Defence Japan defence industry firms saw significant sales growth in 2023

Japan's defence industry is experiencing significant growth, with top companies seeing a 35% increase in sales in 2023. This surge is driven by Tokyo's efforts to strengthen its defence capabilities and production base.

A recent report by the Stockholm International Peace Research Institute (SIPRI) highlights the global boom in the arms industry. The top 100 companies generated $632 billion in revenue in 2023. Among Asian companies, Japanese and South Korean firms led the way. The five major Japanese defence companies—Mitsubishi Heavy Industries, Kawasaki Heavy Industries, Fujitsu, NEC, and Mitsubishi Electric—collectively saw their arms sales rise to $10 billion in 2023.

Ostensibly pacifist Japan has in recent years loosened onerous restrictions that have undercut the ability of its companies to compete in the defence sector — part of a broader buildup and policy shift that comes amid what Tokyo says is "the most severe and complex security environment since the end of World War II." These changes have driven a flurry of domestic orders, according to SIRPI, with some companies seeing the value of new orders increase by more than 300%. [...] Japan has also reportedly started crafting a strategy to strengthen its defence industry and promote exports to lay out medium- to long-term goals by next year. The new strategy is likely to focus on encouraging collaboration among businesses, government and academia. However, analysts say deep-seated challenges remain, including a reluctance by Japanese research centres to engage in research and development related to security and defence technologies due to the stigma attached to working on such projects.

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South Korean defence companies also saw significant growth, with a 39% increase in arms sales, reaching $11 billion. Experts attribute this surge in Japanese and South Korean defence industries to growing regional tensions and the perceived threat of potential conflicts, similar to the ongoing war in Ukraine.