China “enables” Russia’s Ukraine war with drone-making tools

One company benefiting from Russia’s thirst for such products is Shandong Orli Laser Technology Co., a mid-sized maker of laser machine tools that was one of dozens of Chinese companies sanctioned by the U.S. Treasury Department last month.

The Washington Post reviewed the company’s records, videos, advertising materials and other open source material to outline a profile of Ollie Laser, offering a glimpse into the many ways Russia’s war effort relied on Chinese industry.

Ollie Laser represents significant and growing support that Chinese companies are providing to Russia. The company makes fiber laser cutters that are used not only for civilian purposes but also to make military drones, weapons that have become a hallmark of the Ukraine war.

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

But analysts say Chinese exports to Russia – not only in areas such as machine tools but also specialized electronics and other high-end technology components – are allowing Moscow to expand its military manufacturing capabilities and circumvent global efforts to end the Ukraine war, which turns 900 days old next month.

Ollie Laser is one of dozens of Chinese companies that the U.S. Treasury Department imposed sanctions on last month aimed at curbing “Russia’s ability to benefit from access to foreign technology, equipment, software, and IT services.”

The Treasury Department said Ollie Laser ships metal-cutting and other related equipment to Russia and sanctioned it under the category of “China-based supplier to the Russian defense industrial base.”

A review of the UN Comtrade database following NATO’s unprecedented allegations this month revealed that the latest UN Comtrade data shows that China exported more than $245 million worth of laser machine tools to Russia last year, and $162 million worth in 2022. Russia invaded Ukraine on February 24, 2022. According to the database, Chinese exports of laser machine tools to Russia in 2021 were just $90 million.

China is also expected to export $390 million worth of metalworking machinery to Russia in 2023, up from $94 million the previous year.

Russia is “completely dependent on China for supplies of all kinds of machine tools and their parts,” said Pavel Luzin, a visiting scholar at Tufts University and an expert on the Russian military.

Luzin estimates that 90 percent of imported machine tools are made in China, and even Russian-made ones are made with Chinese parts, components and engines.

The Chinese government at the state level has not officially provided any substantial military assistance to Russia and denies U.S. and NATO accusations that it supports the Russian military as politically motivated and unfounded.

Still, analysts say the relationship works well for both Russia and China because Beijing, which maintains tight control over the private sector, allows companies to continue any business they want with Russia.

“[Russia] “Russia knows its strategic partnership with China is probably going to be a lasting one, and that gives it the confidence to focus on confronting NATO,” said Chen Chen, a political science professor at the State University of New York at Albany and an expert on Russia-China relations.

Ollie Laser’s business dealings with Russia predate Moscow’s invasion of Ukraine, and the company has posted videos filmed before 2022 in which Russian customers pose with thumbs up next to its machines, saying they have earned its “trust and admiration.”

But as the invasion and Russia’s isolation progressed, business ties appear to have deepened.

Ollie Laser is privately held and doesn’t release financial statements or trading data, but its advertising page says it ships laser machine tools to 100 countries, including Russia.

Ollie Laser did not respond to interview requests or emailed questions sent Tuesday about its operations in Russia, whether it knows the end uses of its equipment there and the recent sanctions. The company has not commented publicly on the Treasury Department designation.

After the war, the company stepped up its business with Russian customers, hiring more Russian-speaking staff and participating in major trade fairs in Moscow.

Oree Laser ran the ad last August. The company is looking for Russian-speaking salespeople and has also recruited employees to be based in Russia, adding to the nine Russian-speaking employees it has based in the country for “superior customer service.”

Last July, an Ollie employee posted a video on Douyin, China’s version of TikTok, enthusiastically giving Russian customers a tour of the factory and a demonstration of the machines. “We welcome our Russian customers,” the employee wrote in the caption. “We hope the cooperation goes smoothly and that you won’t regret your visit!”

The company has also taken other steps to adapt to Russian customers’ needs. At a trade show in Moscow last year, it promoted cutting machines that employees could operate in Russian.

Ollie Laser was at the same fair this year and said Russian visitors were “fascinated by the live demonstrations showing the precision and speed of our machines.”

Russia’s manufacturing industry does not produce machine tools like the precision laser cutters that Oree makes, and has long relied on imports to procure these tools and the components needed to operate them.

Before the invasion, North Korea sourced these tools from manufacturers in Europe, Japan and South Korea, but analysts say many of those supply lines have been cut off due to sanctions and concerns they could be used for military purposes.

Allen Maggard, an analyst at C4ADS, a Washington-based international security nonprofit, who has reviewed Ollie Laser’s corporate ads, said the company’s fiber-laser tools are examples of machines that Russia’s defense industry has used to make military drones, reactive armor and other military equipment.

Fiber laser cutters can cut metal into precise shapes that the human hand cannot replicate, and are used to create parts such as the frames of military drones.

“Olly Laser’s overall profile is consistent with other Chinese manufacturers that build laser machine tools used by the Russian defense industry,” Maggard said, adding that laser cutters are also used by Aeroscan, a Russian manufacturer of military drones, and other Russian companies use Chinese laser cutters to make military buggies and reactive armor.

A recent article in the government-run newspaper said Ollie Laser’s products are sold to industries including the military (though it did not specify which) and are also used in automobile manufacturing and precision machinery production. In promotional videos, the company promotes the use of its machines in bridge construction and shipbuilding.

Ollie Laser is one of the Chinese companies that is highly regarded and supported by local authorities, despite growing Western pressure against third-party support for Russia’s military.

Although the Chinese government can and does have a great deal of control over the Russian defense industry, it has so far done little to block private companies from supplying it. NATO will likely not be able to block the export of dual-use products like these laser machine tools without Beijing’s cooperation, analysts say.

“As strategic competition with the United States continues to intensify, there is little incentive to crack down hard,” said Chen of the University at Albany.

Things seem to be going well for Ollie Laser: In April, the company announced a major expansion to produce 10,000 mid- to high-end laser machines per year, with construction due to be completed by the end of the year.

The expansion has been selected as a key project for Jinan, where Ollie is based, for 2024. Communist party officials from Jinan have been visiting Ollie every month since May to learn about the expansion plans and Ollie’s needs, according to a post on the company’s website.

Officials this month said the expansion was a key project for the city, and the whole of Shandong province, as a “key driver” of economic development.

Still, expanding business ties with Russia comes with costs, even if they are difficult to quantify because of the lack of transparency.

Ollie Laser executives were preparing to attend the International Manufacturing Technology Show in Chicago in September, the largest trade show in the Western Hemisphere, and the company posted to its YouTube page to advertise special sales and discounts.

The Manufacturing Technology Association, which organises the fair, cancelled Ollie Laser’s participation after learning that the company had been sanctioned by Treasury.

“As soon as we saw their names, we took them off the show,” said Bonnie Gurney, the association’s vice president of strategic content and partnerships.

But some analysts say some of the sanctioned companies remain undaunted and may launch an all-out attack on Russia.

“When a company is sanctioned, it’s free to move its entire operation to Russia,” said Jack Watling, a senior fellow at the Royal Institute for Security Studies in the UK. “They have no alternative market, so they have no choice but to go to Russia.”

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