future of the south korean defense industry - sp.pdf(original equipment manufacturers) to gain a...

Report Price: US$ 1250 (Single User)

Future of the South Korean Defense Industry –

Market Attractiveness, Competitive Landscape and

Forecasts to 2020

Report Code: DF0332MR

Publishing Date: August 2015

Future of the South Korean Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2020

2

Summary

“Future of the South Korean Defense Industry – Market Attractiveness, Competitive Landscape and

Forecasts to 2020” report offers the reader detailed analysis of the defense budget over the next five years.

Alongside it offers insights into the market opportunities and entry strategies adopted by foreign OEMs

(original equipment manufacturers) to gain a market share in the South Korean defense industry.

The report provides detailed analysis of the current industry size and growth expectations during 2016-2020,

including highlights of the key growth stimulators. It also benchmarks the industry against key global markets

and provides detailed understanding of emerging opportunities in specific areas.

Key Findings

South Korea assigned a budget of US$XX billion in 2015 for its defense sector, reflecting a CAGR of XX%

from US$XX billion in 2011. The growth can be attributed to the modernization of its armed forces and the

procurement programs along with the nuclear threat from North Korea. As per the white paper by South

Korean Ministry of Defense (MoD), the country is expected to undertake a number of modernization and

procurement programs in coming 10 years, giving an impetus to the overall defense expenditure. In addition,

reduction in the reliance on imports and emphasis on becoming one of the major defense export hub is

expected to drive the defense spending. This is expected to push the defense budget to reach US$XX billion

by 2020 from US$XX billion in 2016, registering a CAGR of XX%.

Key Features and Benefits The report provides detailed analysis of the South Korean defense industry during 2011–2020, including the

factors that influence the military expenditure. It provides detailed expectations of growth rates and projected

total expenditure.

It provides the manufacturers with insights on market opportunities along with industry structure and

dynamics prevalent in the country. In addition, the report focuses on the regulations governing the South

Korean defense industry and the potential market entry strategies with an expert analysis of the competitive

structure.


3

1. Market Attractiveness and Emerging Opportunities

1.1. Defense Market Size Historical and Forecast

1.1.1. South Korean defense expenditure is expected to be US$XX billion over the forecast period

To combat the challenge posed by a nuclear threat from North Korea, of 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 an aim to transform 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 for the review period of 2011-2015 grew at a CAGR of XX% in 2015.

Defense spending for the forecast period 2016-2020, is expected to grow at a CAGR of XX% in 2020.

The following table and figure show the South Korean defense expenditure during the historic period:

Table 1: South Korean Defense Expenditure, 2011-2015

Year Defense expenditure (US$ bn)

Defense growth percentage

2011

2012

2013

2014

2015

CAGR 2011-2015

Source: Ministry of Defense, South Korea and SDI analysis © SDI

Figure 1: South Korean Defense Expenditure, 2011-2015

Source: Ministry of Defense and SDI analysis © SDI

-20%

-15%

-10%

-5%

0%

5%

0

2

4

6

8

10

12

2011 2012 2013 2014 2015

Gro

wth

ra

te (

%)

De

fen

se

ex

pe

nd

itu

re (

US

$ B

n)

Defense Expenditure (US$ bn) Defense Expenditure Growth Rate


4

The following table and figure show projected defense expenditure of the South Korea over the forecast period:

Table 2: South Korean Defense Expenditure, 2016-2020

Year Defense expenditure (US$ bn)

Defense growth percentage

2016

2017

2018

2019

2020

CAGR 2016-2020


Figure 2: South Korean Defense Expenditure, 2016-2020


-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

0

1

2

3

4

5

6

7

8

9

2016 2017 2018 2019 2020

Gro

wth

ra

te (

%)

De

fen

se

ex

pe

nd

itu

re (

US

$ B

n)

Defense Expenditure (US$ bn) Defense Expenditure Growth Rate


5

1.2. Analysis of Defense Budget Allocation

1.2.1. Defense capital expenditure is expected to increase at a CAGR of XX% over the forecast period

The South Korean DoD allocated an average of XX% of the total defense budget towards capital expenditure

during the review period, which is expected to increase over the forecast period to be XX%. This is

predominantly due to South Korea’s planned armed force modernization program and procurement plans

along with the increasing nuclear threat from North Korea as outlined in the recently published defense white

paper. The country’s revenue expenditure, which can be attributed to the additional recruitment, training, and

development programs for military personnel, is expected to decline from an average of XX% between 2011

and 2015 to XX% during the forecast period.

The following table and chart display South Korea’s defense budget share of capital, revenue and other

expenditure during the historic period:

Table 3: South Korean Defense Budget Split Between Capital and Revenue Expenditure (%),

2011–2015

Year Capital Expenditure Share Revenue Expenditure Share

2011

2012

2013

2014

2015


Figure 3: South Korean Defense Budget Split Between Capital and Revenue Expenditure (%), 2011-

2015


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015

Defe

nse B

ud

get

Sp

lit

(%)

Capital expenditure (%) Revenue expenditure (%)


6

The following table and chart display South Korean defense budget share of capital and revenue expenditure

over the forecast period:

Table 4: South Korean Defense Budget Split Between Capital and Revenue Expenditure (%),

2016–2020

Year Capital Expenditure Share Revenue Expenditure Share

2016

2017

2018

2019

2020


Figure 4: South Korean Defense Budget Split Between Capital, Revenue and Other Expenditure

(%), 2016-2020


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2017 2018 2019 2020

Defe

nse B

ud

get

Sp

lit

(%)

Capital expenditure (%) Revenue expenditure (%)


7

2. Industry Dynamics - Porter’s Five Forces Analysis

Figure 4: Industry Dynamics – Porter’s Five Forces Analysis

Source: SDI analysis © SDI

Intensity of Rivalry Bargaining Power of Supplier

Bargaining Power of Buyer

Barrier to Entry

Threat of Substitute


8

Report Methodology

SDI’s dedicated research and analysis teams consist of experienced professionals with a background in

industry research and consulting in the defense sector. The following research methodology is followed for all

databases and reports:

Secondary Research

The research process begins with exhaustive secondary research to source reliable qualitative and

quantitative information related to the defense market. The secondary research sources that are typically

referred to include, but are not limited to:

Industry associations

National government documents and statistical databases

Company websites, annual reports, financial reports, broker reports, investor presentations

Industry trade journals and other literature

Internal and external proprietary databases

News articles, press releases, and webcasts specific to the companies operating in the market

Primary Research

SDI conducts hundreds of primary interviews a year with industry participants and commentators in order to

validate its data and analysis. A typical research interview fulfills the following functions:

Provides first-hand information on market size, market trends, growth trends, competitive landscape,

and future outlook

Helps to validate and strengthen secondary research findings

Further develops the analysis team’s expertise and market understanding

Primary research involves e-mail interactions, telephone interviews, and face-to-face interviews for

each market category, division, and sub-division across geographies

The participants who typically take part in such a process include, but are not limited to:

Industry participants: CEOs, VPs, business development managers, market intelligence managers,

and national sales managers

External experts: investment bankers, valuation experts, research analysts, and key opinion leaders

specializing in defense markets

Conventions

Currency conversions are performed on the basis of average annual conversion rate format

calculations

All the values in tables, with the exception of compounded annual growth rate (CAGR) and

compounded annual rate of change (CARC), are displayed to one decimal place; therefore, due to

this rounding method, growth rates may appear inconsistent with absolute values

The forecasted values are projected on the basis of nominal values; the inflation was not taken into account


9

TABLE OF CONTENTS

1. Introduction ......................................................................................................................... 11

1.1. What is this Report About? ..........................................................................................................11

1.2. Definitions .....................................................................................................................................11

1.3. Summary Methodology .................................................................................................................14

1.4. SDI Research Terrorism Index .....................................................................................................15

1.5. About Strategic Defense Intelligence ..........................................................................................15

2. Executive Summary ............................................................................................................ 16

3. Market Attractiveness and Emerging Opportunities ........................................................ 18

3.1. Defense Market Size Historical and Forecast..............................................................................19

3.1.1. South Korean defense expenditure expected to grow significantly during the forecast period ................ 19

3.1.2. Nuclear threats from North Korea, acquisition of new technology, and reduction in reliance on imports

set to drive defense expenditure ........................................................................................................................... 23

3.1.3. Military expenditure as a percentage of GDP is expected to remain at same levels during the forecast

period .................................................................................................................................................................. 24

3.2. Analysis of Defense Budget Allocation .......................................................................................28

3.2.1. Capital expenditure share to increase over the next five years................................................................ 28

3.2.2. Allocation of capital expenditure for Air Force expected to increase over the forecast period ................ 30

3.2.3. Capital expenditure allocation for air force to be highest ......................................................................... 32

3.2.4. Army capital expenditure to grow at a modest pace ................................................................................ 36

3.2.5. Naval expenditure on new acquisitions expected to increase .................................................................. 40

3.2.6. Capital Expenditure allocation for C4ISR Systems expected to grow steadily ........................................ 44

3.3. Homeland Security Market Size and Forecast ............................................................................48

3.3.1. Homeland security (HLS) expenditure expected to grow steadily during the forecast period .................. 48

3.3.2. The majority of terror threats are from North Korea ................................................................................. 48

3.3.3. South Korea faces a minimal threat from foreign terrorist organizations ................................................. 49

3.4. Benchmarking with Key Global Markets .....................................................................................51

3.4.1. South Korean defense expenditure expected to remain modest compared to leading spenders............ 51

3.4.2. The US and China dominate the global defense industry ........................................................................ 53

3.4.3. South Korea allocates a significant percentage of GDP towards defense ............................................... 54

3.4.4. South Korea has a moderate per-capita defense expenditure ................................................................. 55

3.4.5. South Korea faces negligible threat from foreign terrorist organizations ................................................. 56

3.5. Market Opportunities: Key Trends and Growth Stimulators ......................................................59

3.5.1. Cyber Security .......................................................................................................................................... 59

3.5.2. Fighters & Multi-Role Aircraft .................................................................................................................... 60

3.5.3. Missile Defense System ........................................................................................................................... 61

3.5.4. Infrastructure Construction ....................................................................................................................... 62

3.5.5. Multi-mission and Maritime Helicopter ...................................................................................................... 63


10

3.5.6. Multi-role Aircraft MRO ............................................................................................................................. 64

4. Defense Procurement Market Dynamics ........................................................................... 65

4.1. Import Market Dynamics ...............................................................................................................66

4.1.1. Defense imports expected to increase during the forecast period ........................................................... 66

4.1.2. The US dominated South Korean defense imports during the historic period ......................................... 67

4.1.3. Aircraft were the major defense imports during the period 2010-2014 .................................................... 68

4.2. Export Market Dynamics ..............................................................................................................69

4.2.1. Defense Exports Grew Considerably During the Historic period .............................................................. 69

4.2.2. Turkey dominates South Korean defense export market during the Historic period ................................ 70

4.2.3. Artillery accounts for the major defense exports during 2010-2014 ......................................................... 71

5. Industry Dynamics .............................................................................................................. 72

5.1. Five Forces Analysis.....................................................................................................................72

5.1.1. Bargaining power of supplier: low to medium ........................................................................................... 73

5.1.2. Bargaining power of buyer: medium to High ............................................................................................ 73

5.1.3. Barrier to entry: Medium ........................................................................................................................... 73

5.1.4. Intensity of rivalry: Medium ....................................................................................................................... 73

5.1.5. Threat of substitution: High ....................................................................................................................... 73

6. Market Entry Strategy ......................................................................................................... 74

6.1. Market Regulation .........................................................................................................................74

6.1.1. Offset policy aids development of Domestic Defense Industry ................................................................ 74

6.1.2. FDI in the defense sector to become less complicated ............................................................................ 75

6.2. Market Entry Route .......................................................................................................................76

6.2.1. Technology Transfer Provides Good Market Entry Opportunities ............................................................ 76

6.2.2. Research and Development Collaborations Offer Market Access ........................................................... 76

6.2.3. Joint Ventures and Licensing Agreements Open New Market Entry Strategy Choices ........................... 77

6.3. Key Challenges .............................................................................................................................78

6.3.1. Intense Emphasis on Technology Transfer .............................................................................................. 78

6.3.2. Industrial Disputes and Rigidity of Labor Market Deter Investment ......................................................... 78

7. Competitive Landscape and Strategic Insights ................................................................ 79

7.1. Competitive Landscape Overview ...............................................................................................79

7.2. Key Public Sector Companies ......................................................................................................79

7.2.1. Korea Aerospace Industries: overview ..................................................................................................... 79

7.2.2. Korea Aerospace Industries: Major Products and Services ..................................................................... 79

7.2.3. Korea Aerospace Industries: recent announcements and strategic initiatives ......................................... 80

7.2.4. Korea Aerospace Industries: alliances ..................................................................................................... 81

7.2.5. Korea Aerospace Industries: recent contract wins ................................................................................... 82

7.2.6. Samsung Techwin: overview .................................................................................................................... 83


11

7.2.7. Samsung Techwin: Major Products and Services .................................................................................... 83

7.2.8. Samsung Techwin: recent announcements and strategic initiatives: ....................................................... 84

7.2.9. Samsung Techwin: Alliances .................................................................................................................... 84

7.2.10. Samsung Techwin: Recent Contract Wins ............................................................................................... 85

7.2.11. Samsung Techwin: financial analysis ....................................................................................................... 86

7.2.12. Hanwha Corporation: overview ................................................................................................................ 88

7.2.13. Hanwha Corporation: Major products and services ................................................................................. 88

7.2.14. Hanwha Corporation: recent announcements and strategic initiatives .................................................... 89

7.2.15. Hanwha Corporation: alliances ................................................................................................................. 89

7.2.16. Hanwha Corporation: recent contract wins............................................................................................... 90

7.2.17. Hanwha Corporation: Financial Analysis .................................................................................................. 91

7.2.18. Hyundai Heavy Industries: overview ........................................................................................................ 93

7.2.19. Hyundai Heavy Industries: products and services ................................................................................... 93

7.2.20. Hyundai Heavy Industries: recent announcements and strategic initiatives ............................................ 93

7.2.21. Hyundai Heavy Industries: alliances ......................................................................................................... 94

7.2.22. Hyundai Heavy Industries: recent contract wins ...................................................................................... 95

7.2.23. Daewoo Shipbuilding & Marine Engineering: overview ............................................................................ 96

7.2.24. Daewoo Shipbuilding: products and services ........................................................................................... 96

7.2.25. Daewoo Shipbuilding & Marine Engineering: recent announcements and strategic initiatives................ 96

7.2.26. Daewoo Shipbuilding & Marine Engineering: alliances ............................................................................ 97

7.2.27. Daewoo Shipbuilding & Marine Engineering: recent contract wins .......................................................... 97

7.2.28. Daewoo Shipbuilding & Marine Engineering: Financial Analysis ............................................................. 98

7.2.29. Huneed Technologies: overview ............................................................................................................ 100

7.2.30. Huneed Technologies: products and services ....................................................................................... 100

7.2.31. Huneed Technologies: Recent Announcements and Strategic Initiatives .............................................. 101

7.2.32. Huneed Technologies: Alliances ............................................................................................................ 101

7.2.33. Huneed Technologies: recent contract wins........................................................................................... 102

7.2.34. STX Engine: overview ............................................................................................................................ 103

7.2.35. STX Engine: products and services ....................................................................................................... 103

7.2.36. STX Engine recent announcements and strategic initiatives ................................................................. 104

7.2.37. STX Engine: alliances ............................................................................................................................. 104

7.2.38. STX Engine: recent contract wins .......................................................................................................... 105

7.2.39. STX Engine: Financial Analysis .............................................................................................................. 106

7.2.40. S&T Dynamics overview ......................................................................................................................... 108

7.2.41. S&T Dynamics: products and services ................................................................................................... 108

7.2.42. S&T Dynamics: Recent Announcements and Strategic Initiatives ......................................................... 109

7.2.43. S&T Dynamics: Recent Contract Wins ................................................................................................... 109

7.2.44. S&T Dynamics: Financial Analysis ......................................................................................................... 110


12

7.2.45. Poongsan Corporation: overview ........................................................................................................... 112

7.2.46. Poongsan: products and services .......................................................................................................... 112

7.2.47. Poongsan Corporation: recent announcements and strategic initiatives ............................................... 113

7.2.48. Poongsan Corporation: alliances ............................................................................................................ 113

7.2.49. Poongsan Corporation: recent contract wins.......................................................................................... 113

7.2.50. Poongsan Corporation: Financial Analysis ............................................................................................. 114

7.3. Key Private Sector Companies .................................................................................................. 116

7.3.1. Samsung Thales: overview .................................................................................................................... 116

7.3.2. Samsung Thales: products and services ................................................................................................ 116

7.3.3. Samsung Thales: recent announcements and strategic initiatives ........................................................ 118

7.3.4. Samsung Thales: Alliances .................................................................................................................... 118

7.3.6. Samsung Thales: Recent Contract Wins ................................................................................................ 119

7.3.7. LIG NEX1: overview ............................................................................................................................... 119

7.3.8. LIG NEX1: Major Products and Services ............................................................................................... 119

7.3.9. LIG NEX1: Recent announcements and strategic initiatives .................................................................. 121

7.3.10. LIG NEX1: Alliances ............................................................................................................................... 122

7.3.11. LIG NEX1: Recent Contract Wins .......................................................................................................... 122

7.3.12. Doosan DST: Overview .......................................................................................................................... 123

7.3.13. Doosan DST: products and services ...................................................................................................... 123

7.3.14. Doosan DST: Recent announcements and strategic initiatives ............................................................. 124

7.3.15. Doosan DST: Recent contract wins ........................................................................................................ 124

8. Business Environment and Country Risk ....................................................................... 125

8.1. Demographics & Social Statistics .............................................................................................. 125

8.1.1. Urban Population .................................................................................................................................... 125

8.1.2. Rural Population ..................................................................................................................................... 126

8.1.3. Number of Households ........................................................................................................................... 127

8.2. Economic Performance .............................................................................................................. 128

8.2.1. GDP Per Capita ...................................................................................................................................... 128

8.2.2. GDP, Current Prices ............................................................................................................................... 129

8.2.3. Consumer Price Index ............................................................................................................................ 130

8.2.4. Wholesale Price Index ............................................................................................................................ 131

8.2.5. Local Currency Unit per USD ................................................................................................................. 132

8.2.6. Lending Rate .......................................................................................................................................... 133

8.2.7. Deposit Rate ........................................................................................................................................... 134

8.2.8. Real Interest Rate ................................................................................................................................... 135

8.2.9. Goods Exports as % of GDP .................................................................................................................. 136

8.2.10. Goods Imports as % of GDP .................................................................................................................. 137

8.2.11. Goods Trade Surplus/Deficit as % of GDP............................................................................................. 138


13

8.2.12. Service Imports as % of GDP ................................................................................................................. 139

8.2.13. Service Exports as % of GDP ................................................................................................................. 140

8.2.14. Service Trade Surplus/Deficit as % of GDP ........................................................................................... 141

8.2.15. Foreign Direct Investments ..................................................................................................................... 142

8.2.16. Net Foreign Direct Investments as % of GDP ........................................................................................ 143

8.2.17. International reserves, including gold ..................................................................................................... 144

8.2.18. Market Capitalization of listed companies .............................................................................................. 145

8.2.19. Market Capitalization of listed companies as % of GDP ........................................................................ 146

8.3. Energy and Utilities ..................................................................................................................... 147

8.3.1. Conventional Thermal Electricity Net Generation (Billion kWh) ............................................................. 147

8.3.2. Conventional Thermal Electricity Installed Capacity (Billion kW) ........................................................... 148

8.3.3. Petroleum Consumption ......................................................................................................................... 149

8.3.4. Total Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts) ............................................ 150

8.3.5. Hydroelectricity Net Generation (Billion Kilowatt Hours) ........................................................................ 151

8.3.6. Nuclear Electricity Net Generation (Billion Kilowatt Hours) .................................................................... 152

8.4. Infrastructure ............................................................................................................................... 153

8.4.1. Air Transport, Freight (million ton-km) .................................................................................................... 153

8.4.2. Rail Lines ................................................................................................................................................ 154

8.4.3. Roads, Total network .............................................................................................................................. 155

8.4.4. Overall Construction ............................................................................................................................... 156

8.5. Minerals ....................................................................................................................................... 157

8.5.1. Mining, Manufacturing, Utilities Output ................................................................................................... 157

8.6. Technology .................................................................................................................................. 158

8.6.1. Patents Granted ...................................................................................................................................... 158

8.6.2. Research and Development Expenditure ............................................................................................... 159

8.7. Telecommunication .................................................................................................................... 160

8.7.1. Telephone lines ...................................................................................................................................... 160

8.7.2. Telephone lines Penetration Rate .......................................................................................................... 161

8.7.3. Mobile Cellular Subscriptions ................................................................................................................. 162

8.7.4. Mobile cellular subscriptions Penetration Rate ...................................................................................... 163

9. Appendix ............................................................................................................................ 164

9.1. About SDI ..................................................................................................................................... 164

9.2. Disclaimer .................................................................................................................................... 164


14

LIST OF FIGURES Figure 1: South Korean Defense Expenditure (US$ billion), 2011–2015 ............................................................................................................. 19 Figure 2: South Korean Defense Expenditure (US$ billion),, 2016–2020 ............................................................................................................ 20 Figure 3: South Korean Defense Expenditure (Local Currency), 2011–2015 ...................................................................................................... 21 Figure 4: South Korean Defense Expenditure (Local Currency), 2016–2020 ...................................................................................................... 22 Figure 5: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015 .. 24 Figure 6: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020 .. 25 Figure 7: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth (in local

currency terms), 2011–2015 ............................................................................................................................................................................... 26 Figure 8: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020 .. 27 Figure 9:South Korean Defense Budget Split Between Capital and Revenue Expenditure ................................................................................. 28 Figure 10: South Korean Defense Budget Split Between Capital and Revenue Expenditure .............................................................................. 29 Figure 11: South Korean Defense Capital Expenditure Breakdown (%), 2011–2015 .......................................................................................... 30 Figure 12: South Korean Defense Capital Expenditure Breakdown (%), 2016–2020 .......................................................................................... 31 Figure 13: South Korean Air Force Capital Expenditure (US$ million), 2011–2015 ............................................................................................. 32 Figure 14: South Korean Air Force Capital Expenditure (US$ million), 2016–2020 ............................................................................................. 33 Figure 15: South Korean Air Force Capital Expenditure (KRW billion),2011–2015 .............................................................................................. 34 Figure 16: South Korean Air Force Capital Expenditure (KRW billion), 2016–2020 ............................................................................................. 35 Figure 17: South Korean Defense Capital Expenditure for Army (US$ billion), 2011–2015 ................................................................................. 36 Figure 18: South Korean Defense Capital Expenditure for Army (US$ billion), 2016–2020 ................................................................................. 37 Figure 19: South Korean Defense Capital Expenditure for Army (KRW billion), 2011–2015 ................................................................................ 38 Figure 20: South Korean Defense Capital Expenditure for Army (KRW billion), 2016–2020 ................................................................................ 39 Figure 21: South Korean Defense Capital Expenditure for Navy (US$ billion), 2011–2015 ................................................................................. 40 Figure 22: South Korean Defense Capital Expenditure for Navy (US$ billion), 2016–2020 ................................................................................. 41 Figure 23: South Korean Defense Capital Expenditure for Navy (KRW billion), 2011–2015 ................................................................................ 42 Figure 24: South Korean Defense Capital Expenditure for Navy (KRW billion), 2016–2020 ................................................................................ 43 Figure 25: South Korean Defense Capital Expenditure for C4ISR (US$ billion), 2011–2015 ............................................................................... 44 Figure 26: South Korean Defense Capital Expenditure for C4ISR (US$ billion), 2016–2020 ............................................................................... 45 Figure 27: South Korean Defense Capital Expenditure for C4ISR (KRW billion), 2011–2015.............................................................................. 46 Figure 28: South Korean Defense Capital Expenditure for C4ISR (KRW billion), 2016–2020.............................................................................. 47 Figure 29: SDI Terrorism Heat Map, 2015 .......................................................................................................................................................... 49 Figure 30: SDI Terrorism Index, 2015 ................................................................................................................................................................. 50 Figure 31: Benchmarking with Key Markets – 2011–2015vs. 2016–2020 ........................................................................................................... 52 Figure 32: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2015 and 2020 ............................................................ 53 Figure 33: Defense Expenditure as Percentage of GDP of Largest Military Spenders (%), 2014 ........................................................................ 54 Figure 34: Per-capita Defense Expenditure of the Largest Military Spenders in the World (US$), 2014 .............................................................. 55 Figure 35: Cyber Security (US$ Million), 2015–2025 .......................................................................................................................................... 59 Figure 36: Fighters & Multi Role Aircraft (US$ Million), 2015–2025 ..................................................................................................................... 60 Figure 37: Missile Defense System (US$ Million), 2015–2025 ............................................................................................................................ 61 Figure 38: Infrastructure Construction (US$ Million), 2015–2025 ........................................................................................................................ 62 Figure 39: Multi-mission and Maritime Helicopter (US$ Million), 2015–2025 ....................................................................................................... 63 Figure 40: Multi-role aircraft MRO (US$ Million), 2015–2025 .............................................................................................................................. 64 Figure 41: South Korean Defense Imports Trend, 2011–2015 ............................................................................................................................ 66 Figure 42: South Korean Defense Imports by Country (%), 2011–2015 .............................................................................................................. 67 Figure 43: South Korean Defense Imports by Category (%), 2011–2015 ............................................................................................................ 68 Figure 44: South Korean Defense Exports by Value, 2011–2015 ....................................................................................................................... 69 Figure 45: South Korean Defense Exports by Country (US$ million), 2011–2015 ............................................................................................... 70 Figure 46: South Korean Defense Exports by Category (%), 2011–2015 ............................................................................................................ 71 Figure 47: Industry Dynamics Porter’s Five Forces Analysis ............................................................................................................................... 72 Figure 48: Samsung Techwin – Revenue Trend Analysis (2010–2014) .............................................................................................................. 86 Figure 49: Samsung Techwin – Operating Profit Trend Analysis (2010–2014) .................................................................................................... 87 Figure 50: Samsung Techwin – Net Profit Trend Analysis (2010–2014) .............................................................................................................. 87 Figure 51: Hanwha Corporation – Revenue Trend Analysis, 2010–2014 ............................................................................................................ 91 Figure 52: Hanwha Corporation – Operating Profit Trend Analysis (2010–2014) ................................................................................................ 92 Figure 53: Hanwha Corporation – Net Profit Trend Analysis (2010–2014) .......................................................................................................... 92 Figure 54: Daewoo Shipbuilding & Marine Engineering – Revenue Trend Analysis (2010–2014) ....................................................................... 98 Figure 55: Daewoo Shipbuilding & Marine Engineering – Operating Profit Trend Analysis (2010–2014) ............................................................. 99 Figure 56: Daewoo Shipbuilding & Marine Engineering – Net Profit Trend Analysis (2010–2014) ....................................................................... 99


15

Figure 57: STX Engine – Revenue Trend Analysis (2010–2014) .......................................................................................................................106 Figure 58: STX Engine – Operating Profit Trend Analysis (2010–2014) .............................................................................................................107 Figure 59: STX Engine – Net Profit Trend Analysis (2010–2014) .......................................................................................................................107 Figure 60: S&T Dynamics – Revenue Trend Analysis (2010–2014) ...................................................................................................................110 Figure 61: S&T Dynamics – Operating Profit Trend Analysis (2010–2014) ........................................................................................................111 Figure 62: S&T Dynamics – Net Profit Trend Analysis (2010–2014) ..................................................................................................................111 Figure 63: Poongsan Corporation – Revenue Trend Analysis (2010–2014) .......................................................................................................114 Figure 64: Poongsan Corporation – Operating Profit Trend Analysis (2010–2014) ............................................................................................115 Figure 65: Poongsan Corporation – Net Profit Trend Analysis (2010–2014) ......................................................................................................115 Figure 66: South Korean Urban Population (In Millions), 2011–2020 .................................................................................................................125 Figure 67: South Korean Rural Population (In Millions), 2010–2019 ..................................................................................................................126 Figure 68: South Korean Number of Households – (In Millions), 2009–2018 .....................................................................................................127 Figure 69: South Korean GDP Per Capita (US$) , 2010–2019 ...........................................................................................................................128 Figure 70: South Korean GDP Current Prices, 2010–2019 ................................................................................................................................129 Figure 71: South Korean Consumer Price Index, 2010–2019 ............................................................................................................................130 Figure 72: South Korean Wholesale Price Index, 2003–2012 ............................................................................................................................131 Figure 73: South Korean LCU per USD, 2010–2019..........................................................................................................................................132 Figure 74: South Korean Lending Rate (%), 2003–2012 ....................................................................................................................................133 Figure 75: South Korean Deposit Rate (%), 2003–2012 ....................................................................................................................................134 Figure 76: South Korean Real Interest Rate (%), 2003–2012 ............................................................................................................................135 Figure 77: South Korean Good Exports as (% of GDP), 2003–2012 ..................................................................................................................136 Figure 78: South Korean Good Imports as (% of GDP), 2003–2012 ..................................................................................................................137 Figure 79: South Korean Goods Balance (% GDP), 2003–2012 ........................................................................................................................138 Figure 80: South Korean Service Imports (% GDP), 2003–2012 ........................................................................................................................139 Figure 81: South Korean Service Exports (% GDP), 2003–2012 .......................................................................................................................140 Figure 82: South Korean Service Trade Surplus/Deficit (% GDP), 2003–2012...................................................................................................141 Figure 83: South Korean Net Foreign Direct Investments (BoP, current US$ billion), 2003–2012 ......................................................................142 Figure 84: South Korean Net Foreign Direct Investments (% GDP), 2003–2012 ................................................................................................143 Figure 85: South Korean International Reserves, including gold (US$ billion), 2003–2012 ................................................................................144 Figure 86: South Korean Market Capitalization of listed companies (US$ billion), 2004–2013 ...........................................................................145 Figure 87: South Korean Market Capitalization of listed companies (% of GDP), 2003–2012 ............................................................................146 Figure 88: South Korean Conventional Thermal Electricity Net Generation (Billion Kilowatt Hours), 2003–2012 ...............................................147 Figure 89: South Korean Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2002–2011 ....................................................148 Figure 90: South Korean Petroleum Consumption (Thousand Barrels Per Day), 2004–2013 .............................................................................149 Figure 91: South Korean Total Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts), 2003–2012 ..............................................150 Figure 92: South Korean Hydroelectricity Net Generation (Billion Kilowatt Hours), 2003–2012 ..........................................................................151 Figure 93: South Korean Nuclear Electricity Net Generation (Billion Kilowatt Hours), 2003–2012 ......................................................................152 Figure 94: South Korean Air Transport, Freight (million ton-kilometers), 2003–2012 ..........................................................................................153 Figure 95: South Korean Rail Lines (total route-km), 2003–2012 .......................................................................................................................154 Figure 96: South Korean Roads, Total Network (Total Route-km), 2003–2010 ..................................................................................................155 Figure 97: South Korean Overall Construction (US$ million), 2008–2017 ..........................................................................................................156 Figure 98: South Korean Mining, Manufacturing, Utilities Output (US$ billion), 2003–2012 ................................................................................157 Figure 99: South Korean Patents Granted, 2003–2012 .....................................................................................................................................158 Figure 100: South Korean Research and Development Expenditure (LCU thousands), 2003–2011 ..................................................................159 Figure 101: South Korean Telephone lines (in million), 2003–2012 ...................................................................................................................160 Figure 102: South Korean Telephone lines Penetration Rate (per 100 people) 2003–2012 ...............................................................................161 Figure 103: South Korean Mobile Cellular Subscriptions (In millions), 2003–2012 .............................................................................................162 Figure 104: South Korean Mobile cellular subscriptions Penetration Rate (per 100 people) 2003–2012 ............................................................163


16

LIST OF TABLES

Table 1: South Korean Defense Expenditure (US$ billion), 2011–2015 .............................................................................................................. 19 Table 2: South Korean Defense Expenditure (US$ billion), 2016–2020 .............................................................................................................. 20 Table 3: South Korean Defense Expenditure (Local Currency), 2011–2015 ....................................................................................................... 21 Table 4: South Korean Defense Expenditure (Local Currency), 2016–2020 ....................................................................................................... 22 Table 5: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015 ... 24 Table 6: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020 ... 25 Table 7: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015 ... 26 Table 8: South Korean GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth (in local currency

terms), 2016–2020 ............................................................................................................................................................................................. 27 Table 9: South Korean Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 ........................................................ 28 Table 10: South Korean Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 ...................................................... 29 Table 11: South Korean Defense Capital Expenditure Breakdown (%), 2011–2015............................................................................................ 30 Table 12: South Korean Defense Capital Expenditure Breakdown (%), 2016–2020............................................................................................ 31 Table 13: South Korean Defense Capital Expenditure for the Air Force (US$ billion), 2011–2015 ...................................................................... 32 Table 14: South Korean Air Force Capital Expenditure (US$ billion), 2016–2020 ............................................................................................... 33 Table 15: South Korean Defense Capital Expenditure for the Air Force ( KRW billion), 2011–2015 .................................................................... 34 Table 16: South Korean Air Force Capital Expenditure (KRW billion), 2016–2020 .............................................................................................. 35 Table 17: South Korean Defense Capital Expenditure for Army (US$ billion), 2011–2015 .................................................................................. 36 Table 18: South Korean Defense Capital Expenditure for Army (US$ billion), 2016–2020 .................................................................................. 37 Table 19: South Korean Defense Capital Expenditure for Army (KRW billion), 2011–2015 ................................................................................. 38 Table 20: South Korean Defense Capital Expenditure for Army (KRW billion), 2016–2020 ................................................................................. 39 Table 21: South Korean Defense Capital Expenditure for Navy (US$ billion), 2011–2015 .................................................................................. 40 Table 22: South Korean Defense Capital Expenditure for Navy (US$ billion), 2016–2020 .................................................................................. 41 Table 23: South Korean Defense Capital Expenditure for Navy (KRW billion), 2011–2015 ................................................................................. 42 Table 24: South Korean Defense Capital Expenditure for Navy (KRW billion), 2016–2020 ................................................................................. 43 Table 25: South Korean Defense Capital Expenditure for C4ISR (US$ billion), 2011–2015 ................................................................................ 44 Table 26: South Korean Defense Capital Expenditure for C4ISR (US$ billion), 2016–2020 ................................................................................ 45 Table 27: South Korean Defense Capital Expenditure for C4ISR (KRW billion), 2011–2015 ............................................................................... 46 Table 28: South Korean Defense Capital Expenditure for C4ISR (KRW billion), 2016–2020 ............................................................................... 47 Table 29: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020............................................................................................................ 51 Table 30: SDI Terrorism Index ............................................................................................................................................................................ 56 Table 31: Offset Regulations in South Korea ...................................................................................................................................................... 74 Table 32: Korean Aerospace Industries – Major Products & Services ................................................................................................................. 79 Table 33: Korean Aerospace Industries – Alliances ............................................................................................................................................ 81 Table 34: Korean Aerospace Industries – Recent Contract Wins ........................................................................................................................ 82 Table 35: Samsung Techwin – Major Products & Services ................................................................................................................................. 83 Table 36: Samsung Techwin – Alliances ............................................................................................................................................................ 84 Table 37: Samsung Techwin – Recent Contract Wins ........................................................................................................................................ 85 Table 38: Hanwha Corporation – Major Products & Services .............................................................................................................................. 88 Table 39: Hanwha Corporation – Alliances ......................................................................................................................................................... 89 Table 40: Hanwha Corporation – Recent Contract Wins ..................................................................................................................................... 90 Table 41: Hyundai Heavy Industries – Major Products & Services ...................................................................................................................... 93 Table 42: Hyundai Heavy Industries – Alliances ................................................................................................................................................. 94 Table 43: Hyundai Heavy Industries – Recent Contract Wins ............................................................................................................................. 95 Table 44: Daewoo Shipbuilding & Marine Engineering – Major Products & Services ......................................................................................... 96 Table 45: Daewoo Shipbuilding & Marine Engineering – Alliances...................................................................................................................... 97 Table 46: Daewoo Shipbuilding & Marine Engineering – Recent Contract Wins ................................................................................................. 97 Table 47: Huneed Technologies –Products & Services .....................................................................................................................................100 Table 48: Huneed Technologies – Alliances ......................................................................................................................................................101 Table 49: Huneed Technologies – Recent Contract Wins ..................................................................................................................................102 Table 50: STX Engine –Products & Services .....................................................................................................................................................103 Table 51: STX Engine – Alliances .....................................................................................................................................................................104 Table 52: STX Engine – Recent Contract Wins .................................................................................................................................................105 Table 53: S&T Dynamics –Products & Services ................................................................................................................................................108 Table 54: S&T Dynamics – Recent Contract Wins .............................................................................................................................................109


17

Table 55: Poongsan Corporation –Products & Services.....................................................................................................................................112 Table 56: Poongsan Corporation – Alliances .....................................................................................................................................................113 Table 57: Poongsan Corporation – Recent Contract Wins .................................................................................................................................113 Table 58: Samsung Thales –Products & Services .............................................................................................................................................116 Table 59: Samsung Thales – Alliances ..............................................................................................................................................................118 Table 60: Samsung Thales – Recent Contract Wins ..........................................................................................................................................119 Table 61: LIG NEX1 –Products & Services ........................................................................................................................................................119 Table 62: LIG NEX1 – Alliances ........................................................................................................................................................................122 Table 63: LIG NEX1 – Recent Contract Wins ....................................................................................................................................................122 Table 64: Doosan DST –Products & Services....................................................................................................................................................123 Table 65: Doosan DST – Recent Contract Wins ................................................................................................................................................124

future of the south korean defense industry - sp.pdf(original equipment manufacturers) to gain a...

Documents