The warning light has come on for the export front of Korean defense companies. The North Atlantic Treaty Organization (NATO) and British Commonwealth Forces seem to be leaning towards German defense companies. Some observers even say that it will be quite difficult for the Korean defense industry to attain its annual export target of US$20 billion this year.
According to industry sources on March 20, the Australian Army put off announcing the winner of its next-generation infantry fighting vehicle project worth US$5 billion (about 6.5 trillion won) from last January to the end of March or April.
The Australian Army is weighing Hanwha Aerospace’s Redback Infantry Fighting Vehicle (IFV) and Rheinmetall’s Lynx armored vehicle. Initially, the Australian Army was known to have given the Redback a higher score.
Korean industry insiders believe that Australia’s delay in selecting the next-generation armored vehicle has been due to pressure from British Commonwealth Forces. “The German Lynx emerged suddenly as a strong candidate in the atmosphere where the NATO and British Commonwealth countries such as Australia should unite strongly against Russia,” said a high-ranking official of the Korean defense industry. “It is unclear whether or not the Redback will be selected.”
Germany’s recent discussions with the Australian government on buying the combat reconnaissance vehicle (CRV) Boxer produced by Rheinmetall’s Queensland plant in Australia are also negatively affecting Korea’s bid to take the order. There are concerns that the Australian government may place the order for the Lynx in exchange for the export of the Boxer.
The NATO’s support for the German defense industry has been spotted since the beginning of this year. Norway selected KMW’s Leopard 2A7 tank as the next model to replace its aging tanks in February and decided to order 54 Leopard 2A7 tanks. Hyundai Rotem’s K2 Black Panther tank competed with the Leopard 2A7 tank but failed to land the order.
Exports of the Redback and the K2 have been expected to reach US$5 to US$10 billion (approximately 13 trillion won). But if they show poor export performance, it will be difficult for the Korean defense industry to achieve its export target of US$20 billion for 2023. Last year, the Korean defense industry exported US$17 billion (approximately 22.1 trillion won) of defense products and achieved the highest-ever export performance. Those in the defense industry say that the rising curve of Korea’s defense exports has reached a critical point.