On March 5, as US and Israeli forces attacked Iranian bases and Tehran launched attacks on Tel Aviv and Gulf countries hosting US bases, an email from a server located in China was exploded.
“We are deeply shocked and outraged by the aggression against Iran, and our hearts go out to you,” the message from Xiamen Victory Technology said. The company offered to sell German-designed engines used to power one-way attack drones.
The US has banned the sale of those engines, known as Limbach L550, to Iran and Russia. It has been a key component in Iran’s Shahid-136 explosive drone, a version of which Russia is also using extensively in Ukraine. Victory Technology displayed an image of a martyr-style drone with the slogan “Innovating Aviation Engine Solutions” on the product page of its website.
The blatant wartime marketing by a small, obscure Chinese company points to a growing source of frustration for Washington: its struggle to stem the flow of so-called dual-use goods – items with both civilian and military uses – to adversaries.
According to Chinese customs data, Chinese companies are sending hundreds of containers filled with such goods to Russia and Iran. Items on the packing list range from engines to computer chips, fiber-optic cables and gyroscopes. For a time, Chinese exporters deliberately mislabeled some shipments to avoid U.S. and European sanctions, but in many cases they no longer bother, according to former senior Treasury Department officials and weapons analysts.
The growing trade is one of the biggest challenges for US nonproliferation officials in the era of drone warfare. During the Cold War and for decades thereafter, they focused intensely on nuclear weapons and ballistic missiles – high-tech devices of mass destruction with scarce components that were relatively easy to locate. Low-tech and disposable, drones are made almost entirely of common parts that easily enter and exit the whirlpool of global trade without detection.
China has increased the challenge. America’s biggest rival has long served as a clearinghouse for American and European-made components that can be shipped to drone factories in Iran and Russia, according to former Treasury officials. Those components, he says, are increasingly being made inside China, often by small factories that are not afraid of Western sanctions.
Victory Technology’s email pitch, apparently by accident, reached the inbox of Iran Watch, part of the Wisconsin Project on Nuclear Arms Control that monitors Iranian weapons-proliferation networks. The group shared it with The Wall Street Journal.
“They are actively trying to sell Limbach L550 engines to Iran, and doing so very brazenly,” said John Caves, a researcher with the Wisconsin project.
The sender of the email, who identified himself as Christophe Chen, said the company began selling engines earlier this year and has not made any exports to Iran or Russia. He did not comment on why he sent the email to Iran Watch.
Martyr’s Supply
Iran’s main attack drone, the Shaheed, is one of the US’s biggest concerns. Analysts estimate it could fly up to 1,000 miles with an explosive warhead and cost $20,000 to $50,000 to build, essentially making it a cheaper alternative to cruise missiles.
Drones have proven effective in air defense and attacking targets. Recently U.S. developed its own imitator.
According to teardowns of drones recovered in Ukraine and the Middle East, early versions of the Shahid used in Ukraine were packed with microelectronics, servomotors to enable precise motion control, and other critical parts manufactured in the US and Europe.
The Treasury Department investigation found that nearly all US and European parts were being shipped through authorized distributors to retailers in mainland China or Hong Kong, who then shipped the parts to Iran or Russia.
Usually they were paid through shell companies which are easy to set up in Hong Kong and help obscure the final destination of the components.
In 2024 the department approved a web Major Hong Kong based companies It is linked to Tehran-based businessman Hamed Dehghan, whose company has been a major supplier for Iran’s drone and missile programs.
A year later, an entirely new network of Hong Kong companies were found serving as fronts for his operations, triggering a new wave of sanctions.
“China turned a blind eye to that flow, while its role has been repeatedly highlighted in public reporting and sanctions designations,” said Miyan Maleki, a former Treasury official who oversees sanctions programs at the Office of Foreign Assets Control. “They either don’t care or have chosen not to intervene.”
In a statement, China’s Foreign Ministry said it had consistently implemented restrictions on the export of dual-use items “in accordance with its own laws and regulations and its international obligations.”
Given the difficulties in imposing sanctions on components, US officials say they are also trying to deprive Tehran of funding by going after buyers and shippers of Iranian oil. A US official said, “We are focused on revenue because when we cut the head of the snake, we can do permanent damage.”
Recently, Russian and Iranian drone programs have been receiving most of their parts directly from China, according to former Treasury officials and industry analysts.
Conflict Armament Research, a UK-based group that investigates arms trafficking, said it had seen a “marked increase” in the use of components produced by Chinese manufacturers in Martyr-style drones.
Meanwhile, Ukrainian military destruction of a Russian first-person-view quadcopter drone has exposed a large number of China-sourced parts.
Chinese customs data shows that local companies are willing to trade openly in drone-related components despite US and European restrictions.
Chinese exports for fiber-optic cables surged in autumn 2024, soon after Russia successfully used them The drone is controlled through cables To resist Ukrainian signal jamming and to recapture the area of Kursk. They increased even more rapidly after the Ukrainian attack on the city of Saransk in April 2025 knocked out Russia’s main domestic supplier of fiber-optic cables.
Official records show that exports of lithium-ion batteries to Russia also increased as the Russian military increased production of battery-powered quadcopters and have remained on the rise since then.
“There’s really no explanation that’s plausible other than it’s being used for the military,” said Joseph Webster, a senior fellow at the Atlantic Council’s Global Energy Center who tracked the data. “It’s extremely clear.”
A similar surge in battery and fiber-optic cable exports to Iran was seen in July and August last year, shortly after Iran’s 12-day war with Israel. Iranian-backed militias used drones controlled through fiber-optic cables to take out An American Black Hawk helicopter and an air-defense radar system in Baghdad in March.
cost analysis
The recent trade in dual-use goods to Iran and Russia is driven by small, nimble Chinese companies that see an opportunity to capitalize on war-induced demand. Such companies rarely transact in dollars and hence have no fear of US sanctions.
In the case of Victory Technology, the company’s website appeared online in late January, when the US began building up military assets in the Middle East to counter Iran.
The address listed on the website is registered to the name of Xiamen Weituo Kelly, a hardware manufacturer founded in 2016, which lists business interests spanning tea and tobacco production, kitchenware and industrial design.
Weituo Kelly is controlled by Chen Shuixuan, a professor of engineering at Xiamen University of Technology, who has been selected by the local government for his innovative spirit. He owns or co-owns more than 100 patents related to vending-machine design and the use of lasers for cleaning industrial surfaces.
In his response to The Wall Street Journal, Victory Technology’s Christophe Chen said the company is focusing on selling its engines domestically for civilian drone use. “They are not used in attack drones,” he wrote. “We humbly request you not to make any false reports.”
The Victory Technology website is available in English, German, Russian, and several other languages, but not Chinese. It featured the L550 engine prominently in photographs and a promotional video.
Another local company, Xiamen Limbach, was approved by the US in late 2024 to supply the L550 to Russia for use in Martyr-type drones. Xiamen Limbach was also approved by the EU around the same time to share engine designs with entities involved in the production of Shaheds. Its Chinese parent company also controls the German company that originally developed the engine.
Xiamen Limbach did not respond to requests for comment.
According to current and former officials, the US cannot completely cut off trade, so its aim is to increase the costs to Iran and Russia as much as possible.
Forcing them to rely on low-quality Chinese parts is part of that effort, said Kerry Bitsoff, a former assistant director of OFAC who worked on nonproliferation. He pointed to reports of some Russian-made rockets falling from the sky as evidence that the disinformation campaign was having an impact on the battlefield.
The question is how American adversaries value the agreement when wars increasingly favor quantity over quality.
“You have to do a cost analysis,” Bitsoff said. “Would I rather have 100 drones that can fly for two hours than 50 that can fly for 20 hours?”
Write to Josh Chin josh.chin@wsj.com And on Austin Ramsey austin.ramzy@wsj.com
