(Dan Tri) - While Japanese businesses benefit from domestic defense policies, Korean companies focus on promoting large export orders.
A K-9 self-propelled gun made in South Korea. This is one of the Korean weapons that is popular in foreign markets (Photo: Reuters).
The global arms market has traditionally been dominated by Western nations such as the United States, Russia and France. However, in recent years, these countries have been facing competition from new rivals, with South Korea and Japan emerging as the leading players.
According to a survey released by the Stockholm International Peace Research Institute (SIPRI) on December 2, the revenue of Japanese defense companies listed in the world's top 100 arms manufacturers increased by 39% and 35% respectively - far exceeding the average of 4.2% of other companies.
These figures are only slightly lower than those of Russia, which remains locked in a conflict with Ukraine. Russia’s leading arms companies saw sales grow by 40%, according to SIPRI.
“The rapid increase in sales by South Korean and Japanese companies reflects a broader picture: the build-up of military capabilities in the region in response to increased threat perceptions,” said Xiao Liang, a researcher at SIPRI. “South Korean companies are also trying to expand their share of the global arms market, including demand in Europe related to the conflict in Ukraine.”
Domestic motivation
Although the combined shares of South Korea (1.7%) and Japan (1.6%) in the global arms market are relatively small, the defense industries of these two countries are increasingly asserting their reputations.
According to SIPRI, the total revenue of the four Korean companies on the list is $11 billion, while the five Japanese companies earned $10 billion in 2023.
Mitsubishi Heavy Industries' revenue increased by 24% in 2023, helping the company rise six places in the rankings to 39th place globally. The remaining four Japanese companies in the top 100 are Kawasaki Heavy Industries (65th), Fujitsu (71st), NEC (91st) and Mitsubishi Electric (96th). NEC and Mitsubishi Electric are two new additions to the list.
The main reason for the increase in revenue of Japanese defense companies is the country's increasing defense budget. Thanks to that, the Japan Self-Defense Forces are looking for orders to supplement weapons and equipment.
In the report, SIPRI noted a "major shift in defense spending policy" as Japan launched "the largest military buildup since the end of World War II" in 2022. The report pointed out that as domestic demand increased, Japanese companies had the opportunity to move up the rankings.
According to the Japan Times , Japan is said to be developing a medium- and long-term strategy to strengthen its defense industry and boost exports. In particular, Tokyo will focus on encouraging cooperation between the government, businesses and researchers.
However, this plan will face challenges because many Japanese research institutions are still hesitant to carry out research on security and defense technology.
Another part of Japan’s plan is to invest in small companies that want to enter the market. Tokyo is also looking for export opportunities, which not only provide financial resources for defense industry companies but also open up opportunities for cooperation in developing advanced weapons.
A Mitsubishi F-2 aircraft of the Japan Self-Defense Forces parades during an event in November 2022 (Photo: Reuters).
Reaching out globally
According to SIPRI's rankings, South Korea's largest arms company is Hanwha Group. Hanwha's revenue in the defense industry increased by 53% in 2023, helping the company rise to 24th place from 42nd place the previous year.
In 2023, Hanwha merged Daewoo's shipbuilding division to form its own shipbuilding company, Hanwha Ocean. This made Hanwha a full-fledged arms manufacturer. The company's arsenal includes naval vessels - adding to its existing land and air arsenal.
Three other Korean companies on the list are Korea Aerospace Industries (KAI - 56th), LIG Nex1 (76th) and Hyundai Rotem (87th). Of these, KAI and Hyundai Rotem both recorded revenue growth of over 40%.
Although the South Korean government has also increased defense spending, experts say the main driver of the South Korean arms industry is exports.
Australia and several European countries have begun purchasing South Korean-made K-9 self-propelled howitzers. Poland has added a series of tanks and light attack aircraft to its fleet made by South Korean companies.
While Western arms makers focus on advanced weapons such as fighter jets, missiles and unmanned vehicles, South Korean companies are strong in ground weapons, an advantage as many countries seek to strengthen their territorial defense capabilities due to the Russia-Ukraine conflict and the situation in the Middle East.
According to CNBC , the stock value of all four Korean companies on the list has increased sharply in 2024. Compared to the end of November 2023, Hanwha Aerospace's stock value increased by more than 150% in late November 2024. KAI's increase was the most modest, but also exceeded 20%.
According to experts, the secret of Korean weapons is "cheaper, better and faster". Korean weapons manufacturers seek to lower costs, produce quickly, and have quality that is not too different from weapons from other countries.
For example, LIG Nex1's Cheon-gong surface-to-air missile, which is said to have similar performance to the US PAC-3 missile, costs only one-third of the price. Poland's defense minister also revealed that the country chose to buy KAI's FA-50s because of its ability to deliver quickly: After the order was signed in 2022, 12 aircraft were delivered to Poland by the end of 2023. The remaining 36 will be delivered from 2025.
"South Korea's advanced technology in civilian industries is now being applied to develop weapons systems, helping to create systems with world-class quality," said Uk Yang, a researcher at the Asan Institute in South Korea.
Source: https://dantri.com.vn/the-gioi/han-quoc-nhat-ban-ngay-cang-ban-duoc-nhieu-vu-khi-20241221091728303.htm
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