Japan Today

Military might: Japan’s expanding needs open market to U.S. defense business

By John Amari for The ACCJ Journal

While media sometimes paint a picture of uneasy defense relations between the United States and Japan—U.S. President Donald Trump wants Tokyo to quadruple what it pays for hosting U.S. forces—on an industry level, it is a healthy time for bilateral ties.

Regional tensions and uncertainty mean that Japan must consider stronger self-defense capabilities, and US companies are in prime position to help.


An expansion of Japan’s collaboration with U.S. defense compa­nies is possible due, in part, to a reinterpretation in 2014 of the country’s Constitution. Dubbed the Three Principles on Arms Exports, the change liberalizes rules around the country’s ability to export arms, advances international defense and security collaboration. A separate effort by the Japanese government also sought to redefine the role of the Japan Self-Defense Force (JSDF) under the United Nations principle of collective self-defense. The shift in position also led to the establishment on October 1, 2015, of the Acquisition, Technology & Logistics Agency (ATLA), whose commissioner reports to the Minister of Defense.

ATLA aims to:

-- Upgrade technological capacity and readiness of the JSDF

-- Streamline acquisition of defense equipment

-- Strengthen defense equipment and technology cooperation

As the world’s largest arms producer, the United States is likely to reap benefit from Japan’s expanding needs. According to the latest data from the Stockholm International Peace Research Institute, reported on December 9, the top five arms producers are all US companies:

-- Lockheed Martin Corporation

-- The Boeing Company

-- Northrop Grumman Corporation

-- The Raytheon Company

-- General Dynamics Corporation

The first three are Corporate Sustaining Members of the American Chamber of Commerce in Japan. Combined, these five accounted in 2018 for $148 billion in sales—some 35 percent of all revenue generated by the top 100. And total sales by all U.S. companies in the ranking was $246 billion (59 percent).

What’s next for these industry powers?


Japan’s proposed defense budget for fiscal 2020, which would take effect on April 1, has grown 1.1 percent from last year to a record high $48.8 billion. Of that, $102 million has been allocated to a project—announced in January—to develop the next generation replacement for the Mitsubishi F-2 jet fighter. Boeing and Lockheed Martin are expected to be in the running when the choice of partner is revealed, likely this summer.

Japan is taking the lead on the fighter development, and the government wants to have a majority of the work done domestically. One reason for this, given by Japanese Minister of Defense Taro Kono, is to “ensure a degree of freedom for future upgrades and performance improvements.”

But partnering with a non-Japanese company would allow access to existing technology and help keep the cost of the project under control. Modern fighter aircraft development has proven to be both expensive and challenging for the United States and European nations alike. The Eurofighter, F-22, and F-35 are examples. Even Russia’s Su-57 and China’s J-20 have run into developmental and production delays.

While Tokyo is reportedly considering both UK and U.S. contractors as top options, some suggest the United States has become the favorite given the importance of the U.S.–Japan Defense Cooperation pact.

And Trump’s demands have had an influence on some decisions. In November 2018, Japan more than tripled its original order of Lockheed Martin’s F-35 from 42 to 147. At more than $88 million per plane, the increase is worth more than $9.24 billion.

At the time, Japanese Prime Minister Shinzo Abe told Trump, “Introducing high-performance equipment, including American, is important for our country to strengthen its defense capabilities.”

It is a sign of Tokyo’s desire to maintain the important bilateral alliance as it looks to the next cost-sharing arrangement with Washington. The current five-year agreement—under which Japan bears about 80 percent of the costs of hosting U.S. forces—expires on March 31, 2021. Trump is asking for a more than four-fold increase in that contribution.



Beyond the fighter jet project, many other aspects of the defense industry and cooperation were on display in November when Japan hosted the Defense and Security Equipment International (DSEI) event for the first time.

Based in London, DSEI is one of the largest fully integrated, large-scale defense and security exhibitions in the world.

The three-day event, held November 18–20, welcomed 200 exhibitors—many of which are small and medium-sized enterprises (SMEs)—as well as 16 regional pavilions and about 10,000 visitors. Dignitaries from around the world, including Kono and Lt Gen Jerry P Martinez, retired commander of U.S. Forces Japan and commander of the 5th Air Force, Pacific Air Forces, Yokota Air Base, also attended.

“The inaugural DSEI in Japan exceeded all expectations by bringing SMEs and global giants together. It provided the ideal environment for the seeds of collaboration and sales to be sown,” DSEI Japan Vice President Richard Thornley, who is an aerospace and defense consultant, told The ACCJ Journal.

Thornley said the fact that Japan’s defense minister was present demonstrates Tokyo’s desire to make DSEI the premier defense show in Asia to help Japan’s defense industry boost its exports and collaborations. “The numerous foreign military delegations underscored the interest in Japan’s defense equipment as well as that of other nations.”


DSEI Japan featured six 30-minute presentations by non-Japanese contractors on day one. Shorter presentations by 20 Japanese SMEs—from logistics to production and maintenance to security and technology—followed on the second day. Speakers included representatives from the government, military, and diplomatic corps. The third day offered a forum where SMEs could network.

In a DSEI Japan press release, James Angelus, president of the consultancy International Security Industry Council (ISIC) Japan, spoke of a security renaissance for business between Japanese contractors and their foreign counterparts. ISIC Japan aims to strengthen Japan’s defense and security capacity through business-to-business collaboration.

“As military threats rise in East Asia, and U.S. and Japanese defense budgets increase to meet them, prime contractors in America, Australia, and Europe are building networks of smaller subcontractors in Japan to strengthen their supply chains. Local SMEs are anxious to go global,” Angelus stressed.

The chairman of DSEI and ISIC Japan, Masanori Nishi, confirmed the urgent need for robust security in the Indo-Pacific and the need for collaboration between defense contractors in like-minded countries.

Nishi, a former administrative vice minister of defense, said: “Japan’s security rests on innovative technologies, efficiencies across the spectrum, and focused corporate leadership. Industrial strength is critical to the survival of the free world.”


One session during DSEI Japan, organized by a newly formed non-profit organization, featured SME networking among 12 Japanese and three U.S. companies: General Atomics, Raytheon, and General Dynamics.

On the evening of the last day, ISIC Japan held an inaugural reception at The New Sanno Hotel, in the Minami-azabu neighborhood of Tokyo’s Minato Ward. The hotel is managed by the U.S. Naval Joint Services Activity. At the reception, Martinez and Japan Maritime Self-Defense Force Retired Admiral Katsutoshi Kawano raised a toast to fruitful com­mercial ties between the two nations’ defense industries.

Senior officials from the Ministry of Defense (MOD), ATLA, and the Ministry of Economy, Trade and Industry (METI) attended, as well as industry representatives from Hitachi, Fujitsu, Toshiba, and Marubeni. The reception was supported by Collins Aerospace, General Atomics, and Raytheon.


Planning for DSEI Japan began about four years ago, shortly after the reinterpretation of the Constitution. During that time, approval for the event was secured from Japan’s MOD, METI, and the Ministry of Foreign Affairs.

Speaking to The ACCJ Journal, Alex Soar, international devel­opment director at DSEI organizer Clarion Events Limited, said that the involvement by government ministries really helped them feel comfortable bringing the show to Japan. He could tell that this was the right year for the inaugural DSEI Japan and to begin exploring the Japanese defense market.

A spokesperson from Mitsubishi Heavy Industries, Ltd., which has struggled to secure overseas defense contracts over the past few years, said: “There were a range of capabilities that we wanted to exhibit at DSEI Japan. We have seen many delegations from many countries and had good feedback. We hope for even closer collaboration between the UK, U.S., Europe, and ASEAN countries.”

The same goes for U.S. companies looking for opportunities in Japan. With connections made through DSEI, projects such as the next-generation fighter jet development in the pipeline, and calls from Washington to boost purchases and collaboration, the potential for stronger defense ties is bright.

Custom Media publishes The ACCJ Journal for the American Chamber of Commerce in Japan.

© The ACCJ Journal

©2024 GPlusMedia Inc.

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The reason US contractors are increasing market share in Japan is because of the decline of the Japanese defense industry. The majority of Japanese defense contractors are quitting business, forcing Japanese government to turn to US contractors to fill the void.


I hope Japan doesn't start exporting arms as well

To the contrary, Japan has been trying to export its weapons for six years with zero success.

Japanese weapons are designed specifically to suit Japanese conditions, meaning they are not suitable for foreign requirements.

The most notable of this is the Soryu, whose interior is designed for short height Japanese sailors, so Australian technical evaluators found it too tight for Australian sailors and dropped the Soryu before price bidding of two qualified European offerings.

Another notorious example is the P-1, whose electronics are decades behind the US P-8, and this obsolete ESM with lacking threats library was the cause of the infamous false lock-on fiasco back in 2019 against the Korean destroyer and coast guard ship in rescue operations, because the P-1's obsolete ESM lacking an up to date threat library mistook the Coast Guard Ship's search radar for the destroyer's targeting illumination radar and caused an international fiasco, and the Japanese MSDF became an international laughing stock afterward.

-7 ( +2 / -9 )

I predict the US military-industrial-govnt complex will manage to push the F35 on Japan, which from the start was designed as a epic profit maker and not much else. But they all behind it and seem successful.

3 ( +3 / -0 )

The reason US contractors are increasing market share in Japan is because of the decline of the Japanese defense industry. The majority of Japanese defense contractors are quitting business, forcing Japanese government to turn to US contractors to fill the void.

Unfortunately, there are too many netto uyokus not sharing the similar, realistic view of Japan's current status. Being surpassed by China was bad, and now it is losing the industrial competition to India, South Korea, Taiwan and Vietnam. If some people correctly pinpointed the Plaza Accord for Japan's decline, it still does not explain how Germany recovered unscathed and prospered into a world hegemon better than Japan will ever be.

-1 ( +5 / -6 )


Japan has already bought 105 F35s

2 ( +2 / -0 )

What a total waste of money! Especially the F35s!

6 ( +6 / -0 )

What a total waste of money! Especially the F35s!

You think so?

-6 ( +0 / -6 )

Cannot believe countries still want to waste the taxpayers money on overpriced weapons and defence systems that are useless against viruses and natural disasters. Spend the taxpayers money wisely on improving the lives of the people and keep a large fund available to help people in the case of natural disasters and medical emergences like the Corona Virus.

2 ( +3 / -1 )


Cannot believe countries still want to waste the taxpayers money on overpriced weapons and defence systems that are useless against viruses and natural disasters

Unfortunately Japan is surrounded by unfriendly neighbors, who are constantly threatening borders with their ships, planes and missiles.

The country has to deal with both natural and human disasters.

0 ( +2 / -2 )

"Another notorious example is the P-1, "

Instead of talking out of one's orifices, why don't we check from credible sources?

"Overall both of these jets showcase different ASW philosophies which their operators are happy with. Thus we cannot call any of them more capable than the other for whatever reason."


2 ( +3 / -1 )

"In short, Japan has built an aircraft that could be very deadly for submarines."


2 ( +3 / -1 )

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