In 2022, the Polish government signed framework agreements to buy a total of US$12.4 billion worth of arms from major Korean defense companies. The weapons included 48 FA-50 light attack aircraft, 1,000 K2 tanks, 648 K9 self-propelled howitzers and 288 Cheonmoo self-propelled multiple launch rocket systems (MLRSs).
Security threats have surfaced during the Russia-Ukraine war, which has been fueling interest in Korean weapons in the global market. Poland is one of those countries with a significant interest in purchasing Korean arms. However, Europe’s leading arms exporters, Germany and France, have been downsizing their arms production for a long time and the United States, the largest arms producer, is also facing difficulties in quick arms deliveries due to the replenishment of its own stocks due to military support for Ukraine and existing orders.
In response, Poland turned to Korean-made weapons with a rapid production capacity, proven performances, and reasonable prices. The K9 self-propelled howitzers and FA-50 light attack aircraft purchased by the Polish government have already been operated by the Korean military for a long time and have proven their competitiveness by being exported to various countries even before the war in Ukraine. They are not much different from those of the U.S. and Germany in terms of performances but they have stronger price competitiveness than those of the U.S. and Germany.
Korea’s ability to meet fast delivery requirements is also making Korean weapons an attractive choice among countries which need to buy such weapons. Korea Aerospace Industries (KAI) signed an export contract for 48 FA-50 trainers with the Polish government. It will deliver 12 FA-50GF (Gap Filler) modified from the ROK Air Force’s TA-50 Block 2 Tactical Trainer to meet export specifications, first within this year, and 36 FA-50PL aircraft, which satisfy Poland’s requirements from 2025 to 2028. The word “Gap Filler” means filling a gap in Poland’s air force power to allow for the rapid replacement of aging fighters and the early deployment of new fighters.
The first and second FA-50GFs were delivered in July, ahead of schedule. They made their maiden flights the following month during Poland’s Armed Forces Day celebrations. Polish President Andrzej Duda visited KAI’s booth at the International Defense Industry Exhibition in Poland. “I am very pleased with KAI’s fast delivery and the early modernization of the Polish Air Force,” Duda said.
The K2 tanks and K9 self-propelled howitzers were also quickly delivered at the request of Poland. The first shipment of 10 K2 tanks and 24 K9 self-propelled howitzers arrived in Poland in early December 2022, just four months after the signing of the first execution contract. “After Russia’s invasion of Ukraine, we have learned that it is essential for our armed forces to be equipped with this modernization in order to defend ourselves against enemy aggression,” said the Polish President at the welcoming ceremony for the tanks and howitzers from Korea. “The speedy delivery of the weapons really matters to us.”
In a September story on Hanwha Aerospace’s K-9 self-propelled howitzer production plant, the Wall Street Journal (WSJ) noted that fast delivery and price competitiveness hold the key to the rapid growth of South Korea’s defense exports.
Korea’s ability to provide value-added services with its exports, such as faithful technology transfers and local production, is also cited as a competitive advantage. Hanwha Aerospace’s Redback, which was selected to make Hanwha Aerospace the preferred bidder for Australia’s next-generation infantry fighting vehicle (IFV) project in July last year, also implemented an active localization strategy in appealing to the Australian government. Hanwha Aerospace designed and developed the Redback based on the K-21 Infantry Fighting Vehicle in accordance with performance requirements demanded by the Australian Army. The name Redback is derived from the redback spider that lives in Australia.
The Redback will roll out at H-ACE Factory under construction in Geelong, Victoria of Australia. The Australian Ministry of Defense announced the introduction of the Redback, emphasizing that it will help develop local economies in Australia by directly creating hundreds of jobs and indirectly more than 1,000 jobs.
Hanwha Aerospace also partnered with Indian company Larsen & Toubro (L&T) for the local production of 100 K9 self-propelled howitzers to India in 2017 when exporting them to India. The Korean defense contractor is once again attempting to win a new a self-propelled air-defense gun missile system (SPAD-GMS) project of the Indian Army by putting the Biho K30 Self-Propelled Anti-Aircraft Gun front and center in its partnership with L&T.
This year, Korean defense exports are expected to top US$20 billion, up from US$17 billion in 2022, the highest on record. They averaged US$3 billion a year for 10 years from 2010 to 2020, jumping to US$7.25 billion in 2021 and reaching US$17 billion in 2022. Considering that Korea’s annual arms imports are US$5 billion, the Korean defense industry has become an export industry that makes foreign money.
South Korea has significantly expanded its presence in the global arms export market. According to the Stockholm International Peace Research Institute, Korea’s share of the world defense export market from 2018 to 2022 was 2.4 percent, taking ninth place in the world. Despite a high barrier to entry into the world defense industry, which requires advanced technology and production capabilities, South Korea’s share surged from just 1.3 percent in the previous five years (2013-2017). It was a close second to Spain (2.6 percent) and ahead of Israel (2.3 percent).
The world arms export market was dominated by the top three countries -- the United States (40 percent), Russia (16 percent), and France (11 percent). The three powerhouses had double-digit shares and the rest including No. 4 China (5.2 percent) single-digit shares.
“South Korea will strategically promote its defense industry and become a defense powerhouse by entering the club of the world’s top four defense exporters after the United States, Russia, and France,” South Korean President Yoon said on his 100th day in office in August. The country aims to achieve a 5 percent share of the world defense export market and become one of the top four arms exporters in 2027.
A SIPRI researcher told the Wall Street Journal that he expects South Korea to become the world’s fifth-largest arms exporter within a few years. South Korea will be able to overtake Germany, Italy, the United Kingdom, and Spain, which are currently the fifth through eighth largest exporters, he forecast.
To expand its share of the world defense export market, South Korea needs to put diversification above anything else. According to a report by the Stockholm International Peace Research Institute, most (63 percent) of South Korea’s arms were sold to countries in Asia and Oceania including the Philippines (16 percent), India (13 percent), and Thailand (13 percent) from 2018 to 2022.
The Korea Institute for Industrial Economics & Trade (KIET) selected the development of big new markets such as India, Saudi Arabia, and Egypt as a top priority in its report titled “Economic Effects of South Korea Becoming the World’s Fourth Largest Defense Exporting Country and Tasks for South Korea.” India and Saudi Arabia have high demand for arms. They placed first (11 percent) and second (9.6 percent) in global arms imports from 2018 to 2022.
India and Saudi Arabia import most of their weapons from the United States, so Korean defense contractors will need differentiated strategies to enter the Indian and Saudi Arabian market such as cooperating with them in local production, the use of locally produced parts, and providing long-term or low-interest financial support.
The defense market has been growing in Europe since the war in Ukraine. In particular, Eastern European countries such as Poland and Romania, which are neighbors of Ukraine, are increasing defense spending and modernizing their weapons. In response, Korean defense companies are targeting the European market with Poland as their base after signing a large arms contract with the Polish government in 2022.
KAI plans to open an office at the Minsk Air Base in Poland and use Poland as a marketing base for the European market to promote the superiority of Korean aircraft to potential customers in Europe in need of replacing aging fighter jets. In addition to the FA-50, the company is also looking to export the KF-21, a supersonic fighter under development for mass-production of the jet fighter in 2026.
Hanwha Aerospace, which had exported the K9 self-propelled howitzer and the Cheonmoo MLRS to Poland, also completed the registration of a subsidiary in Poland in the first half of this year. The company has been included on a shortlist for Romania’s new self-propelled artillery gun project by appealing with the K9. Romania is expected to select a preferred bidder by the end of the year.
As South Korea’s presence in the global defense market continues to grow rapidly, the Seoul ADEX 2023 will be held on the largest-ever scale at Seoul International Airport in Seongnam, Gyeonggi Province, from Oct. 17 to 22. Considering that the biennial Seoul ADEX was partially held due to the COVID-19 snafu in 2021, the Seoul ADEX will be normally held for the first time in four years in 2023.
In the meantime, the status of the Korean defense industry in the world has changed significantly. Reflecting this change, the world’s interest in this year’s Seoul ADEX has also ballooned, raising expectations that it will be a major opportunity for Korean defense companies to push up sales.
The number of exhibitors increased from 440 companies from 28 countries in 2021 to 550 companies from 35 countries this year. The number of foreign delegates is also the highest ever, with 114 from 55 countries, including defense ministers from nine countries such as Malaysia, Australia, and Iraq, and air force chiefs of staff from 14 countries.
Some insiders of the Korean defense industry say that this year’s Seoul ADEX will serve as a stepping stone for South Korea looking to become the fourth-largest powerhouse in the world defense market.