South Korea's cars, refrigerators, smartphones and pop stars have all found success and rising demand beyond domestic shores. Now its defense industry is looking to mimic this success. It's easy to see why: South Korean cars are scoring higher for quality over their Japanese-made counterparts. ("South Korean car makers score strongly in U.S. quality study", Reuters, 17 June) In the last decade, the country's cultural exports have surged across the globe in a phenomenon termed hallyu ("the Korean wave"). From popular smash hits like PSY's Gangnam Style music video to arty cult films like the 2004 Cannes Film Festival Grand Prix winner Oldboy, South Korea is on the rise. So is the defense industry, albeit at a slower, steadier rate. In January, IHS Jane's Defence Weekly reported that South Korean defense exports reached US$3.6 billion in 2014, citing the nation's Defense Acquisition Program Administration (DAPA). That's a 6 percent increase over 2013's figure of US$3.4 billion, and it's still climbing. For 2015, DAPA is projecting international sales of US$4 billion - an amount previously set for the year 2020. Air-bound Beyond the Region The defense exports' average annual gain of 31 percent in the last half-decade comes as no surprise, given slowing domestic growth. Manufacturers have looked abroad to fill the gap with the support of President Park Geun-hye's administration, which has also done its part by boosting spending on defense acquisitions, particularly on air defense and monitoring systems ("South Korea building up military, rising as arms exporter", UPI, 24 February 2015) South Korea's main defense exports - warships, K-9 howitzers, military aircraft and aircraft parts - have found ready buyers in countries like Malaysia, the Philippines, Indonesia, Turkey and Peru. The latter three nations were buyers of the supersonic trainer jet T-50, a collaboration between Korea Aerospace Industries (KAI) and Lockheed Martin that came equipped with a radar and navigation system by Honeywell Aerospace. With little geopolitical baggage weighing it down, South Korea's defense products are well-placed to gain further market share in the international arms arena, beyond its established customer base in Southeast Asia. Winning the US$10 billion contract for the US military's T-X program - which aims to replace its aging T-38 trainer jets - would herald South Korea's entry into the desirable shortlist of US defense cooperation partners. South Korea's chosen replacement is the KAI T-50 Golden Eagle, a strong off-the-shelf contender. No surprise, given that it was originally designed by Lockheed to be a successor to the T-38. ("Lockheed says T-50 well suited for USAF’s next generation trainer needs", Flightglobal, 17 October 2012). Speed Bumps on the Road to Growth But according to a June report by the Korea Institute for Industrial Economics & Trade (KIET) South Korean defense exports' price competitiveness has seen little change in the last few years, with high production costs, low productivity and operating ratios hampering the industry's development. The KIET report contains a list of recommendations to strengthen competitiveness, particularly among the defense industry's small and medium enterprises (SMEs). Chief among them is reform of the production and market structure, which contains obstacles in the shape of the defense-cost reimbursement contracts, the defense goods designation and pressure from corporations. A slightly more challenging necessity is to boost technological innovation, with the report urging for greater government support from an early development stage and incentives created for testing and evaluation. Research and development is a crucial field, but in comparison to industries like machinery, steel or automobiles, the defense sector's R&D investment paled: in 2013, its spending was proportionate to only 5.2 percent of what the automobile industry pumped into R&D. This was despite the fact that the defense industry boasts a comparatively high ratio of R&D personnel - 24.2 percent of its total number of defense workers. Among R&D personnel, 42.7 percent had a Master's degree or Ph.D - a talent pool that can be allowed to do more, through greater investment. According to the report's authors, insufficient R&D funding is a contributing factor to the industry's weak competitiveness. Partnerships to Take Flight To reach the next stage of its journey towards becoming a top defense exporter, South Korea will find it useful to rely on existing strategic relationships with partners like Honeywell Aerospace. Co-development and co-production offer opportunities to leverage on industrial expertise to manufacture products that can better fulfil international market demand, such as for more localized aircraft and avionics equipment. As proof that collaboration is the way forward, in March this year the KAI-Lockheed partnership successfully bid for South Korea's US$7.88 billion KF-X fighter project - an initiative that had seemed uncertain at times, bogged down by feasibility and cost issues. Slated to enter service in 2025 at the earliest, the KF-X fighter could crown South Korea as one of the world's top defense exporters, a leader in developing localized aircraft for an international market. South Korea’s defense industry's upwards flight is certainly one worth watching.