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Summary
Japanese defense expenditure is inclusive of expenditure on the army, navy, air force, SACO, US force realignment, and other expenses. In 2016, the Japanese Government allocated US$41.7 billion to its total defense budget, compared to US$59.1 in 2012, and registered a CAGR of -8.36% during 2012-2016. Defense expenditure is expected to grow at an estimated CAGR of 1.74% during the forecast period, to value US$45.8 billion in 2021.

Key Findings
- During 2012-2016, Japanese defense expenditure registered negative growth of -8.36%, decreasing from US$59.1 billion in 2012 to US$41.7 billion in 2016

- Defense expenditure is anticipated to register a positive CAGR of 1.74% over 2017-2021and reach a value of US$45.8 billion in 2021

- Over the forecast period, the country's budget for homeland security is expected to be US$16.4 billion cumulatively

- The key areas of investment are expected to be multi-role aircraft,missile defense systems, transport and utility helicopters, destroyers,and amphibious ships


Synopsis
Strategic Defence Intelligence's report-Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021 offers detailed analysis of the industry with market size forecasts from 2017-2021. This report sheds lighton factors that influence demand in the industry, key market trends, and challenges faced by industry participants. In particular, it provides an in-depth analysis of the following:

- Defense industry market size and drivers: detailed analysis of the defense industry during 2017-2021, including highlights of the demand drivers and growth stimulators. 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 the army, navy, and air force. It also details the key challenges faced by defense market participants within the country

- Porter's Five Force analysis of the defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, 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 from 2016 to 2026

- Competitive landscape and strategic insights:includingan overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis


Reasons To Buy
- Identify and track the global defense market and make regional comparisons to effectively target new revenue streams

- Understand the importance of being led by the defense ministries in the military procurement market and define your strategies with insight on what your customers really want by analyzing recent orders, technical specifications, and the country's expected investment pattern during 2017-2021

- Make correct business decisions based on detailed analysis of the defense industry from 2017-2021,which includes the total competitive landscape of the sector with detailed profiles of the top domestic and foreign defense manufacturers along with information about their products, alliances, recent contract wins, and financial analysis

- Determine prospective investment areas by gaining an in-depth understanding of the industry in terms of market opportunities

- Channel resources by identifying various military requirements that are expected to generate revenues across different sectors during 2017-2021

Table Of Contents

Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021
Table of Contents
1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Japan to cumulatively invest US$220.9 billion in the defense sector over the forecast period 16
3.1.2.Nuclear missile development programs of North Korea, strategic challenges from China, and a territorial issue with Russia are the main factors driving the Japanese defense industry 18
3.1.3.Defense budget as a percentage of GDP expected to average 0.96% over the forecast period 20
3.2. Analysis of Defense Budget Allocation
3.2.1. The Ministry of Defense is expected to allocate an average of 18.9% towards capital expenditure during the forecast period
3.2.2. Procurement of equipment is expected to pick up over the forecast period 23
3.2.3.The Japanese Army accounts for the largest percentage share of the overall defense budget 25
3.2.4.Army defense expenditure expected to increase over the forecast period 27
3.2.5. Air Force expenditure to cumulatively value US$48.7 billion over the forecast period 30
3.2.6.Japanese Naval defense expenditure to grow at a CAGR of 1.59% over the forecast period 32
3.2.7.Per capita defense expenditure expected to increase over the forecast period 34
3.3. Homeland Security Market Size and Forecast
3.3.1. Intrusion in coastal areas, organized crime, and natural disasters are expected to drive Japanese homeland security expenditure
3.3.2. Japan faces "some risk" of terrorism
3.4. Benchmarking with Key Global Markets
3.4.1. Japan is the seventh-largest defense spender globally
3.4.2. Japan's defense expenditure is low compared to the US, China, and Russia
3.4.3. Japanese defense budget as a percentage of GDP is expected to remain constant at 1% over the forecast period
3.4.4. Japan has a score of 0.0on the SDI Research Intelligence Terrorism Index
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Transport Aircraft
3.5.2. Destroyer
3.5.3. Multi-role Aircraft
4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Japan to sign new defense import programs with foreign countries
4.1.2. Procurement of F-35 aircraft to increase defense imports marginally over the forecast period
4.1.3. The US was the key defense supplier to Japan
4.1.4. Aircraft and missiles were the key defense imports during 2011-2015
4.2. Export Market Dynamics
4.2.1. Relaxation in export policies to boost the Japanese exports
5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low
5.1.2. Bargaining power of buyer: high
5.1.3. Barrier to entry: high
5.1.4. Intensity of rivalry: high
5.1.5. Threat of substitution: medium
6 Market Entry Strategy
6.1. Market Regulation
6.1.1. No offset policy in Japan
6.1.2. Restrictive defense policies to prevent increase in foreign investment
6.2. Market Entry Route
6.2.1. Affiliation with Japanese defense companies can be used as an entry strategy
6.2.2. Foreign military sales to Japan
6.2.3. Entry through technology transfer program
6.2.4. Relaxation in existing policy can be used as an entry route
6.3. Key Challenges
6.3.1. Domestic companies fail to achieve economies of scale
6.3.2. Japanese export policy still poses a challenge for domestic defense companies
6.3.3. Opposition by Japanese ccivilians
7 Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Foreign Competitors
7.2.1. Lockheed Martin: overview
7.2.2. Lockheed Martin: products
7.2.3. Lockheed Martin: recent announcements and strategic initiatives
7.2.4. Lockheed Martin: alliances
7.2.5. Lockheed Martin: recent contract wins
7.2.6. Lockheed Martin: financial analysis
7.2.7. Raytheon: overview
7.2.8. Raytheon: products
7.2.9. Raytheon: recent announcements and strategic initiatives
7.2.10. Raytheon: alliances
7.2.11. Raytheon: recent contract wins
7.2.12. Raytheon: financial analysis
7.2.13. BAE Systems: overview
7.2.14. BAE Systems: products
7.2.15. BAE Systems: recent announcements and strategic initiatives
7.2.16. BAE Systems: alliances
7.2.17. BAE Systems: recent contract wins
7.2.18. BAE Systems: financial analysis
7.2.19. Airbus Group: overview
7.2.20. Airbus Group: defense products and services
7.2.21. Airbus Group: recent announcements and strategic initiatives
7.2.22. Airbus Group: recent contract wins
7.3. Key Domestic Companies
7.3.1. NEC Corporation: overview
7.3.2. NEC Corporation: products and services
7.3.3. NEC Corporation: recent contracts and strategic initiatives
7.3.4. NEC Corporation: alliances
7.3.5. NEC Corporation: recent contract wins
7.3.6. NEC Corporation: financial analysis
7.3.7. Toshiba Corporation: overview
7.3.8. Toshiba Corporation: defense products
7.3.9. Toshiba Corporation: recent announcements and strategic initiatives
7.3.10. Toshiba Corporation: alliances
7.3.11. Toshiba Corporation: recent contract wins
7.3.12. Toshiba: financial analysis
7.3.13. Mitsubishi Heavy Industries: overview
7.3.14. Mitsubishi Heavy Industries: defense products
7.3.15. Mitsubishi Heavy Industries: recent announcements and strategic initiatives
7.3.16. Mitsubishi Heavy Industries: alliances
7.3.17. Mitsubishi Heavy Industries: recent contract wins
7.3.18. Mitsubishi Heavy Industries: financial analysis
7.3.19. Kawasaki Heavy Industries: overview
7.3.20. Kawasaki Heavy Industries: defense products
7.3.21. Kawasaki Heavy Industries: recent announcements and strategic initiatives
7.3.22. Kawasaki Heavy Industries: alliances
7.3.23. Kawasaki Heavy Industries: recent contract wins
7.3.24. Kawasaki Heavy Industries: financial analysis
7.3.25. Ishikawajima-Harima Heavy Industries Co. Ltd.: overview
7.3.26. Ishikawajima-Harima Heavy Industries Co. Ltd.: products
7.3.27. Ishikawajima-Harima Heavy Industries Co. Ltd.: recent announcements and strategic initiatives
7.3.28. Ishikawajima-Harima Heavy Industries Co. Ltd.: alliances
7.3.29. Ishikawajima-Harima Heavy Industries Co. Ltd.: recent contract wins
7.3.30. Mitsubishi Electric Corporation: overview
7.3.31. Mitsubishi Electric Corporation: products
7.3.32. Mitsubishi Electric Corporation: recent announcements and strategic initiatives
7.3.33. Mitsubishi Electric Corporation: alliances
7.3.34. Mitsubishi Electric Corporation: recent contract wins
7.3.35. Mitsubishi Electric Corporation: financial analysis
8 Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP per capita at constant prices
8.1.2. GDP at current prices (US$)
8.1.3. Exports of goods and services (current LCU billion)
8.1.4. Imports of goods and services (current LCU billion)
8.1.5. Gross national disposable income (US$ billion)
8.1.6. LCU per US$ (period average)
8.1.7. Market capitalization of listed companies (US$ billion)
8.1.8. Market capitalization of listed companies (% of GDP)
8.1.9. Government cash surplus/deficit as % of GDP (LCU)
8.1.10. Goods exports as a % of GDP
8.1.11. Goods imports as a % of GDP
8.1.12. Services imports as a % of GDP
8.1.13. Service exports as a % of GDP
8.1.14. Foreign direct investment, net (BoP, current US$ billions)
8.1.15. Net foreign direct investment as % of GDP
8.2. Mineral
8.2.1. Mining, Manufacturing, Utilities Output (US$ billion)
9 Appendix
9.1. About SDI
9.2. Disclaimer


List of Tables
Table 1: Japanese Defense Expenditure (JPY billion and US$ billion), 2012-2021
Table 2: Japanese GDP Growth and Defense Expenditure as Percentage of GDP, 2012-2021
Table 3: Japanese Defense Budget Split between Capital, Revenue, SACO and the US Forces Realignment Expenditure (%), 2012-2021
Table 4: Japanese Capital Expenditure (JPY billion and US$ billion), 2012-2021
Table 5: Japanese Defense Expenditure Breakdown (%), 2012-2021
Table 6: Japanese Defense Expenditure For Army (JPY billion and US$ billion), 2012-2021
Table 7: Japanese Defense Expenditure For Air Force (JPY billion and US$ billion), 2012-2021
Table 8: Japanese Defense Expenditure For Navy (JPY billion and US$ billion), 2012-2021
Table 9: Japanese Per Capita Defense Expenditure (US$), 2012-2021
Table 10: Japanese Homeland Security Expenditure (JPY billion and US$ billion), 2012-2021
Table 11: Benchmarking with Key Markets -2012-2016 vs. 2017-2021
Table 12: SDI Research Terrorism Index
Table 13: FMS deals to Japan
Table 14: Cost Comparison of Defense Equipment in Japan and the US
Table 15: Lockheed Martin - Product Focus
Table 16: Lockheed Martin - Alliances
Table 17: Lockheed Martin - Recent Contract Wins
Table 18: Raytheon - Product Focus
Table 19: Raytheon - Alliances
Table 20: Raytheon - Recent Contract Wins
Table 21: BAE Systems - Product Focus
Table 22: BAE Systems - Alliances
Table 23: BAE Systems - Recent Contract Wins
Table 24: Airbus Group - Product Focus
Table 25: Airbus Group - Recent Contract Wins
Table 26: NEC Corporation - Product Focus
Table 27: NEC Corporation - Alliances
Table 28: NEC Corporation - Recent Contract Wins
Table 29: Toshiba Corporation - product focus
Table 30: Toshiba Corporation - Alliances
Table 31: Toshiba Corporation - Recent Contract Wins
Table 32: Mitsubishi Heavy Industries - product focus
Table 33: Mitsubishi Heavy Industries - Alliances
Table 34: Mitsubishi Heavy Industries - Recent Contract Wins
Table 35: Kawasaki Heavy Industries - Product Focus
Table 36: Kawasaki Heavy Industries - Alliances
Table 37: Kawasaki Heavy Industries - Recent Contract Wins
Table 38: Ishikawajima-Harima Heavy Industries Co. Ltd - product focus
Table 39: Ishikawajima-Harima Heavy Industries Co. Ltd. - Alliances
Table 40: Ishikawajima-Harima Heavy Industries Co. Ltd. - Recent Contract Wins
Table 41: Mitsubishi Electric Corporation - Product Focus
Table 42: Mitsubishi Electric Corporation - Alliances
Table 43: Mitsubishi Electric Corporation. - Recent Contract Wins


List of Figures
Figure 1: Japanese Defense Expenditure (US$ Billion), 2012-2021
Figure 2: Japanese Defense Expenditure (JPY billion), 2012-2021
Figure 3: Japanese GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2012-2021
Figure 4:Japanese Defense Budget Split between Capital, Revenue, SACO and the US Forces Realignment Expenditure (%), 2012-2021
Figure 5: Japanese Capital Expenditure (US$ billion), 2012-2021
Figure 6: Japanese Capital Expenditure (JPY billion), 2012-2021
Figure 7: Japanese Defense Expenditure Breakdown (%), 2012-2021
Figure 8: Japanese Defense Expenditure for Army (US$ Billion), 2012-2021
Figure 9: Japanese Defense Expenditure for Army (JPY billion), 2012-2021
Figure 10: Japanese Expenditure for Air Force (US$ Billion), 2012-2021
Figure 11: Japanese Expenditure for Air Force (JPY billion), 2012-2021
Figure 12: Japanese Expenditure for Navy (US$ Billion), 2012-2021
Figure 13: Japanese Expenditure for Navy (JPY billion), 2012-2021
Figure 14: Japanese Per Capita Defense Expenditure (US$), 2012-2021
Figure 15: Japanese Homeland Security Budget (US$ Billion), 2012-2021
Figure 16: Japanese Homeland Security Budget (JPY billion), 2012-2021
Figure 17: SDI Terrorism Heat Map, 2016
Figure 18: Benchmarking with Key Markets -2012-2016 vs. 2017-2021
Figure 19: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2016 and 2021
Figure 20: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2016
Figure 21: SDI Terrorism Index, 2016
Figure 22: Transport Aircraft Market Size (US$ Million), 2016-2026
Figure 23: Destroyer Market Size (US$ Million), 2016-2026
Figure 24: Multi-role Aircraft Market Size (US$ Million), 2016-2026
Figure 25: Japanese Defense Import Trend, 2011-2015 (TIV values)
Figure 26: Japanese Defense Imports by Country (%), 2011-2015
Figure 27: Japanese Defense Imports by Category (%), 2011-2015
Figure 28: Industry Dynamics - Porter's Five Forces Analysis
Figure 29: Lockheed Martin Corp. - Revenue Trend Analysis (US$ Billion), 2011-2015
Figure 30: Lockheed Martin Corp. - Operating Profit Trend Analysis (US$ billion), 2011-2015
Figure 31: Lockheed Martin Corp. - Net Profit Trend Analysis (US$ billion), 2011-2015
Figure 32: Raytheon - Revenue Trend Analysis (US$ Billion), 2011-2015
Figure 33: Raytheon - Operating Profit Trend Analysis (US$ billion), 2011-2015
Figure 34: Raytheon - Net Profit Trend Analysis (US$ billion), 2011-2015
Figure 35: BAE Systems - Revenue Trend Analysis (GBP Billion), 2011-2015
Figure 36: BAE Systems - Operating Profit (GBP Billion), 2011-2015
Figure 37: BAE Systems - Net Profit Trend Analysis (GBP Billion), 2011-2015
Figure 38: NEC Corporation - Revenue Trend Analysis (Billion Yen), 2011-2015
Figure 39: NEC Corporation - Operating Profit Trend Analysis (Billion Yen), 2011-2015
Figure 40: NEC Corporation - Net Profit Trend Analysis (Billion Yen), 2011-2015
Figure 41: Toshiba- Revenue Trend Analysis (Billion Yen), 2011-2015
Figure 42: Toshiba - Operating Profit Trend Analysis (Billion Yen), 2011-2015
Figure 43: Toshiba - Net Profit Trend Analysis (Billion Yen), 2011-2015
Figure 44: Mitsubishi Heavy Industries - Revenue Trend Analysis (Billion Yen), 2011-2015
Figure 45: Mitsubishi Heavy Industries- Operating Profit Trend Analysis (Billion Yen), 2011-2015
Figure 46: Mitsubishi Heavy Industries - Net Profit Trend Analysis (Billion Yen), 2011-2015
Figure 47: Kawasaki Heavy Industries - Revenue Trend Analysis (Billion Yen), 2011-2015
Figure 48: Kawasaki Heavy Industries - Operating Profit Trend Analysis (Billion Yen), 2011-2015
Figure 49: Kawasaki Heavy Industries - Net Profit Trend Analysis (US$ Million), 2011-2015
Figure 50: Mitsubishi Electric Corporation - Revenue Trend Analysis (Billion Yen), 2011-2015
Figure 51: Mitsubishi Electric Corporation- Operating Profit Analysis (Billion Yen), 2011-2015
Figure 52: Mitsubishi Electric Corporation- Net Profit Analysis (Billion Yen), 2011-2015
Figure 53: Japanese GDP Per Capita at Constant Prices (US$), 2015-2025
Figure 54: Japan GDP at Current Prices (US$ Billion), 2015-2025
Figure 55: Japanese Exports of goods and services (LCU$), 2005-2013
Figure 56: Japanese Imports of goods and services (LCU), 2005-2013
Figure 57: Gross national disposable income (US$ billion), 2005-2013
Figure 58: Japanese LCU per US$, 2015-2024
Figure 59: Japanese market capitalization of listed companies (US$ billion), 2005-2012
Figure 60: Japanese market capitalization of listed companies (% of GDP), 2005-2012
Figure 61: Government cash surplus/deficit as % of GDP (LCU), 2005-2012
Figure 62: Japanese Goods exports as a % of GDP (%), 2005-2014
Figure 63: Japanese Goods imports as a % of GDP (%), 2005-2014
Figure 64: Japanese Services imports as a % of GDP (%), 2005-2014
Figure 65: Japanese Service exports as a % of GDP (%), 2005-2014
Figure 66: Japanese Foreign direct investment, net (BoP, current US$ billion), 2005-2014
Figure 67: Japanese Net foreign direct investment as % of GDP, 2005-2014
Figure 68: Japanese Mining, Manufacturing, Utilities Output (US$ billion), 2005-2014

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