In December of 2024, the Mitsufuji Corporation showcased several prototype items at the Vietnam Defense Expo, including a scale model of a hangar tent with electromagnetic shielding and wearable tech much like a wristwatch. The Kyoto-based company started in 1956 as a traditional Nishijin textiles manufacturer. But from 2024 onward, it became involved in producing membrane materials able to protect military equipment from being disabled in an electromagnetic attack.
Mitsufuji’s pivot is in keeping with the Defense Buildup Program (DBP), a top-down strategy for promoting Japanese defense companies overseas laid out by the Ministry of Defense (MOD) in December of 2022. Broadly, the strategy aims to promote the growth of a domestic defense industry as a strategic tool in Japanese defense and foreign policy.
There is, however, an underlying issue that concerns the Japanese defense sector. Unlike the United States or UK, which have companies like Lockheed Martin or BAE Systems that mostly rely on military contracts for most of their business, comparable Japanese companies like Mitsubishi Heavy Industries (MHI)’s sales of military hardware make up less than a fifth of its total revenue. The problem is not unique to MHI; reports of various Japanese companies, small and large, show numerous cases of retreating from the defense industry due to low-profit margins. In 2023 alone, it was reported that 100 Japanese defense companies either downsized or left the sector entirely.
The MOD’s 2014 paper, Strategy on Defense Production and Technological Bases, highlighted the problem of decreasing defense budgets through 2012, coupled with reduced procurement of military hardware, as increasing unit and maintenance cost along with growing platform complexity made procurement prohibitively expensive. In the face of these headwinds, former Japanese defense minister Minoru Kihara remarked that Japan should do what it can to invest in indigenous dual-use technologies to keep up with global trends. This was echoed by Kazuhisa Shimada, former MOD Vice-Minister of Defense, who stated that matching dual-use technologies to national security can be successful when the government gets actively involved rather than waiting for companies to showcase the products they can produce. The idea is that the Japanese government needs to collaborate with the private sector to innovate emerging technologies, which in turn can be used to bolster the capabilities of the Japanese Self-Defense Forces (JSDF) and meet the needs of modern warfare, enhancing Japan’s national security and economic resilience in the process.
Despite these longstanding concerns over the lack of support for the private sector, including startups, there is still reason to be optimistic. On June 7, 2023, the Diet passed the Act on Enhancing Defense Production and Technology Bases to strengthen the defense industry by ensuring security measures on the supply chain and providing financial support for defense companies. In the same month, representatives from the MOD and METI engaged with 200 startup companies specialized in various technological fields from cybersecurity and space to drone warfare and artificial intelligence.
This was followed by the MOD passing the Basic Policy on Enhancing Defense Production and Technology Bases on October 12, 2023 – a policy that aims to improve domestic defense production through implementing financial and security measures to increase competitiveness. In September 2024, the MOD and METI announced a framework for advanced dual-use technologies with defense applications that are developed by startups. The MOD’s Acquisition, Technology and Logistics Agency (ATLA) then created the Defense Innovation Science and Technology Institute (DISTI) in October 2024. The institute aims to develop innovative defense equipment and boasts a staff of 76, including researchers from several universities and companies that specialize in information and communications technology (ICT) and robotics. The DISTI is based on the Defense Advanced Research Projects Agency (DARPA) and the Defense Innovation Unit (DIU) of the US Department of Defense (DOD).
Supporting startups in the defense industry sector goes a long way to ensure Japan has a viable defense sector that can compete for local and international contracts. Hideki Fukawa, the director of ATLA’s Defense Equipment Cooperation Planning Office, said that he sees more Japanese defense companies participating in overseas defense exhibitions over the next few years, now confident that the government will support them. Thanks to a change in Japanese defense policy and more willingness to invest and assist these companies, more will be willing to market their defense products overseas. This is an opportunity for the government and the private sector to work together and build connections with friendly nations to create long-lasting security ties.
The approach seems to be working already: in the wake of the Vietnam Defense Expo, Mitsufuji reported new contracts for their fibers from Asia and Europe.
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