscow last year, an employee promoted a cutting machine that could have its operating system in Russian.

Oree Laser participated in the same trade show this year, where it said Russian visitors were “captivated by the live demonstrations showcasing the precision and speed of our machines.”

Russia’s own manufacturing sector does not produce machine tools like the precision laser cutters Oree manufactures, and it has long relied on imports to procure these tools and the parts needed to operate them.

Before the invasion, it sourced these tools from European, Japanese, South Korean and other manufacturers. But many of those supply lines have been cut off, analysts say, either because of sanctions or concerns about their application for military purposes.

The company’s fiber laser tools are an example of machines that have been used by Russia’s defense industry to produce military drones, reactive armor and other military equipment, said Allen Maggard, an analyst at the Washington-based global security nonprofit C4ADS, who reviewed Oree Laser’s company advertisements.

Fiber laser cutters are able to cut metal into precise shapes, something that cannot be replicated by the human hand, and are used to create parts such as military drone frames.

“Oree Laser’s overall profile aligns with other Chinese manufacturers of laser machine tools used by the Russian defense industry,” said Maggard. Laser cutters, he added, have been used by Aeroscan, a Russian manufacturer of military drones, while other Russian companies use Chinese laser cutters to manufacture buggies and reactive armor for military users.

A recent article in a government-owned newspaper said Oree Laser’s products have been sold to industries including the military — without specifying which military — and are also used for automobile manufacturing and to make precision instruments. In promotional videos, it has touted its machines’ usage in bridge construction and shipbuilding.

Pride of Jinan city

Oree Laser is among the Chinese companies that have been elevated and supported by local officials, despite mounting Western pressure on third-country support for Russia’s war machine.

Beijing has so far done little to stop private companies from supplying the Russian defense industries, even though it can and does have significant control over its industries. NATO will not be able to stop the export of dual-use goods like these laser machine tools without Chinese government cooperation, analysts say.

There has been “little incentive to crack down hard as its strategic competition with the U.S. continues to heat up,” said Chen of the University at Albany, SUNY.

For Oree Laser, business seems to be going well. It said in April that it would be expanding significantly so that it could produce 10,000 medium- and high-end laser machines per year, with construction expected to be completed this year.

The expansion plan has been selected as a key project of the city of Jinan, where Oree is based, for 2024. Communist Party officials from Jinan have visited Oree every month since May to learn about the expansion and Oree’s needs, according to posts on its website.

Just this month, officials said the expansion was a key project for the city, as well as wider Shandong province, as an “important engine” for economic development.

Still, burgeoning business ties with Russia come at a cost, even if that is difficult to quantify because of its opacity.

Oree Laser officials had been preparing to go to Chicago in September for the International Manufacturing Technology Show, the largest trade fair of its kind in the Western Hemisphere. It posted on its YouTube page, offering exclusive deals and discounts.

The Association for Manufacturing Technology, which organizes the trade show, canceled Oree Laser’s participation after seeing it was sanctioned by the Treasury.

“As soon as we saw their name, we removed them from the show,” said Bonnie Gurney, the association’s vice president for strategic content and partnerships.

Some analysts say, however, that some sanctioned companies will remain undeterred and isolation could push these companies to go all in on Russia.

“When a company has been sanctioned, it is then free to switch its entire business to Russia,” said Jack Watling, a senior research fellow at the Royal United Services Institute. “It doesn’t have an alternative market, so it may as well go with it.”

Mahtani reported from Singapore and Wu from Taipei. Catherine Belton contributed to this report.