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Tailored for Export

Our Bureau - : Nov 6, 2023 - : 3:22 am

South Korea is looking shift its defence industry from one that is centred on internal demand to one that is focussed on exports. Korean defence firms are now making growing and rapid inroads into the defence market in the region, underscored by the government’s ambitions of transforming the country into an arms-exporting powerhouse.

Defence firms in South Korea have tailored export strategies, optimised to the demands of customer countries by region, and have been conducting market development activities in future effective markets in Europe, Africa, the Middle East, and Latin America. According to International Trade Administration, South Korea’s defence budget is the world’s 10th largest in size and it is also the world’s 10th largest defence exporter. South Korea is projected to generate 29.7 trillion won (US$23.4 billion) in defence exports by 2027. Last year, South Korean arms exports grew by 140 per cent to US$17.3 billion from US$7.25 billion in 2021, the highest arms exports in the history of South Korea.

According to data from the Stockholm International Peace Research Institute (SIPRI), South Korea’s share of the global arms exports over a five-year period ending in 2021 was 2.8 per cent, making it the eighth largest in the world. By comparison, during the preceding five-year period, South Korean arms exports accounted for just 1 per cent of the global output for 13th place overall.

According to Morgan Stanley, South Korea has become a major exporter of military and defence equipment and supplies, with 2022 exports totalling 22.9 trillion South Korean won (US$17.9 billion). That’s more than double the figure of 9.5 trillion won in 2021. “Rising demand from Europe and Asia for Korean manufacturers to provide military/defence equipment, including tanks, artillery, and airplanes, are pushing up export volumes,” said the bank’s second half outlook investment report on South Korea.

Humble Origins
The South Korean defence industry began with production of rifles which imitated M-16, the ammunitions and other small arms not significantly considered advanced technology. It rapidly developed and produced more advanced defence products with the K-1 88-tanks, manufactured by Hyundai, based on General Dynamics’ M1 Abrams, and K200-KIFV (Korea Infantry Fighting Vehicle), manufactured by Daewoo and based on the American AIFV) in the mid-1980s to K-1 basic trainer aircraft, made by KAI, the Chang Bogo class submarine (upgraded German 209-type, produced by DMSE), in 1990s, K-50 supersonic advanced trainers and multirole light fighters developed by KAI, and Son Won Il class submarines (German 214-type submarines), produced by Hyundai in recent years.

Today, South Korea has already become an aggressive competitor with Europe in high-end military components, matching Western standards for quality and performance. The government is developing defence industry export markets and promoting marketing activities.

Aerospace Defence Booster
The aerospace defence industry pushes the South Korean arms exports. The country has succeeded deals to sell KT-1 and T-50s to Indonesia, Turkey, Peru, Iraq and the Philippines. KAI is seeking to export T-50 to several countries including the United Arab Emirates. Early this year, KAI finalised a contract to supply Malaysia with eighteen FA-50 light fighters. The FA-50, a multi-role aircraft modelled after the T-50 Golden Eagle advanced trainer aircraft, underscores KAI’s expanding global footprint in the aerospace industry. With this export deal, the total exports of KAI’s domestically produced KT-1 and T-50 series aircraft may reach approximately 240 units globally.

The next goal of the nation’s sole jet maker this year is to win the preferred bidder status for Egypt’s project to locally produce the jet trainers and lightweight fighters in collaboration with a foreign company, KAI CEO Kang Gu-young said. It will be KAI’s first foray into Africa’s military aircraft market if it wins the contract to export more than 100 T-50 trainer aircraft to Egypt. “Egypt’s strategic geographic location (between the northeast corner of Africa and Western Asia) would then open many other doors of opportunity,” Kang opined.

KAI’s ultimate objective is to export its aircraft to the United States, a market for the world’s greatest fighter aircraft makers. That would elevate KAI’s status and provide momentum for its next vision of becoming a key player in the international aerospace industry, Kang added. Nevertheless, South Korea continues to be the United States’ third largest country for arms exports after Saudi Arabia and Australia based on the total export volume from 2009 to 2021, thus a substantial market for U.S. defence contractors.


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