Future of the South Korean Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023
South Korea is one of the major economies within Asia with a considerable amount of security issues, which calls for a firm security posture. To combat the challenge posed by a nuclear threat from North Korea, the need to replace obsolete military equipment, and a growing necessity for restructuring and modernization of the military, South Korea has introduced the Defense Reform Plan 2020 (DRP 2020) with the aim of transforming the military into a smaller but more capable force.
South Korea maintained a reasonably constant defense budget in relation to growing GDP, and the defense expenditure during 2014–2018 grew at a CAGR of over 5.7%. Defense expenditure during 2019–2023 is expected to grow at a CAGR of about 4.9%, crossing US$48 Billion in 2023. The reduction in military personnel, acquisition of new technology, and a reduction in the reliance of imports are other factors that impact the dynamics of South Korea’s defense expenditure.
South Korean homeland security (HLS) expenditure is expected to grow consistently during the forecast period. The cyber and defense threat from North Korea and China accentuate the need for the procurement of sophisticated security technology with the coordination of IT and reinstates the increasing demand for cloud-based security solutions.
During 2012–2016, South Korea was ranked ninth on the list of the highest arms importing countries in the world, behind India, China, and Pakistan. Traditionally, South Korea has imported the majority of its defense goods from the US, accounting for more than 45%. The military alliance between the US and South Korea serves as one of the components driving trade statistics. Germany, Israel, and the UK are the other major suppliers of arms to South Korea with shares of about 40%, 6%, and 4.4% respectively.
The report ""Future of the South Korean Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023"" offers detailed analysis of the South Korean defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.
In particular, this report provides the following -
- The South Korean defense industry market size and drivers: Detailed analysis of the South Korean defense industry during 2019–2023, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns.
- Budget allocation and key challenges: Insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.
- Porter’s Five Force analysis of the South Korean defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
- Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years.
- Market opportunities: Details of the top five defense investment opportunities over the next 10 years.
- Competitive landscape and strategic insights: Analysis of the competitive landscape of the South Korean defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Companies mentioned in this report: Korea Aerospace Industries (KAI), Hanwha Techwin America, Hyundai Heavy Industries (HHI), Daewoo Ship Building & Marine Engineering (DSME), Huneed Technologies, STX Engine, S&T Dynamics and Poongsan Corporation
- South Korea’s defense budget stands at US$40.5 billion in 2018, and the country is expected to cumulatively spend US$233.1 billion on its military over the forecast period.The main factors driving this growth are the rapid modernization of the country’s armed forces in recent years.
- During 2014-2018, an average of 30.8% of the country’s total defense budget was allocated to capital expenditure; while an average of 69.2% was reserved for revenue expenditure. This is primarily due to South Korea’s future modernization programs. For instance, In March 2015, KAI, the primary contractor for the project, selected the Airbus H155 platform as a foundation for developing LAH-LCH helicopters in both military and civil helicopter configurations. The program plans to commission light civil helicopters (LCH) into service by 2020 and its armed Light Attack Helicopter (LAH) variant by 2022, with the eventual LAH helicopter requirement estimated to be 200 airframes.
- The MoD is expected to invest in Fighters & Multi-Role Aircraft, Fighters and Multi-Role Aircraft MRO, Military IT- Networking, Infrastructure Construction and Attack Helicopters
Reasons to buy
- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the South Korean defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the South Korean defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts