WASHINGTON ― South Korea’s defense export sales have already hit $15 billion this year, surpassing a record $7.25 billion last year, and could reach $20 billion by year’s end if potential deals with Australia, Malaysia, Norway and Saudi Arabia break in Seoul’s direction.
The dramatically growing figure, reported by the Korea Institute for Industrial Economics and Trade, isn’t by accident but rather part of a deliberate strategy, observers say. South Korean firms are leveraging a combination of high-level deal-making across multiple administrations in Seoul, commercial technology, favorable government policies and industry appearances at arms fairs like the Association of the U.S. Army’s annual meeting in D.C. this week.
South Korean President Yoon Suk-yeol recently announced his aspiration to make his country one of the world’s top four arms exporters. Already, Seoul is riding a wave of deals this year that includes a $5.8 billion pact with Poland for Korea Aerospace Industries’ FA-50 fighter jets, Hyundai Rotem’s K2 Black Panther tanks, and Hanwha Defense’s K9 Thunder howitzers and K10 resupply vehicles. The K9 also beat out French, Russian and Chinese offerings to win a $1.7 billion contract with Egypt in February.
On Tuesday, Hanwha Defense announced the Pentagon had accepted its unmanned ground vehicle, the Arion-SMET, for a coveted spot in upcoming foreign comparative tests. Days earlier, the company announced its K9 howitzer and K10 had proved their interoperability with a variety of U.S. munitions at Yuma Proving Ground, Arizona.
South Korea has set its sights on the U.S. market, and executives on the sidelines of the show said the Yuma tests and upcoming experiments for the Arion-SMET are paving the way.
“We’ve really shown the U.S. community about the capability of this product here,” Hanwha Defense USA’s chief executive, John Kelly, told Defense News.
“There’s a lot of interest in K9 and K10 globally, as you can imagine, driven by current events in Ukraine, and we have a lot of existing customers who are looking at upgrading and buying additional capacity,” he added. South Korea, Turkey, Poland, India, Finland, Norway, Estonia, Australia and Egypt all own K9 howitzers.
One potent symbol of South Korea’s competitiveness and cooperation with American firms is the AS-21 Redback. U.S. company Oshkosh Defense’s bid to replace the Army’s M2 Bradley is based on the Redback; and in Australia’s competition for a new tracked infantry fighting vehicle, the Redback and German firm Rheinmetall’s Lynx are still in contention, while British company BAE Systems and American business General Dynamics were eliminated in 2019.
By Kelly’s reckoning, that settled the question of whether South Korea’s defense exports can compete against their U.S. counterparts.
“Who were the two companies selected? They weren’t U.S. companies,” Kelly said. “The reason we have just done the demonstrations here in Yuma is because the capabilities we have on both of those vehicles exceed what the U.S. already has in place.”
“It’s no longer a question of: ‘Can we compete?’ I believe we can compete. I believe we are very competitive on price as well,” he added.
‘A strong edge’
Beyond North America, South Korea’s defense industry is marketing itself as the ideal partner for Eastern European countries in the wake of Russia’s invasion of Ukraine. Whereas the West has been enmeshed in the war on terror since 2001, South Korea and its defense-industrial base have focused on conventional warfare since 1953, when an armistice agreement was signed amid the Korean War.
“We have a strong edge in terms of land-focused weapons systems, like the K9 howitzer and main battle tanks like the K2,” Col. Kim Yong Sun, who oversees operations of South Korea’s state arms procurement agency in the U.S., told Defense News earlier this month.
“Poland, the Baltic countries and other nations confronting Russia — they need weapons systems and raw materials right now, not in two, three or four years,” Kim said. “On the Korean Peninsula and in the current geopolitical situation, main battle tanks, howitzers and that level of weapons systems are essential. We have the infrastructure to produce massive amounts of weapons systems.”
Another way South Korea pursues buyers is through tailored sales pitches. Nikkei Asia recently reported that Seoul conducts thorough analysis of the buyers’ security challenges, finances and industrial makeup, and from there it might suggest jointly producing the arms with a local player or offer to sell cheaper, secondhand equipment.
South Korea also markets itself as more flexible when it comes to technology transfer agreements.
“[Washington has been] very reluctant to share its technology with countries that buy U.S. weapons systems. But Korea, we are different,” said Kim, who is both the defense cooperation and defense logistics attache in Washington.
“Selling only a weapons system is just a very small scope of cooperation, but sharing the values, like technology, is very essential for other countries,” Kim added. “We’d like to give them knowledge, how to produce the weapons and maintain them.”
‘Not just K-pop’
South Korea’s aggregate defense exports for the last five years rose 177% over the previous five years, making it the world’s eighth-largest defense exporter for that period, according to data compiled by the Stockholm International Peace Research Institute. That means South Korea is the globe’s fastest-climbing country over those periods, beyond China and the United Kingdom.
“They will go up in the rankings probably by next year,” said Siemon Wezeman, a senior researcher at the Swedish think tank. “They’re the quickest moving in the last decade or two.”
That growth is based on its expansion beyond historic customers in Southeast Asia like the Philippines, Malaysia and Thailand to India, Australia and as far afield as the United Arab Emirates. Wezeman said Seoul made a splash 10 years ago when the U.K. passed over its own shipyards to buy South Korean naval tankers, and it has since become a powerhouse.
“They’re at the level where they can offer countries a slightly simpler combat aircraft, a slightly simpler corvette, a slightly simpler submarine at reasonable prices, with a track record where everything works,” Wezeman added. “That’s interesting for a lot of markets.”
Some observers don’t find South Korea’s thriving defense industry hard to believe when the country has a long tradition of manufactured exports that now includes everything from cars, phones and semiconductors to container ships.
“It’s not just K-pop that they’re exporting,” said Byron Callan, managing director of Capital Alpha Partners. “Why is it a surprise that a country with some pretty acute security needs on their northern border, and that’s demonstrating they’re a globally competitive technology producer, would also be an emerging power in defense markets?”
Hanwha Defense’s Arion-SMET, a six-wheel drive unmanned ground vehicle, is one program that leverages commercial technology ― in this case, electric vehicle technology.
“We are taking all the lessons from the commercial sector and applying it to the military sector,” said Youngwoo Seo, an executive in charge of the company’s defense robotics division. “There’s a lot of crossover; we’re not isolated in a chamber working all the technology alone. We learn and collaborate with universities and the vendors.”
Promotional efforts by President Yoon have included a trip to the NATO summit in Spain this summer, where he met with European leaders. But the goal transcends who’s in the Blue House, said Peter Lee, a research fellow in the foreign policy and defense program at the United States Studies Centre, a think tank in Australia.
Defense exports in particular have for years been a way for South Korea to bolster alliances and sustain its military as it faces down North Korea’s formidable combat power ― a view that prevailed even under the recently ended administration of President Moon Jae-in, regarded as a peacemaker.
“The underside of the Korean peace-loving stereotype is that they’re actually defense hawks and usually increase defense spending to get out from under the American shadow and build self-reliance,” Lee said.
During a recent visit to Australia, South Korean officials offered to build attack submarines within seven years to bridge the gap between the Collins-class diesel-electric sub Australia wants to replace and the nuclear-powered subs promised by Australia’s alliance with the U.S. and the U.K. According to Lee, that assurance highlights the peril of South Korea’s ambition.
“It was a very bold pitch, it got front page headlines and it got the interest in that the South Koreans might actually be players on the undersea warfare side of the equation,” Lee said. “Those are good pitches, they’re very audacious and it creates a lot of expectations that might not be met.”
Still, Lee argued, South Korea’s rise is good news for the U.S. as the Biden administration works, with an eye on Russia and China, to shore up allied and partner defense-industrial bases. In other words, there’s enough demand right now to go around.
“It’s something the U.S. should welcome unless in some miraculous, near-term future the U.S. defense-industrial base can ramp up to basically accommodate all these needs,” Lee said. “With the prospect of a two-front war [in Europe and the Pacific] now feasible, the demand in Europe, the demand in Asia is just going to keep growing.”
Joe Gould is the senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry. He served previously as Congress reporter.