Table of Contents
1. 1. Introduction 10
1.1. What is this Report About? 10
1.2. Definitions 10
1.3. Summary Methodology 12
1.4. About Strategic Defense Intelligence 13
2. Executive Summary 14
3. Market Attractiveness and Emerging Opportunities 16
3.1. Current Market Scenario 17
3.1.1. Primary threat perception 17
3.1.2. Military Doctrine and Strategy 18
3.1.3. Military Fleet Size 20
3.1.4. Procurement Programs 25
3.1.5. Ongoing procurement programs 25
3.1.6. Future procurement programs 26
3.1.7. Top Procurement Programs by Value (US$ Million) 2018-2023 27
3.1.8. Social, Political and Economic Environment and Support for Defense Projects 28
3.1.9. Political and Strategic Alliances 29
3.2. Defense Market Size Historical and Forecast 30
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 30
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 32
3.2.3. Japan SACO and US force related expenditure to increase at a CAGR of
5.34% over the forecast period 34
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 36
3.2.5. Defense expenditure as a percentage of GDP expected to average
0.9% over the forecast period 38
3.3. Analysis of Defense Budget Allocation 40
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 40
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 42
3.3.3. Procurement of equipment is expected to pick up over the forecast period 43
3.3.4. The Japanese Ground Self-Defense Force (GSDF) accounts for the largest percentage share of the overall defense budget 45
3.3.5. Ground Self-Defense Force (GSDF) to continue accounting for the majority share of the Japanese defense budget 47
3.3.6. Per capita defense expenditure is expected to increase over the forecast period 51
3.4. Homeland Security Market Size and Forecast 52
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 52
In terms of US dollars, Japan is projected to cumulatively allocate US$15.8 billion over the forecast period 52
3.4.2. Intrusion in coastal areas, organized crime, and natural disasters are expected to drive Japanese homeland security expenditure 55
3.4.3. Japan faces “moderate risk” of terrorism 56
3.4.4. Japan faces a moderate level of threat from foreign terrorist organizations 57
3.4.5. Japan has a terrorism index score of
3.6 59
3.5. Benchmarking with Key Global Markets 60
3.5.1. Japan is the fifth-largest defense spender globally 60
3.5.2. Japan’s defense expenditure is low compared to the US, China, Saudi Arabia and the UK 62
3.5.3. Japanese defense budget as a percentage of GDP is expected to average at
0.9% over the forecast period 63
3.6. Market Opportunities: Key Trends and Growth Stimulators 64
3.6.1. Top 10 Defense Market Sectors by Value (US$ Million) – Projections over period 2018-2023 64
3.6.2. Land-based C4ISR 65
3.6.3. Infrastructure Construction 66
3.6.4. Facilities Management 67
4. Defense Procurement Market Dynamics 68
4.1. Import Market Dynamics 70
4.1.1. Japan to sign new defense import programs with foreign countries 70
4.1.2. Procurement of F-35 aircraft to increase defense imports marginally over the forecast period 71
4.1.3. The US was the key defense supplier to Japan 72
4.1.4. Aircraft and missiles were the key defense imports during 2013-2017 73
4.2. Export Market Dynamics 74
4.2.1. Relaxation in export policies to boost Japanese exports 74
5. Industry Dynamics 76
5.1. Five Forces Analysis 76
5.1.1. Bargaining Power of Supplier: Low 78
5.1.2. Bargaining Power of Buyer: High 78
5.1.3. Barrier to Entry: High 78
5.1.4. Intensity of Rivalry: High 78
5.1.5. Threat of Substitution: Medium 78
6. Market Entry Strategy 79
6.1. Market Regulation 79
6.1.1. No offset policy in Japan 79
6.1.2. Modified defense policies to augurs well for foreign investment in defense sphere 79
6.2. Market Entry Route 81
6.2.1. Budgeting Process 81
6.2.2. Procurement Policy and Process 82
6.2.3. Affiliation with Japanese defense companies can be used as an entry strategy 83
6.2.4. Foreign military sales to Japan 83
6.2.5. Entry through technology transfer program 84
6.2.6. Relaxation in existing policy can be used as an entry route 85
6.3. Key Challenges 86
6.3.1. Domestic companies fail to achieve economies of scale 86
6.3.2. Japanese export policy still poses a challenge for domestic defense companies 86
6.3.3. Opposition by Japanese civilians 87
7. Competitive Landscape and Strategic Insights 88
7.1. Competitive Landscape Overview 88
7.2. Key Foreign Competitors 91
7.2.1. Lockheed Martin: Overview 91
7.2.2. Lockheed Martin: Products 91
7.2.3. Lockheed Martin: Recent Announcements and Strategic Initiatives 91
7.2.4. Lockheed Martin: Alliances 93
7.2.5. Lockheed Martin: Recent Contract Wins 94
7.2.6. Lockheed Martin: Financial Analysis 96
7.2.7. Raytheon: Overview 98
7.2.8. Raytheon: Products 98
7.2.9. Raytheon: Recent Announcements and Strategic Initiatives 98
7.2.10. Raytheon: Alliances 100
7.2.11. Raytheon: Recent Contract Wins 101
7.2.12. Raytheon: Financial Analysis 104
7.2.13. BAE Systems: Overview 106
7.2.14. BAE Systems: products 106
7.2.15. BAE Systems: Recent Announcements and Strategic Initiatives 106
7.2.16. BAE Systems: Alliances 107
7.2.17. BAE Systems: Recent Contract Wins 108
7.2.18. BAE Systems: Financial Analysis 109
7.2.19. Airbus Group: Overview 111
7.2.20. Airbus Group: Defense Products and Services 111
7.2.21. Airbus Group: Recent Announcements and Strategic Initiatives 112
7.2.22. Airbus Group: Recent Contract Wins 113
7.2.23. Airbus Group: Financial Analysis 114
7.2.24. Bell: Overview 116
7.2.25. Bell : Defense Products and Services 116
7.2.26. Bell: Recent Announcements and Strategic Initiatives 116
7.2.27. Bell: Alliancess 118
7.2.28. Bell: Recent Contract Wins 119
7.3. Key Domestic Companies 121
7.3.1. NEC Corporation: Overview 121
7.3.2. NEC Corporation: products and services 121
7.3.3. NEC Corporation: Recent Contracts and Strategic Initiatives 121
7.3.4. NEC Corporation: Alliances 122
7.3.5. NEC Corporation: Recent Contract Wins 123
7.3.6. Toshiba Corporation: Overview 124
7.3.7. Toshiba Corporation: Defense Products 124
7.3.8. Toshiba Corporation: Recent Announcements and Strategic Initiatives 124
7.3.9. Toshiba Corporation: Alliances 125
7.3.10. Toshiba Corporation: recent contract wins 125
7.3.11. Toshiba: Financial Analysis 126
7.3.12. Mitsubishi Heavy Industries: Overview 128
7.3.13. Mitsubishi Heavy Industries: Defense Products 128
7.3.14. Mitsubishi Heavy Industries: Recent Announcements and Strategic Initiatives 128
7.3.15. Mitsubishi Heavy Industries: Alliances 129
7.3.16. Mitsubishi Heavy Industries: Recent Contract Wins 130
7.3.17. Mitsubishi Heavy Industries: Financial Analysis 131
7.3.18. Kawasaki Heavy Industries: Overview 133
7.3.19. Kawasaki Heavy Industries: Defense Products 133
7.3.20. Kawasaki Heavy Industries: Recent Announcements and Strategic Initiatives 133
7.3.21. Kawasaki Heavy Industries: Alliances 134
7.3.22. Kawasaki Heavy Industries: Recent Contract Wins 135
7.3.23. Kawasaki Heavy Industries: Financial Analysis 136
7.3.24. Ishikawajima-Harima Heavy Industries Co. Ltd.: Overview 138
7.3.25. Ishikawajima – Harima Heavy Industries Co. Ltd.: Products 138
7.3.26. Ishikawajima-Harima Heavy Industries Co. Ltd.: Recent Announcements and Strategic Initiatives 139
7.3.27. Ishikawajima-Harima Heavy Industries Co. Ltd.: Alliances 140
7.3.28. Ishikawajima-Harima Heavy Industries Co. Ltd.: recent contract wins 140
7.3.29. Mitsubishi Electric Corporation: Overview 141
7.3.30. Mitsubishi Electric Corporation: Products 141
7.3.31. Mitsubishi Electric Corporation: Recent Announcements and Strategic Initiatives 141
7.3.32. Mitsubishi Electric Corporation: Alliances 142
7.3.33. Mitsubishi Electric Corporation: Recent Contract Wins 142
7.3.34. Mitsubishi Electric Corporation: Financial Analysis 143
8. Business Environment and Country Risk 145
8.1. Economic Performance 145
8.1.1. GDP per capita at Constant Prices 145
8.1.2. GDP at Current Prices (US$) 146
8.1.3. Exports of Goods and Services (current LCU Billion) 147
8.1.4. Imports of Goods and Services (current LCU Billion) 148
8.1.5. Gross National Disposable Income (US$ Billion) 149
8.1.6. LCU per US$ (Period Average) 150
8.1.7. Market Capitalization of Listed Companies (US$ Billion) 151
8.1.8. Market Capitalization of Listed Companies (% of GDP) 152
8.1.9. Government Cash Surplus/Deficit as a percentage of GDP (LCU) 153
8.1.10. Goods Exports as a percentage of GDP 154
8.1.11. Goods Imports as a percentage of GDP 155
8.1.12. Service Imports as a percentage of GDP 156
8.1.13. Service Exports as a percentage of GDP 157
8.1.14. Foreign Direct Investment, net (BoP, current US$ Billion) 158
8.1.15. Net Foreign Direct Investment as a percentage of GDP 159
8.1.16. Mining, Manufacturing, Utilities Output (US$ Billion) 160
9. Appendix 161
9.1. About SDI 161
9.2. Disclaimer 161