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Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

May 2018 | 161 pages | ID: FB737F007A5EN
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Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

SUMMARY

The Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

SYNOPSIS

This report offers detailed analysis of the Japanese defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following -
  • The Japanese defense industry market size and drivers: detailed analysis of the Japanese defense industry during 2019-2023, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
  • Market opportunities:list of the top ten defense investment opportunities over the next 5 years
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the Japanese defense industry.
SCOPE
  • During the historic period, the total defense budget, including funding for SACO and US force realignment, witnessed a CAGR of 0.47% to value US$47.3 billion in 2018, compared to US$46.4 billion in 2014.
  • Over the forecast period, the Japanese defense budget is expected to grow at a CAGR of 2.51% to value US$53.7 billion by 2023.
  • The country’s defense expenditure is expected to be largely driven by efforts to combat the threat of North Korea’s rising military strength, the Chinese intrusion on offshore islands within the vicinity of the country, and Russian activities in the disputed Northern territory.
  • As a percentage of GDP, the country’s defense expenditure is expected to average 0.9% over the forecast period.
REASONS TO BUY
  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Japanese defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Profiles of the top domestic and foreign defense manufacturers . This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the Japanese defense industry covering sections including demand drivers, Key Trends , and latest industry contracts
1. 1. INTRODUCTION

1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About Strategic Defence Intelligence

2. EXECUTIVE SUMMARY

3. MARKET ATTRACTIVENESS AND EMERGING OPPORTUNITIES

3.1. Current Market Scenario
  3.1.1. Primary threat perception
  3.1.2. Military Doctrine and Strategy
  3.1.3. Military Fleet Size
  3.1.4. Procurement Programs
  3.1.5. Ongoing procurement programs
  3.1.6. Future procurement programs
  3.1.7. Top Procurement Programs by Value (US$ Million) 2018-2023
  3.1.8. Social, Political and Economic Environment and Support for Defense Projects
  3.1.9. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
  3.2.1. Total Japanese defense expenditure inclusive of SACO and US realignment expenditure is projected to grow at a CAGR of 2.51% over the forecast period
  3.2.2. Japan defense budget (excluding SACO and US force related expenditure) is projected to grow at a CAGR of 2.38% over the forecast period
  3.2.3. Japan SACO and US force related expenditure to increase at a CAGR of 5.34% over the forecast period
  3.2.4. North Korean nuclear missile development programs, strategic challenges from China, and a territorial issue with Russia are the main factors driving the Japanese defense industry
  3.2.5. Defense expenditure as a percentage of GDP expected to average 0.9% over the forecast period
3.3. Analysis of Defense Budget Allocation
  3.3.1. The Ministry of Defense is expected to allocate an average of 56.1% of the budget towards capital expenditure over the forecast period
  3.3.2. The Ministry of Defense is expected to divert an additional cumulative average of 2.4% towards SACO/US realignment expenditure over the forecast period
  3.3.3. Procurement of equipment is expected to pick up over the forecast period
  3.3.4. The Japanese Ground Self-Defense Force (GSDF) accounts for the largest percentage share of the overall defense budget
  3.3.5. Ground Self-Defense Force (GSDF) to continue accounting for the majority share of the Japanese defense budget
  3.3.6. Per capita defense expenditure is expected to increase over the forecast period
3.4. Homeland Security Market Size and Forecast
  3.4.1. In terms of local currency, the Japanese homeland security budget is expected to grow at a CAGR of 1.10% over the forecast period
In terms of US dollars, Japan is projected to cumulatively allocate US$15.8 billion over the forecast period
  3.4.2. Intrusion in coastal areas, organized crime, and natural disasters are expected to drive Japanese homeland security expenditure
  3.4.3. Japan faces “moderate risk” of terrorism
  3.4.4. Japan faces a moderate level of threat from foreign terrorist organizations
  3.4.5. Japan has a terrorism index score of 3.6
3.5. Benchmarking with Key Global Markets
  3.5.1. Japan is the fifth-largest defense spender globally
  3.5.2. Japan’s defense expenditure is low compared to the US, China, Saudi Arabia and the UK
  3.5.3. Japanese defense budget as a percentage of GDP is expected to average at 0.9% over the forecast period
3.6. Market Opportunities: Key Trends and Growth Stimulators
  3.6.1. Top 10 Defense Market Sectors by Value (US$ Million) - Projections over period 2018-2023
  3.6.2. Land-based C4ISR
  3.6.3. Infrastructure Construction
  3.6.4. Facilities Management

4. DEFENSE PROCUREMENT MARKET DYNAMICS

4.1. Import Market Dynamics
  4.1.1. Japan to sign new defense import programs with foreign countries
  4.1.2. Procurement of F-35 aircraft to increase defense imports marginally over the forecast period
  4.1.3. The US was the key defense supplier to Japan
  4.1.4. Aircraft and missiles were the key defense imports during 2013-2017
4.2. Export Market Dynamics
  4.2.1. Relaxation in export policies to boost Japanese exports

5. INDUSTRY DYNAMICS

5.1. Five Forces Analysis
  5.1.1. Bargaining Power of Supplier: Low
  5.1.2. Bargaining Power of Buyer: High
  5.1.3. Barrier to Entry: High
  5.1.4. Intensity of Rivalry: High
  5.1.5. Threat of Substitution: Medium

6. MARKET ENTRY STRATEGY

6.1. Market Regulation
  6.1.1. No offset policy in Japan
  6.1.2. Modified defense policies to augurs well for foreign investment in defense sphere
6.2. Market Entry Route
  6.2.1. Budgeting Process
  6.2.2. Procurement Policy and Process
  6.2.3. Affiliation with Japanese defense companies can be used as an entry strategy
  6.2.4. Foreign military sales to Japan
  6.2.5. Entry through technology transfer program
  6.2.6. Relaxation in existing policy can be used as an entry route
6.3. Key Challenges
  6.3.1. Domestic companies fail to achieve economies of scale
  6.3.2. Japanese export policy still poses a challenge for domestic defense companies
  6.3.3. Opposition by Japanese civilians

7. COMPETITIVE LANDSCAPE AND STRATEGIC INSIGHTS

7.1. Competitive Landscape Overview
7.2. Key Foreign Competitors
  7.2.1. Lockheed Martin: Overview
  7.2.2. Lockheed Martin: Products
  7.2.3. Lockheed Martin: Recent Announcements and Strategic Initiatives
  7.2.4. Lockheed Martin: Alliances
  7.2.5. Lockheed Martin: Recent Contract Wins
  7.2.6. Lockheed Martin: Financial Analysis
  7.2.7. Raytheon: Overview
  7.2.8. Raytheon: Products
  7.2.9. Raytheon: Recent Announcements and Strategic Initiatives
  7.2.10. Raytheon: Alliances
  7.2.11. Raytheon: Recent Contract Wins
  7.2.12. Raytheon: Financial Analysis
  7.2.13. BAE Systems: Overview
  7.2.14. BAE Systems: products
  7.2.15. BAE Systems: Recent Announcements and Strategic Initiatives
  7.2.16. BAE Systems: Alliances
  7.2.17. BAE Systems: Recent Contract Wins
  7.2.18. BAE Systems: Financial Analysis
  7.2.19. Airbus Group: Overview
  7.2.20. Airbus Group: Defense Products and Services
  7.2.21. Airbus Group: Recent Announcements and Strategic Initiatives
  7.2.22. Airbus Group: Recent Contract Wins
  7.2.23. Airbus Group: Financial Analysis
  7.2.24. Bell: Overview
  7.2.25. Bell : Defense Products and Services
  7.2.26. Bell: Recent Announcements and Strategic Initiatives
  7.2.27. Bell: Alliancess
  7.2.28. Bell: Recent Contract Wins
7.3. Key Domestic Companies
  7.3.1. NEC Corporation: Overview
  7.3.2. NEC Corporation: products and services
  7.3.3. NEC Corporation: Recent Contracts and Strategic Initiatives
  7.3.4. NEC Corporation: Alliances
  7.3.5. NEC Corporation: Recent Contract Wins
  7.3.6. Toshiba Corporation: Overview
  7.3.7. Toshiba Corporation: Defense Products
  7.3.8. Toshiba Corporation: Recent Announcements and Strategic Initiatives
  7.3.9. Toshiba Corporation: Alliances
  7.3.10. Toshiba Corporation: recent contract wins
  7.3.11. Toshiba: Financial Analysis
  7.3.12. Mitsubishi Heavy Industries: Overview
  7.3.13. Mitsubishi Heavy Industries: Defense Products
  7.3.14. Mitsubishi Heavy Industries: Recent Announcements and Strategic Initiatives
  7.3.15. Mitsubishi Heavy Industries: Alliances
  7.3.16. Mitsubishi Heavy Industries: Recent Contract Wins
  7.3.17. Mitsubishi Heavy Industries: Financial Analysis
  7.3.18. Kawasaki Heavy Industries: Overview
  7.3.19. Kawasaki Heavy Industries: Defense Products
  7.3.20. Kawasaki Heavy Industries: Recent Announcements and Strategic Initiatives
  7.3.21. Kawasaki Heavy Industries: Alliances
  7.3.22. Kawasaki Heavy Industries: Recent Contract Wins
  7.3.23. Kawasaki Heavy Industries: Financial Analysis
  7.3.24. Ishikawajima-Harima Heavy Industries Co. Ltd.: Overview
  7.3.25. Ishikawajima - Harima Heavy Industries Co. Ltd.: Products
  7.3.26. Ishikawajima-Harima Heavy Industries Co. Ltd.: Recent Announcements and Strategic Initiatives
  7.3.27. Ishikawajima-Harima Heavy Industries Co. Ltd.: Alliances
  7.3.28. Ishikawajima-Harima Heavy Industries Co. Ltd.: recent contract wins
  7.3.29. Mitsubishi Electric Corporation: Overview
  7.3.30. Mitsubishi Electric Corporation: Products
  7.3.31. Mitsubishi Electric Corporation: Recent Announcements and Strategic Initiatives
  7.3.32. Mitsubishi Electric Corporation: Alliances
  7.3.33. Mitsubishi Electric Corporation: Recent Contract Wins
  7.3.34. Mitsubishi Electric Corporation: Financial Analysis

8. BUSINESS ENVIRONMENT AND COUNTRY RISK

8.1. Economic Performance
  8.1.1. GDP per capita at Constant Prices
  8.1.2. GDP at Current Prices (US$)
  8.1.3. Exports of Goods and Services (current LCU Billion)
  8.1.4. Imports of Goods and Services (current LCU Billion)
  8.1.5. Gross National Disposable Income (US$ Billion)
  8.1.6. LCU per US$ (Period Average)
  8.1.7. Market Capitalization of Listed Companies (US$ Billion)
  8.1.8. Market Capitalization of Listed Companies (% of GDP)
  8.1.9. Government Cash Surplus/Deficit as a percentage of GDP (LCU)
  8.1.10. Goods Exports as a percentage of GDP
  8.1.11. Goods Imports as a percentage of GDP
  8.1.12. Service Imports as a percentage of GDP
  8.1.13. Service Exports as a percentage of GDP
  8.1.14. Foreign Direct Investment, net (BoP, current US$ Billion)
  8.1.15. Net Foreign Direct Investment as a percentage of GDP
  8.1.16. Mining, Manufacturing, Utilities Output (US$ Billion)

9. APPENDIX

9.1. About SDI
9.2. Disclaimer

LIST OF TABLES

Table 1: The Japanese Army Strength
Table 2: Japanese Navy Strength
Table 3: Japanese Air Force Strength
Table 4: Japan - Ongoing Procurement Programs
Table 5: Japan - Future Procurement Programs
Table 6: Top Japanese Defense Procurement Programs by Value (US$ Million) 2018-2023
Table 7: Japanese Defense Expenditure (JPY Billion & US$ Billion), 2014-2023
Table 8: Japanese Defense Budget (JPY Billion & US$ Billion), 2014-2023
Table 9: Japanese SACO and US force related expenditure (JPY Billion & US$ Billion), 2014-2023
Table 10: Japanese GDP Growth and Defense Expenditure as Percentage of GDP, 2014-2023
Table 11: Japanese Defense Budget Split between Capital, Revenue, 2014-2023
Table 12: Japanese Capital Expenditure (JPY billion & US$ billion), 2014-2023
Table 13: Japanese Defense Expenditure Breakdown (%), 2014-2023
Table 14: Japan Defense Budget in JPY Billion - Breakdown by Services (GSDF, ASDF, MSDF and Others) 2014-2023
Table 15: Japan Defense Budget in US$ Billion - Breakdown by Services (GSDF, ASDF, MSDF and Others) 2014-2023
Table 16: Japanese Per Capita Defense Expenditure (US$), 2014-2023
Table 17: Japanese Homeland Security Expenditure (JPY billion & US$ billion), 2014-2023
Table 18: Terrorism Index, 2018
Table 19: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Table 20: Top 10 Japan Defense Market Sectors by Value (US$ Million) - 2018-2023
Table 21: Japanese Budget Formation Timetable:
Table 22: FMS deals to Japan
Table 23: Cost Comparison of Defense Equipment in Japan and the US
Table 24: Top 10 Defense Suppliers in the Japanese Defense Industry - By Value (US$ Million) 2018-2023
Table 25: Competitive Landscape of the Japanese Defense Industry
Table 26: Lockheed Martin - Product Focus
Table 27: Lockheed Martin - Alliances
Table 28: Lockheed Martin - Recent Contract Wins
Table 29: Raytheon - Product Focus
Table 30: Raytheon - Alliances
Table 31: Raytheon - Recent Contract Wins
Table 32: BAE Systems - Product Focus
Table 33: BAE Systems - Alliances
Table 34: BAE Systems - Recent Contract Wins
Table 35: Airbus Group - Product Focus
Table 36: Airbus Group - Recent Contract Wins
Table 37: Bell - Product Focus
Table 38: Bell - Alliances
Table 39: Bell - Recent Contract Wins
Table 40: NEC Corporation - Product Focus
Table 41: NEC Corporation - Alliances
Table 42: NEC Corporation - Recent Contract Wins
Table 43: Toshiba Corporation - product focus
Table 44: Toshiba Corporation - Alliances
Table 45: Toshiba Corporation - Recent Contract Wins
Table 46: Mitsubishi Heavy Industries - product focus
Table 47: Mitsubishi Heavy Industries - Alliances
Table 48: Mitsubishi Heavy Industries - Recent Contract Wins
Table 49: Kawasaki Heavy Industries - Product Focus
Table 50: Kawasaki Heavy Industries - Alliances
Table 51: Kawasaki Heavy Industries - Recent Contract Wins
Table 52: Ishikawajima-Harima Heavy Industries Co. Ltd - Product Focus
Table 53: Ishikawajima-Harima Heavy Industries Co. Ltd. - Alliances
Table 54: Ishikawajima-Harima Heavy Industries Co. Ltd. - Recent Contract Wins
Table 55: Mitsubishi Electric Corporation - Product Focus
Table 56: Mitsubishi Electric Corporation - Alliances
Table 57: Mitsubishi Electric Corporation. - Recent Contract Wins

The threats of North Korea’s long-range ballistic missiles and China’s maritime intrusion have prompted Japan to focus on fortifying its own defense capabilities. Although Japan’s defense budget registered a decline of 3.56% over the review period, this trend will change in the coming years, according to Strategic Defense Intelligence’s new report – Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019.

The majority of the defense budget is to be spent on revenue expenditure, which includes personnel salaries, operational expenses, training, and development. Capital expenditure accounted for a 19.4% share of the overall defense budget in 2014, and includes the procurement of military equipment, material expenses, R&D expenses, aircraft acquisition, and shipbuilding.

This report provides in depth analysis of the Japanese defense market, with identification of market drivers augmenting its provision of data on the current industry size and growth expectations to 2019. Together with its investigation of the industry structure and procurement dynamics, with analysis of the competitive landscape of the Bangladeshi defense industry, and its assessment of the business environment, Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019 should be considered required reading for those serious about capitalizing on the significant opportunities it holds.

Japanese Defense Expenditure (US$ Bilion), 2010-2014
Japanese Defense Expenditure (US$ Bilion), 2010-2014 

Key insights include:

  • North Korea been identified by the Japanese government as a prime threat. This is primarily due to their testing of advanced ballistic missiles in 1998 and the more recent nuclear missile development initiatives in 2006, which violated the UN Security Council resolution.
  • By 2018, Japan is expected to begin full-scale production of a new generation of powerful missile systems, which will be developed with the US, thereby increasing Japan’s defense expenditure.
  • One of the major concerns of the Japanese maritime security forces is the growing intrusion of Chinese forces into the nation’s coastal areas. To counter this issue, Japan has deployed a number of forces around the Senkaku/Diaoyu Islands in collaboration with the US. 
  • The Japanese Navy and the Japanese Coast Guard are jointly responsible for protecting these islands. Both forces operate in collaboration with the US forces and regularly patrol Japanese maritime territory in order to protect vital sea lanes of communication. Over the forecast period, Japan is expected to strengthen surveillance capabilities in seas surrounding Japan and invest in the research and development of unmanned aerial vehicles as well as procuring patrol naval vessels and aircrafts.
  • Japanese defense companies are highly advanced and sophisticated in terms of defense equipment manufacturing. Despite this, the Japanese defense industry is restricted solely to manufacturing tanks, warplanes, helicopters, and warships. This has resulted in a strong need to enter into joint development programs with other technologically advanced countries in order to procure sophisticated equipment such as missile defense systems and advanced C4ISR equipment.


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