South Korea has ambitious plans to be the
fourth-largest weapons exporter by 2027 after the United States, Russia and France. In recent years, South Korea has edged out
stiff competition from western defense manufacturers and cheaper Chinese developers, with both
attractive pricing and faster delivery times. Korea has lots of weapons and has a potential
to deliver it very quickly. So, how did South Korea become one of the
world’s biggest arms dealers, and could it even eclipse the likes of China and Germany? Between 2010 and 2017, Seoul more than tripled
its total defense exports to $3.1 billion. In 2017 alone, 132 companies in South Korea
were exporting arms to 83 countries. Since then, it has expanded its sales footprint
beyond Asia to include Europe and South America. This is the former Republic of Korea Seoul,
a decommissioned frigate that has defended South Korea’s seas for three decades. A modified version of the ship is currently
used by the Bangladesh Navy, and there are many other countries that have South Korean
military hardware in service. From 2018 to 2022, the East Asian nation was
the 9th largest weapons supplier globally, ahead of Israel, the Netherlands and Turkey. Today, the biggest South Korean defense companies
include Hanwha, Korea Aerospace Industries, LIG Nex1 and Hyundai Rotem. Their products, which include tanks and planes, are on display at ADEX, the country’s largest defense exhibition. Many major customers of South Korea’s defense
equipment have a significant presence here. We’ve got dedicated pavilions from the United
States, Europe and Poland as well. Following Russia’s invasion of Ukraine,
Poland, a neighbor of Ukraine and Russian ally Belarus signed a multibillion-dollar arms deal
in August 2022 with Korean companies to supply equipment that includes
rocket launchers, tanks, and fighter jets. South Korea has become Poland's second largest
partner after the U.S. in arms imports. It was essential for Poland in this very critical
security circumstances surrounding my country. The Republic of Korea's armaments industry
continues to cooperate with the U.S. which translates into compatibility with NATO standards. It's very important for Poland
as a NATO member country. This compliance with NATO means that these
munitions and equipment meet common standards, allowing them to be used within the alliance. It took slightly more than three months
for the first shipment to arrive in what is South Korea’s biggest ever arms deal. In 2018, Hungary ordered 44 Leopard tanks
from Germany, and so far, only one tank has been delivered,
five years after the signing of the deal. So, I think in comparison to the potential
of European defense industry, the position of the South Korean defense industry
is quite strong. But the growth of South Korea’s defense
industry was borne out of necessity, following the tragic war it fought against
the North between 1950 and 1953. There has been a long history of military tension
and conflict between North Korea. And that’s why we kept our production line. We kept investing in R&D. So, from the conventional weapon systems,
we add more value with the high technology. The war, which claimed millions of lives,
saw the South Koreans initially overwhelmed by troops from the Communist North, which
was trained and supplied by China and Russia. The United States, under a United Nations
mandate, came to the aid of the South Koreans, and an alliance was forged between both countries
in 1953 as the war drew to a close. However, both South Korea and North Korea
are technically still at war since no peace treaty was signed. In the years since, the scars of the war
and periodic conflicts continue to haunt South Koreans today. This patrol boat that I’m on belongs to
the same class of ships that was involved in skirmishes as recent as 2002. It was only in the 1970s when South Korea started to
develop its domestic defense industry with urgency. There were two events leading up to it:
Provocations by the North in 1968 and the reduction of U.S. troops in the country in 1971. The country was undergoing rapid economic
growth during that period, referred to as the Miracle on the Han River. While the military benefitted from the boom,
its fledgling defense industry was still dependent on foreign technology. South Korea’s defense industry has developed
since the 1970s under several indigenous programs to increase the competitiveness of
heavy industries like shipbuilding industries, and to localize basic defense products
like machine guns, artilleries, tanks and so on. In 2018, the 12th President of South Korea, Moon Jae-In, launched one such modernization program,
known as Defense Reform 2.0. One of its aims is to reduce its reliance
on foreign defense technology while building its domestic defense ecosystem,
from technology to production lines. South Korea's competitiveness in its defense
industry actually comes from a few important and attractive distinctive factors,
which are, first, fast delivery timeline. Second, manufacturing efficiency and prowess. Third, strong governmental willingness to
support defense contractors. Korean defense products are known to be very
cost efficient compared to other competing solutions. And considering the cost effectiveness, it still performs
very well, in terms of capabilities and firepower. And secondly, major Korean defense companies
react very promptly to customers’ feedback. We have a resilient logistics support system. Our customers, they are satisfied
with our after-sales support. Defense deals are ultimately reliant on the
government of the day, which could change as political winds shift. There are fears that a new government in Poland
could put the brakes on negotiations for a second defense deal between the two countries. There’s also pressure for technology transfers
to create jobs and boost domestic production capabilities. As a new entrant to the global defense market,
we try to team with other foreign global businesses, cooperating with the local suppliers. We try to contribute to the development of
their industries and economy as well. For example, we set up the facility there,
thereby creating more jobs and contribute to the development of the R&D and technology. Luckily, the Korean government is very supportive. But are these enough to give its defense industry an edge? Other countries with well-established defense
industries are looking to challenge South Korea for defense contracts. France is already very well positioned as
an attractive exporter of credible weapon systems. Also, if Turkish defense industries' capabilities
rise with another price competitiveness and credible technology, which are currently
South Korea's market advantages, then these two countries could be
major concerns for South Korea. But for now, demand for weapons is growing
in the face of wars in Ukraine and the Middle East. In July 2023, Hanwha edged Germany's Rheinmetall
to snag a $4.7 billion Australian contract for 129 Redback infantry fighting vehicles. It is one of many deals that have demonstrated
the competitiveness of South Korea‘s military hardware on the global stage, and the country
has its sights on other markets such as the Middle East. After we won the bid for Redback in Australia,
there are lots of countries in Eastern Europe, they show a keen interest in our
next-generation infantry fighting vehicle. Establishing cooperation with South Korea
is also part of Poland's plans to modernize its armed forces, especially the long-postponed
need to replace post-Soviet equipment and to increase the size of the Polish army and
to develop the potential of the domestic defense industry in cooperation with foreign partners. If this current pace of defense exports continues
until 2027, then I think it's a very positive sign that South Korea could be one of the
top four defense exporters in 2027.
