Japan Defense Industry
Due to security concerns in Asia, there are market opportunities for U.S. defense manufactures interested in Japan’s already favorable market.
Major U.S. defense contractors have developed working relationships over many years with domestic manufacturers for license production of U.S. military technology and equipment in Japan. The Japanese market’s need for interoperability of military technology and equipment has historically strongly favored U.S. defense suppliers over European and other third-country suppliers. CS Japan expects this trend to continue. CS Japan encourages new-to-market U.S. suppliers of defense products that are seeking opportunities to sell to Japanese defense programs to seek local partnerships with specialized trading firms capable of representing them as registered vendors to Japan’s Ministry of Defense.
Japan’s growing national defense expenditures are mainly driven by its assessment of an increasingly challenging regional security environment, including perceived threats due to advancing North Korean missile technologies and China’s growing regional influence.
On December 24, 2022, Japan’s Cabinet approved a record 6.82 trillion-yen defense budget for the Japanese Fiscal Year 2023 (April 2023-March 2024), a 26.3% increase from the previous year. Highlights from the budget include:
Naval—The Japan Maritime Self-Defense Force (JMSDF) will continue to modify its two Izumo-class helicopter carriers (JS Izumo and JS Kaga) into aircraft carriers capable of enabling Lockheed Martin F-35B fighter aircraft operations (5.2 billion yen). In addition, the JMSDF secured 60.3 billion yen to acquire six SH-60L antisubmarine patrol helicopters. It was also allocated 35.7 billion yen for the purchase of four 1,900 ton-class offshore patrol vessels which will specialize in warning and surveillance with minimal manpower.
Land—The Japan Ground Self-Defense Force will acquire 26 new Wheeled Armored Vehicles to carry personnel (13.6 billion yen), succeeding the previous Type-96 Armored Personnel Carrier. 21.3 billion yen will be spent on 24 Type-16 Mobile Combat Vehicles, useful for their ability to be transported by aircraft.
Air—The Japan Air Self-Defense Force will procure an additional eight conventional take-off and landing F-35A Lightning II Joint Strike Fighters (106.9 billion yen) and eight short take-off and vertical landing F-35Bs during the next fiscal year (143.5 billion yen). Japan is in the process of acquiring 147 F-35 fighters from the United States over the coming decade. Once the acquisition is complete, Japan will be the world’s second-largest F-35 operator, after the United States.
Additionally, Japan’s Ministry of Defense plans to invest heavily in the research and development of defense equipment technology, including stand-off defense capabilities, Counter-HGV (hypersonic gliding vehicle) capabilities, and next generation fighter aircraft through the Global Combat Air Program (GCAP) with partners Italy and the UK. This expenditure amounts to 896.8 billion yen in 2023, 3.1 times the amount of 2022’s expenditures.
For more information about defense market developments in Japan and related opportunities for U.S. firms, please contact the U.S. Commercial Service at Office.Tokyo@trade.gov.