Defense Industry
It has been pointed out that large-scale business restructuring is urgent for the enhancement of the global competitiveness of the South Korean defense industry.
Back in 2009, the South Korean government repealed its policy for specialization and systemic integration in the defense industry. Then, South Korean defense companies were exposed to excessive competition with the number of small firms skyrocketing in the sector. Their cutthroat competition has had a significantly negative effect on their global competitiveness.
This is contrary to developed countries’ trend of consolidation led by major defense contractors, which is to cope with the contraction of the global market following defense budget cuts. Examples of the consolidation abound, including Lockheed Martin, Boeing, Northrop Grumman, Raytheon, EADS and BAE Systems.
Fortunately for South Korea, though, signs of a similar trend are being witnessed in it as of late and this trend is expected to be led by the Hanwha Group, which recently acquired a series of defense contractors such as Samsung Techwin and Samsung Thales. In addition, Daewoo Shipbuilding & Marine Engineering is looking to sell its defense arm, signaling a meaningful change in the structure of the domestic defense industry.