South Korea’s Defence Industry Might – The Golden K-Cow

A deep-dive analysis into South Korea’s defence might reveals three fundamental tenets backstopping the meteoric rise of South Korea’s hard power capabilities.

Owing to the Korean Wave, the successful export of South Korean products, from K-Pop acts to hit dramas, to cosmetic brands and even food products, has put the country onto the world map, with the insertion of “K” as a prefix viewed in a superior light, a ‘premium’ label attached to any entity. South Korea’s cultural influence across the globe is a phenomenon that has since taken on a life of its own, but an often-forgotten fact about the fledgling East Asian middle power is that South Korea, as a technical fact, remains at war with North Korea, albeit one characterized as a ‘frozen conflict’ due to the 1953 Korean Armistice Agreement. Amidst constant provocations from North Korea, the Republic of Korea (ROK) Armed Forces has focused on the acquisition of assets specifically targeted towards deterring the North Korean threat, in particular its nuclear element(s). While the world has been largely enamored with its soft power capabilities, South Korea has quietly accelerated its development of hard power capabilities over the past decade, punctuated by its July 2022 arms deal with Poland, and President Yoon Suk Yeol’s commitment to transform South Korea into one of the top four weapons suppliers in the world by 2027. As a result, South Korea saw its arms sales rise by more than 230% between 2021 and 2022, emerging as one of the biggest economic beneficiaries of the ongoing Russo-Ukraine conflict.

A deep-dive analysis into South Korea’s defence might reveals three fundamental tenets backstopping the meteoric rise of South Korea’s hard power capabilities.

Capitalization – Filling the Polish Gap

Following Russia’s full-scale invasion of Ukraine in February 2022, many European states such as Belgium and Slovenia found themselves scrambling to provide military support to Ukraine, while also ensuring that their respective militaries remained well-stocked and prepared for a region that then seemed to be teetering dangerously towards a power-based order. As one of Ukraine’s closest strategic partners, Poland has also dug deep into its military coffers, agreeing to provide more than 240 Infantry Fighting Vehicles (IFVs) and 330 Main Battle Tanks (MBTs) to Ukraine as of April 2023. Poland grappled with a fundamental national security paradox – it saw a need to provide military equipment to support Ukraine’s efforts against Russia, but that this provision of support would deplete its supply of military equipment, potentially leaving itself vulnerable against the exact situation unfolding in Ukraine – a subversion of its territorial sovereignty. Simply put, Poland had found itself caught between a rock and a hard place.

Considering that Poland possessed more than 600 MBTs as of April 2022, its commitment of 330 MBTs to Ukraine represents a significant gap in its land warfighting setup that requires replenishing, something that it has attempted to fill via M1A2 Abrams MBT arms deals with the United States (U.S.) in July 2021 and January 2023 respectively. Despite the initial purchase of 250 Abrams being agreed to in July 2021, the deal was only given the formal go-ahead by the U.S. in February 2022, with the first 28 MBTs sighted on Polish soil only in July 2022. With the U.S. military industrial complex’s production capabilities being over-stretched due to the Ukraine situation (and its wartime requirements), alongside increased needs from its clientele, it has fallen behind on originally-scheduled delivery timelines for Taiwan and Ukraine, forcing states to consider pivoting towards other options for arms acquisitions.

It is here that South Korea enters the picture, with its gap-filling venture culminating into the watershed arms deal between Poland and South Korea in July 2022. One of President Yoon’s first moves since taking office as South Korea’s 13th President in May 2022 was to attend the June 2022 North Atlantic Treaty Organization (NATO) Summit as an observer, where he mentioned how issues such as the Ukraine situation and North Korea’s missile tests were threatening the sanctity of ‘universal values’. By playing up security threats facing the global community and stamping South Korea’s interest in maintaining a stable international security environment, Yoon had laid the diplomatic groundwork required to backstop South Korea’s push towards becoming the world’s 4th largest arms exporters by 2027.

Many observers point to the sheer size of the Poland-South Korea deal as its standout feature, with the July 2022 deal totaling US$12.4 billion, the largest military export deal in its history. but what is most notable is South Korea’s ability to fulfil the delivery of these systems onto Polish soil in lightning-quick fashion, at a speed that no other major arms exporter was able to match. Traditionally, an arms acquisition agreement can take multiple years just to get through the confirmation and paperwork process, as the sensitivities of military asset acquisitions often involve a bureaucratic process of checks and balances that are usually high in specificity and lengthy by nature – let alone the delivery timelines. However, Poland’s Minister for National Defence, Mariusz Błaszczak, had stated that South Korea was the only supplier capable of providing the weapons fast enough – more specifically, before the end of 2022. The ability of South Korea’s defence industry to execute on contractual obligations quickly is essential for countries transferring arms to Ukraine (such as Poland), who need to replenish their depleting military asset stockpiles to maintain its defence capabilities. South Korea eventually made good on its promise, with the first shipment of 10 K2 MBTs and 24 K9 Howitzers completed on 6 December 2022, merely four months after the arms deal was finalized. It has also maintained its excellence in production throughout other parts of the deal, with its quick rollout of the FA-50 fighter jets hailed for its remarkable speed, a mere eight months between the contract’s signature and the first delivery.

Through the Poland deal, South Korea’s defence industry has found a way to slot itself into a gap that has emerged in the European market. To be clear, South Korea’s military capabilities are not newfound – the very fact that the Korean War remains ‘frozen’ means that there is a constantly high demand for these military assets, mostly originating from the domestic requirements of its own armed force. This demand has led to South Korea’s defence industry maintaining sustainably large production capacities to meet these internal needs, and the ‘Polish Gap’ presented the perfect market opportunity for South Korea to capitalize on, with mass production capabilities that it already had in place to cope with the constant threat that North Korea poses to its national security.

The Military Industrial Complex – Rapid Expansion

South Korea’s ability to produce and deliver its assets on accelerated timelines has also generated more knock-on effects, with Poland committing to deliver multiple Leopard 2 MBTs to aid Ukraine’s efforts, and rumblings regarding Poland’s intention to eventually transfer all of its 240 Leopard 2 MBTs over to Ukraine. With the fact that Poland had purchased 1,000 K2 MBTs from Ukraine as part of the July 2022 deal in consideration, if these rumblings held water, it would signal a pivotal shift in Poland’s land fighting setup – an undeniable intention to elevate the K2 MBT into the role as Poland’s spearhead frontline armoured asset for the distant future. More crucially, such a move would affirm Polish faith in South Korea’s defence industry and its production and equipment capabilities, potentially opening up a long-term defence partnership between the two states, and thereafter carving a lasting space in the European arms market for South Korea to slot itself into.

This leads into the next point, on the strengths of South Korea’s military industrial complex. The three defence contractors involved in the July 2022 Poland deal are Hyundai Rotem, Hanwha Defence, and Korea Aerospace Industries (KAI), responsible for the production of the K2 MBTs, K9 howitzers and the FA-50 fighter jets respectively. South Korea’s defence industry first entered the European arms market proper in 2014, when Poland selected the K9 howitzer’s chassis for its AHS Krab howitzer. Since then, the South Korean government has continued to strengthen financial support for its defence industry, from former South Korea President Moon Jae-in’s Defence Reform 2.0 initiative in 2018, to President Yoon’s commitments. This whole-of-government approach to support its domestic defence industry has transpired in various forms, from the introduction of new laws to insulate its defence capabilities from external shocks, to its export-oriented approach to defence, including an emphasis on asset interoperability and consistent appearances in arms conventions around the world, which has afforded South Korea’s defence corporations increased exposure in the international arms market, putting it in a better position to secure more contracts and deals.

The success of South Korea’s military industrial complex in securing contracts also comes from its detailed sales pitching strategy, which involves an analysis of its prospective buyers’ challenges, finances, and needs, before the final design of a tailored pitch that aims to capture the hearts and minds of prospective clientele. Such a strategy necessitates extended periods of research and an in-depth understanding of the market situation of potential buyers, and more importantly, an accurate read-and-predict comprehension of the global geopolitical climate, skills that industry bigwigs such as Hanwha and Hyundai have developed throughout the past decades, backed by strong financial and logistical support from its government. As part of this pitch strategy, South Korea also markets itself as an highly flexible exporter state, with the ability to adjust specific caveats of any deal according to the importer’s needs, including flexible repayment forms & timelines, and proven maintenance & after-sales services.

Furthermore, an interesting quirk about South Korea’s pitches is its fairly liberal stance when it comes to offering technological transfer as an add-on during the negotiation of arms contracts, something that other arms-exporting states are often reluctant to do due to intellectual property rights and sensitivities over the potential leakage of military secrets and operational details. For instance, the U.S. has a long-standing habit of imposing specific conditions on follow-on sales and usage purposes during contract negotiations, and a reluctance for technology sharing over national security concerns, which has culminated into the imposition of multiple laws to govern the export of defence technology. Such domestic restrictions limit the ability of the U.S. to speed up the negotiation and fulfilment of arms contracts, as there are multiple barriers to entry and administrative hoopla that both the importer and exporter have to overcome. South Korea’s liberal stance on defence technology transfer is an attractive prospect for states looking to build up its defence capabilities whilst reducing reliance on overseas partners, and one that also amplifies the potential monetary gains extractable from such arms deals. The  Poland-South Korea deal includes a technology transfer agreement that will see manufacturing factories being set up in Poland, aimed at providing a sales and manufacturing pipeline – a direct supplier located in Europe itself.

The Perfect K-Product – Affordability and Performance

Much has been said about South Korea’s opportunistic moves and the strength of its military industrial complex, but the primary criterion determining the success of any state’s defence industry boils down to one simplistic concept – the capabilities of its military assets. Major arms exporters such as Germany, U.S. and France have enjoyed positions of reputational privilege in the defence industry due to its production capabilities and product reliability, and South Korea’s attempt to penetrate a traditionally top-heavy industry is certainly not simple. For states to be willing to invest millions in South Korea’s arms, it has to be convinced of the fit of these ‘K-products’ in its own military setup, and its performance in combat.

The K2 MBT, also known as the Black Panther, is designed in a manner that points to the future direction of South Korea’s defence industry, one where most, if not all, of its sub-components are locally produced to avoid reliance on external partners in a period that has been characterized by diminishing inter-dependence. Its reliance on indigenous technology is notable, while it has also been described as fully interoperable with NATO due to its satisfaction of STANAG requirements, with its specifications meeting the ammunition (120mm), transmission (German-produced), and targeting standards at a visual glance. Delving deeper into its capabilities, the K2 has been described as a glove-like fit for South Korea’s mountainous terrain due to superior armament stability and vehicle suspension, designed for stable targeting even while navigating rough and uneven terrain, and to deter and counter its most pertinent land warfare threat in North Korea. Analysts have contended that the K2 MBT could be the most technologically superior tank currently in production, with capabilities that surpass some of its notable competitors in the market.

There is a need to clarify the K2 MBT in relation to the section’s sub-header – the K2 is estimated to cost around US$8.5 million per model, a number that certainly cannot be viewed as strictly affordable. However, this value pales in comparison to the more popular options in the international tank market, with the M1 Abrams and the Leopard 2s both estimated to cost upwards of US$10 million each. Furthermore, the U.S. is already facing aforementioned issues in terms of overstretched production factories and an inability to meet contractual delivery timelines, while the Bundeswehr has been suffering from a series of vehicle breakdowns and deficiencies in its combat readiness levels, adding further strain to a military industrial complex that continues facing challenges in resupplying Europe. Resultantly, the K2 MBT has risen to become the next-most attractive option in the international tank market due to its financial efficacy and availability. Besides Poland, Turkey has also pivoted towards the South Korean option, basing the design of its Altay MBT on the K2’s chassis via a US$200 million deal signed in May 2022. As for effectiveness, the K2 MBT remains relatively ‘untested’ in combat, with it yet to appear in any active conflict thus far despite overwhelmingly positive reviews from military observers. However, its closest contemporaries, the Abrams MBT and the Leopard 2 MBT, have been observed as having specific problems in areas of fuel consumption and climate survivability respectively. No system is perfect, but the K2 MBT remains as the most modern option that incorporates lessons learnt from past tank combat performances into one single unit, with significant upside potential in terms of armour plate protection and autonomous capabilities.

On the other hand, the K9 howitzer is perhaps the ideal personification of the segment’s sub-header, an alternative that captures both affordability and performance adequately. The K9 has been labelled as a game-changer and one of the success stories in the field of heavy tracked artillery assets, with notable capabilities such as its advanced hydro-pneumatic suspension system and an automatic feed loading mechanism. More specifically, the K9 is recognized for its armour coverage against different munition sizes and chemical weapons, high maximum speed and rapid rate-of-fire. A key yardstick to measure the capability of a land fighting asset is its ability to fuse protection, mobility and firepower into a singular package, and the K9 howitzer offers capabilities in these three categories, to a combined level that no other existing artillery unit can match at the moment.

Ukraine’s situation has placed howitzers firmly back into the reticles of states around the world, especially states keen on strengthening its land warfare and protection capabilities. As a result, the K9 howitzer’s clientele continues to expand, with increasing demands originating primarily from European states such as Estonia, Finland and Norway, all seeking to augment and provide further artillery coverage(s) for its land fighting setup. There has been rumblings of other potential customers such as Romania as well, a likely participant given that it signed a memorandum of understanding with South Korea for the K9s in February 2023. Outside of Europe, its customers include Australia, Egypt and India, and Hanwha Defence continues to promote the K9 as one of the centrepieces of its line-up.

A K9 howitzer is estimated to cost around US$11 million, a price that places it as an far more economical option when compared to its closest contemporary asset, the German-made PzH 2000s, estimated at around US$20 million. While these numbers have much potential room for inaccuracies, its meteoric rise in popularity over the past two years cannot be ‘credited’ solely to Europe’s changing regional security environment, but also an increased belief from the international arms market in South Korea’s military assets and its capabilities. Unlike the K2 MBT, the K9 howitzer has seen actual combat action in both Turkey and South Korea, with extensive tests conducted in Australia and India. The fact that the latter made a second order for 100 more K9s in 2023 after its first purchase of 100 units in 2017, should be understood as a testament of its effective performance and reliability in combat conditions.

Simplified altogether, the might of South Korea’s defence industry can be analyzed and understood using the baseline rule governing demand and supply – that these products are simply “cheap and good”. The reality is that all states operate on a finite budget, and there is an endless obsession with value maximization, the combination of cost efficacy and performance effectiveness. South Korea’s products have successfully captured the attention of international markets by providing value-for-money options that allow states to fulfil their security needs in a global climate that has been shifting towards increased polarization.

The Golden K-Cow

At an initial glance, an unusually favourable picture of South Korea’s defence industry has been painted, and its positive reputation in the international arms market is certainly well-deserved. However, for the industry to move beyond short-term gains and to establish itself as an equal competitor vis-à-vis other industry stalwarts, it has to continue achieving breakthroughs in its development of military assets. South Korea has to carve out a justifiable and sustainable space in the arms market for it to secure its position at the negotiating table, and this usually occurs if a state has a narrow list of products that far exceeds all options available on the market (think Germany), or on the contrary, if it has a wide variety of products that allow it to generate interdependence with many states and secure significant monetary returns (think U.S.). At present, South Korea’s position appears to be tentative, with neither foot on firm ground. In fairness, this ‘weakness’ can be attributed to the growing pains of an up-and-coming industry, but it is an operational reality that its government and defence conglomerates will have to face in time to come, unless it chooses to adopt a model of development that would seemingly go against the grain.

Just as the South Korean locals take massive pride in its ‘hanwoo’, their indigenous locally-bred cows known for its quality and texture during consumption, the comparable might of its military industrial complex has become the state’s ‘golden cow’, an industry generating massive economic returns, and a source of prestige and pride for the government and the ROK Armed Forces. More critically, its defence industry has become the crown jewel backstopping South Korea’s burgeoning reputation in global security affairs, and its ultimate deterrent against potential adversaries.

Thomas Lim
Thomas Lim
Thomas Lim is a Senior Analyst with the Military Studies Programme of the S. Rajaratnam School of International Studies, a policy-oriented think tank located in Singapore’s Nanyang Technological University. His research interests include foreign policy analysis, military technology and developments, armoured vehicle operations and maritime security.