Russian maker of the famed Kalashnikov AK-47 faces bankruptcy

Izhmash Arms Factory, the sole licensed manufacturers of the famous AK-47 assault rifle, may be facing bankruptcy. Andrei Markin, a businessman in the company's home city of Izhevsk, has filed suit to declare the company bankrupt because of outstanding debts totaling approximately $265,000. While the manufacturer states that its order books are full and that Markin's suit is bogus, there is little doubt that Izhmash -- and the Russian arms industry -- have fallen on hard times.

Between 2007 and 2008, the Russian arms industry experienced a 72 percent drop in sales. Although the country is still a world leader in the firearms industry, it is ceding an ever-increasing market share to China, which has demonstrated an impressive ability to reverse-engineer military technology. Currently, Russia is caught between two tough choices: it can either accept a smaller market share, or can make increasingly complex weapons systems available to China. If it follows the latter path, it will do so in the full knowledge that China will continue its reverse-engineering process, stealing an ever-increasing portion of Russia's sales.