Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

  • ID: 4434499
  • Report
  • Region: Taiwan
  • 84 pages
  • Strategic Defence Intelligence
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Taiwan’s Homeland Security Expenditure Stands Estimated to Reach US$3.1 Billion in 2022

Taiwan’s military expenditure is projected to register a CAGR of 2.90% during the forecast period to reach US$12.1 Billion by 2022. The main factors driving this growth are the rapid modernization of the country’s armed forces in recent years and the People’s Republic of China’s (PRC) assertiveness with regards to territorial claims.

Homeland security expenditure stands is estimated to reach US$3.1 Billion in 2022, registering a CAGR of 1.38% during 2018-2022. This expenditure is primarily driven by Taiwan’s focus on enhancing its defense capabilities to counter human trafficking and the illicit drug trade.

Taiwanese defense imports witnessed substantial growth over the period 2012-2016. Imports in 2012 were low due to delayed deliveries by the US, which was under pressure from the People's Republic of China (PRC), however, to compensate this; Taiwan started importing engines from Germany. During the forecast period, the US is expected to remain the largest exporter of defense equipment as other countries are reluctant to supply military equipment due to pressure from the People's Republic of China (PRC). The country’s imports were highest in 2014 due to the procurement of air defense systems, missiles, and aircraft.

The report “Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers detailed analysis of the Taiwanese defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

Moreover, this report provides the following

  • The Taiwanese defense industry market size and drivers: Detailed analysis of the Taiwanese defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns.
  • Budget allocation and key challenges: Insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.
  • Porter’s Five Force analysis of the Taiwanese defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
  • Import and Export Dynamics: Analysis of prevalent trends in the country’s imports and exports over the last five years.
  • Market opportunities: Details of the top five defense investment opportunities over the next 10 years.

Competitive landscape and strategic insights: analysis of the competitive landscape of the Taiwanese defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Scope

  • Taiwan’s defense budget stands at US$10.2 billion in 2017, and the country is expected to cumulatively spend US$57.1 billion on its military over the forecast period.The main factors driving this growth are the rapid modernization of the country’s armed forces in recent years and the People’s Republic of China’s (PRC) assertiveness with regards to territorial claims.
  • During 2013-2017, an average of 17.9% of the country’s total defense budget was allocated to capital expenditure; while an average of 82.1% was reserved for revenue expenditure. This is primarily due to Taiwan’s future modernization programs. For instance, in 2016, the Taiwanese Government announced future modernization plans in order to develop a strong defense industry. With the government planning to reduce the country’s armed forces from 215,000 to 190,000 by 2019, personnel costs are likely to reduce, resulting in a decline in revenue expenditure.
  • The MoD is expected to invest in corvettes, misisle defense systems, diesel-electric submariens and mulri-role aircraft MRO.

Reasons to buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Taiwanese defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the Taiwanese defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
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1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About the Publisher

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary Threat Perception
3.1.2. Military Doctrine & Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Social, Political and Economic Environment & Support for Defense Projects
3.1.6. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Taiwanese defense budget to grow at an estimated CAGR of 2.90% during 2017-2022
3.2.2. Issue of One China anticipated to drive military expenditure
3.2.3. Defense budget as a percentage of GDP will remain at an average of 1.8% over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure is expected to increase during the forecast period
3.3.2. Capital expenditure is anticipated to record a CAGR of 3.25% during the forecast period
3.3.3. Taiwan’s per capita defense expenditure is expected to increase during the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. The homeland security market in Taiwan is expected to grow at a CAGR of 1.38% during the forecast period
3.4.2. Human trafficking to drive homeland security expenditure
3.4.3. Taiwan falls under “Some risk” category in the terrorism index
3.4.4. Taiwan faces very low threat from terrorist organizations
3.4.5. Taiwan has a terrorism index score of 0.1
3.5. Benchmarking with Key Global Markets
3.5.1. Taiwanese defense expenditure expected to remain low compared to leading spenders
3.5.2. Taiwan will continue to remain as a small contributor in the global arms market
3.5.3. Defense budget as a percentage of GDP is expected to remain low over the forecast period
3.6. Market Opportunities: Key Trends and Drivers
3.6.1. Multi-role Aircraft MRO
3.6.2. Diesel-electric Submarine
3.6.3. Missile Defense Systems
3.6.4. Corvettes

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports increased during the period 2012-2016
4.1.2. The US, Germany, and Italy are the major defense equipment suppliers for Taiwan
4.1.3. Aircraft, Missiles, and Air defense systems accounted for a total share 89.9% in Taiwanese defense imports
4.2. Export Market Dynamics
4.2.1. Taiwan defense exports was very low during 2012-2016
4.2.2. Central American countries are the major prospects for Taiwanese defense exports

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: High
5.1.2. Bargaining power of buyer: Medium
5.1.3. Barrier to entry: High
5.1.4. Intensity of rivalry: Low
5.1.5. Threat of substitution: Low

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. The government encourages offsets to develop the domestic defense industrial base
6.2. Market Entry Route
6.2.1. Budgeting process
6.2.2. Procurement Policy and Process
6.2.3. Foreign equipment manufacturers enter the market through direct commercial sales
6.2.4. Foreign military sales is the viable market entry route for foreign defense companies
6.2.5. Biennial defense exhibition provides an attractive entry route
6.3. Key Challenges
6.3.1. Corruption and lack of transparency are the factors which hinders the growth of the Taiwanese defense industry
6.3.2. Delay of procurement programs will lead to cost overruns
6.3.3. Lack of sales agents and stringent regulations restrict domestic defense industry growth

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. Aerospace Industrial Development Corporation (AIDC): overview
7.2.2. Aerospace Industrial Development Corporation (AIDC): products
7.2.3. Aerospace Industrial Development Corporation (AIDC): recent announcements and strategic initiatives
7.2.4. Aerospace Industrial Development Corporation (AIDC): alliances
7.2.5. Aerospace Industrial Development Corporation (AIDC): recent contract awards
7.2.6. Chung-Shan Institute of Science and Technology (CSIST): overview
7.2.7. Chung-Shan Institute of Science and Technology (CSIST): products
7.2.8. Chung-Shan Institute of Science and Technology (CSIST): recent announcements and strategic initiatives
7.2.9. Chung-Shan Institute of Science and Technology (CSIST): alliances
7.2.10. China Shipbuilding Corporation (CSBC), Taiwan: overview
7.2.11. China Shipbuilding Corporation (CSBC), Taiwan: products
7.2.12. China Shipbuilding Corporation (CSBC), Taiwan: alliances
7.2.13. The Combined Service Forces (CSF): overview
7.2.14. The Combined Service Forces (CSF): products
7.2.15. The Combined Service Forces (CSF): alliances

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP per capita at constant prices (US$)
8.1.2. GDP at current prices (US$)
8.1.3. Exports of goods and services (NT$ Bn)
8.1.4. Imports of goods and services (NT$ Bn)
8.1.5. LCU per US$ (period average)
8.1.6. Goods exports as a percentage of GDP
8.1.7. Goods imports as a percentage of GDP
8.1.8. Services imports as a percentage of GDP
8.1.9. Services exports as a percentage of GDP
8.1.10. Net Foreign Direct Investment as % of GDP

9. Appendix
9.1. About the Author
9.2. Disclaimer

List of Tables
Table 1: Taiwan (Republic of China) Ground Forces Strength
Table 2: Taiwan (Republic of China) Air Force Strength
Table 3: Taiwan (Republic of China) Navy Strength
Table 4: Taiwan - Ongoing Development and Procurement Programs
Table 5: Taiwan - Future Procurement Programs
Table 6: Taiwanese Defense Expenditure (NT$ billion& US$ billion), 2013-2022
Table 7: Taiwanese GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022
Table 8: Taiwanese Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Taiwanese Defense Capital Expenditure (NT$ Billion & US$ Billion), 2013-2022
Table 10: Taiwanese Per Capita Defense Expenditure (US$), 2013-2022
Table 11: Taiwanese Homeland Security Expenditure (NT$ billion & US$ billion), 2013-2022
Table 12: Terrorism Index, 2017
Table 13:Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Table 14: Defense Offset Regulations in Taiwan
Table 15: Taiwan Budget Formation Timetable
Table 16: Competitive Landscape of the Taiwan Defense Industry
Table 17: Aerospace Industrial Development Corporation (AIDC) - Product Focus
Table 18: Aerospace Industrial Development Corporation (AIDC) - Alliances
Table 19: Taiwan Aerospace Industrial Development Corporation (AIDC) - Recent Contract Wins
Table 20: Chung-Shan Institute of Science and Technology (CSIST) - Product Focus
Table 21: Chung-Shan Institute of Science and Technology (CSIST) - Alliances
Table 22: China Shipbuilding Corporation (CSBC) - Product Focus
Table 23: China Shipbuilding Corporation (CSBC), Taiwan- Alliances
Table 24: The Combined Service Forces (CSF) - Product Focus
Table 25: The Combined Service Forces (CSF) - Alliances

List of Figures
Figure 1: Taiwanese Defense Expenditure (NT$ Billion), 2013-2022
Figure 2: Taiwanese Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Taiwan GDP Growth and Defense Expenditure as Percentage of GDP Growth,2013-2022
Figure 4: Taiwanese Defense Budget Split Between Capital and Revenue Expenditure (%),2013-2022
Figure 5: Taiwanese Defense Capital Expenditure (NT$ Billion), 2013-2022
Figure 6: Taiwanese Defense Capital Expenditure (US$ Billion), 2013-2022
Figure 7: Taiwanese Per Capita Defense Expenditure (US$), 2013-2022
Figure 8: Taiwanese Homeland Security Expenditure (NT$ Billion), 2013-2022
Figure 9: Taiwanese Homeland Security Expenditure (US$ Billion), 2013-2022
Figure 10: Terrorism Heat Map, 2017
Figure 11: Terrorism Index, 2017
Figure 12: Benchmarking with Key Markets, 2013-2017 vs. 2018-2022
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ billion),2017 and 2022
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 15: Multi-role Aircraft MRO Market Size (US$ Million), 2017-2027
Figure 16: Diesel-electric Submarine Market Size (US$ Million), 2017-2027
Figure 17: Missile Defense Systems Market Size (US$ Million), 2017-2023
Figure 18: Corvettes Market Size (US$ Million), 2017-2027
Figure 19: Taiwan Defense Import Trend (US$ Million), 2012-2016 (TIV values*)
Figure 20: Taiwanese Defense Imports by Country (%), 2012-2016
Figure 21: Taiwanese Defense Imports by Category (%), 2012-2016
Figure 22: Taiwanese Defense Export Trend (US$ Million), 2012-2016 (TIV values)
Figure 23: Taiwan Defense Exports by Country (%), 2012-2016
Figure 24: Industry Dynamics Porter’s Five Forces Analysis
Figure 25: Taiwan’s GDP Per Capita at Constant Prices (US$), 2015-2025
Figure 26: Taiwan’s GDP at Current Prices (US$ Billion), 2015-2025
Figure 27: Exports of goods and services (NT$ Million), 2005-2014
Figure 28: Imports of goods and services (NT$ Billion), 2005-2014
Figure 29: Taiwan’s NT$ per US$, 2015-2024
Figure 30: Taiwan- Goods exports as a % of GDP (%), 2005-2014
Figure 31: Taiwan- Goods imports as a % of GDP (%), 2005-2014
Figure 32: Taiwan- Services imports as a % of GDP (%), 2005-2014
Figure 33: Taiwan- Services exports as a % of GDP (%), 2005-2014
Figure 34: Taiwan- Net Foreign Direct Investment as % of GDP 2005-2012

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  • Aerospace Industrial Development Corporation (AIDC)
  • China Shipbuilding Corporation (CSBC)
  • Chung-Shan Institute of Science and Technology (CSIST)
  • The Combined Service Forces (CSF)
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