This month a group of South Korean defence-industry bosses and government officials visited Ottawa. Their pitch: howitzers, rocket-launchers and submarines for the Canadian armed forces. They are not the only East Asians taking advantage of the global rush to rearm, not least among America’s suddenly nervous allies. Japanese firms are also finding plenty of eager buyers.
Japanese and South Korean armsmakers are now among the fastest-growing in the world. The combined annual revenues of the two countries’ defence-focused firms have risen by 25% since 2022, to $63bn, outpacing even Europe’s resurgent armsmakers. Although America’s defence giants, with total revenues exceeding $200bn, remain dominant, their growth has been a more modest 15% since 2022.
One reason why Japanese and South Korean defence firms are doing so well is that their governments, which have long been net importers of arms, want more domestically made weapons with which to protect their territories, rather than relying on American military backing. That has been a “turning-point”, says Kanehana Yoshinori, the chairman of Kawasaki Heavy Industries, Japan’s second-largest aerospace-and-defence company.
In 2022, amid rising regional tension, Japan expanded its defence budget and began its biggest military build-up since the second world war. In 2023 defence-related domestic orders at Japan’s biggest arms manufacturers were two to four times their level in the preceding year, according to the Stockholm International Peace Research Institute (SIPRI), a think-tank.
Orders have kept coming: at Mitsubishi Heavy Industries, Japan’s biggest defence firm, they were up by a fifth, year on year, in the last quarter of 2024. Mr Kanehana says Kawasaki used to get orders for up to two military helicopters annually; this year it is “six to seven”. This month the firm delivered an advanced submarine worth $470m to Japan’s ministry of defence.
South Korea has also been spurred by regional security concerns. As the defence industry has grown, the country’s dependence on arms imports has fallen sharply. According to SIPRI, South Korea’s imports dropped by about a quarter between 2015-19 and 2020-24, while cross-border trade in arms worldwide hardly changed.
East Asian armsmakers have also tapped into growing defence budgets elsewhere. Their short supply chains—most parts are sourced at home—have allowed them to scale up quickly. After taking in several large orders in the first nine months of 2023, Mitsubishi Heavy Industries reported a slight dip a year later. Yet speedy execution meant sales still rose sharply.
America remains the dominant exporter of such big-budget items as advanced long-range strike capabilities: according to to SIPRI, it supplies 45% of all exports of land-attack missiles with a range over 250km. But Asian firms have been meeting new demand for such things as helicopters, artillery and precision munitions.
South Korea has thus become an exporter to Indonesia, New Zealand, the Philippines and Thailand. The revenues of Hanwha Aerospace, its largest arms firm, rose by about 60%, year on year, in the last quarter of 2024, boosted by deliveries of the Chunmoo, a rocket-launch system, and K9, a howitzer, to Poland and other countries. In December Korea Aerospace Industries signed an agreement to sell its KUH-1 Surion helicopter to Iraq.
Japan’s pacifist constitution prevents the country’s armsmakers from selling to states at war. Still, its defence firms, which usually sell via government-to-government deals, have been helped by an easing of limits on arms exports. Mr Kanehana reports growing interest from Australia and the Middle East. And in September Japan and Norway signed a deal to work together on defence equipment.
Demand for Japanese- and South Korean-made weaponry is likely to grow as America’s allies act on the realisation that, with Donald Trump back in the White House, they will have to do more to defend themselves. Expect East Asia’s defence boom to endure. ■
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