The South Korean Defense Industry – Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016

Table of Contents

1 Executive Summary
2 Introduction
2.1 What is this Report About?
2.2 Definitions
2.3 Summary Methodology
2.4 ICD Research Terrorism Index
2.5 About ICD Research Defense Intelligence Centre
2.6 About Strategic Defence Intelligence
3 Market Attractiveness and Emerging Opportunities
3.1 Defense market Size Historical and Forecast
3.1.1 South Africa’s annual defense expenditure to reach US$XX.XX billion by 2016
3.1.2 Crime, peacekeeping missions, border security and military modernization initiatives to drive defense expenditure
3.1.3 Military expenditure as a percentage of GDP expected to increase during the forecast period
3.2 Analysis of Defense Budget Allocation
3.2.1 Capital expenditure share to decrease over the next five years
3.2.2 Capital expenditure for air force to be highest with fastest growth rate
3.2.3 Army and air force to share the majority of the defense budget
3.2.4 Army capital expenditure to grow at a modest pace
3.2.5 Air force capital expenditure budget to double over the forecast period
3.2.6 Naval expenditure on new acquisitions expected to grow steadily following a decline in the review period
3.2.7 Defense intelligence capital expenditure to reach US$XX.XX million by 2016
3.3 Homeland Security Market Size and Forecast
3.3.1 Homeland security market expected to grow at a CAGR of XX.XX% in the forecast period
3.3.2 Rising threat of global terrorism could affect the country, though threat level is currently low
3.3.3 South Africa faces minimal threat from foreign terrorist organizations
3.4 Benchmarking with Key Global Markets
3.4.1 South African defense expenditure expected to remain modest compared to leading spenders
3.4.2 The country will continue to be a small player in the global defense market
3.4.3 South African defense expenditure as a percentage of GDP is lower than the majority of leading defense spenders
3.4.4 South Africa has a moderate per-capita defense expenditure
3.4.5 South Africa faces negligible threat from foreign terrorist organizations
3.4.6 South Africa ranked XXth among top arms importing countries for the review period
3.4.7 South Africa ranked XXth among top arms exporting countries for the review period
3.5 Market Opportunities: Key Trends and Drivers
3.5.1 Demand for monitoring and security equipment to increase
3.5.2 Greater demand for unmanned aerial vehicles (UAVs)
3.5.3 Increased demand for military transport fleet is expected
3.5.4 Demand for maritime patrol and surveillance equipment to increase
3.5.5 Government plan to enhance landward capability to offer attractive opportunities
3.5.6 Demand for survey vessels provides opportunities for investors
3.5.7 Aviation security is one of the key focus areas in homeland security
4 Defense Procurement Market Dynamics
4.1 Import Market Dynamics
4.1.1 Defense imports value has declined considerably over the last three years
4.1.2 In 2010, Sweden and Israel replaced Germany as the highest arms exporters to South Africa
4.1.3 Aircraft, surveillance and patrol ships constitute major import categories
4.2 Export Market Dynamics
4.2.1 Defense export value grew significantly in the review period
4.2.2 US was the biggest importer of arms from South Africa
4.2.3 Armored vehicles constitute the major export category
5 Industry Dynamics
5.1 Five Forces Anlysis
5.1.1 Bargaining power of supplier: Low
5.1.2 Bargaining power of Buyer: High
5.1.3 Barrier to entry: Medium
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 Offset policy ensures support for local companies
6.1.2 Foreign direct investment (FDI) is channeled to benefit local business
6.2 Market Entry Route
6.2.1 Foreign OEMs find alternative routes into the market
6.2.2 Joint ventures and collaborations provide market entry opportunities
6.3 Key Challenges
6.3.1 Corruption and bribery
6.3.2 Small market size discourages significant investment
6.3.3 Lack of transparency
6.3.4 Lack of relevant defense policy
7 Competitive landscape and Strategic Insights
7.1 Competitive landscape Overview
7.2 Key Public Sector Companies
7.2.1 Denel: overview
7.2.2 DENEL: Major Products and Services
7.2.3 DENEL: recent announcements and strategic initiatives
7.2.4 DENEL: alliances
7.2.5 DENEL: recent contract wins
7.2.6 Denel: financial analysis
7.2.7 Ansys Limited: overview
7.2.8 Ansys Limited: Major Products and Services
7.2.9 Ansys Limited: recent announcements and strategic initiatives
7.2.10 Ansys Limited: alliances
7.2.11 Ansys Limited: Recent Contract Wins
7.2.12 Ansys Limited: financial analysis
7.3 Key Private Sector Companies
7.3.1 Reutech: overview
7.3.2 Reutech: products and services
7.3.3 Reutech: recent announcements and strategic initiatives
7.3.4 Reutech: alliances
7.3.5 Reutech: recent contract wins
7.3.6 Reutech: financial analysis
7.3.7 Saab Grintek: overview
7.3.8 Saab Grintek: products and services
7.3.9 Saab Grintek: recent announcements and strategic initiatives
7.3.10 Saab Grintek: alliances
7.3.11 Saab Grintek: recent contract wins
7.3.12 Saab Grintek: financial analysis
7.3.13 Land Systems South Africa: overview
7.3.14 Land Systems South Africa: products and services
7.3.15 Land Systems South Africa: recent announcements and strategic initiatives.
7.3.16 Land Systems South Africa: alliances
7.3.17 Land Systems South Africa: recent contract wins
7.3.18 Land systems South Africa: financial analysis
7.3.19 IVEMA: overview
7.3.20 IVEMA: products and services
7.3.21 IVEMA: recent announcements and strategic initiatives
7.3.22 IVEMA: recent announcements and strategic initiatives
7.3.23 IVEMA: recent contract wins
7.3.24 IVEMA: financial analysis
7.3.25 Aerosud: overview
7.3.26 Aerosud: products and services
7.3.27 Aerosud: recent announcements and strategic initiatives
7.3.28 Aerosud: alliances
7.3.29 Aerosud: recent contract wins
7.3.30 Aerosud: financial analysis
7.3.31 Turbomeca Africa: overview
7.3.32 Turbomeca Africa: products and services
7.3.33 Turbomeca Africa: recent announcements and strategic initiatives
7.3.34 Turbomeca Africa: alliances
7.3.35 Turbomeca Africa: recent contract wins
7.3.36 Turbomeca Africa: financial analysis
7.3.37 Global Armour: overview
7.3.38 Global Armour: products and services
7.3.39 Global Armour: recent announcements and strategic initiatives
7.3.40 Global Armour: alliances
7.3.41 Global Armour: recent contract wins
7.3.42 Global Armour: financial analysis
7.3.43 Milkor (Pty) Ltd: overview
7.3.44 Milkor (Pty) Ltd: products and services
7.3.45 Milkor (Pty) Ltd: recent announcements and strategic initiatives
7.3.46 Milkor (Pty) Ltd: alliances
7.3.47 Milkor (Pty) Ltd: recent contract wins
7.3.48 Milkor (Pty) Ltd: financial analysis
7.3.49 Advanced Technologies and Engineering: overview
7.3.50 Advanced Technologies and Engineering: products and services
7.3.51 Advanced Technologies and Engineering: recent announcements and strategic initiatives
7.3.52 Advanced Technologies and Engineering: alliances
7.3.53 Advanced Technologies and Engineering: recent contract wins
7.3.54 Advanced Technologies and Engineering: financial analysis
7.3.55 Tellumat Defense: overview
7.3.56 Tellumat Defense: products and services
7.3.57 Tellumat Defense: recent announcements and strategic initiatives
7.3.58 Tellumat Defense: alliances
7.3.59 Tellumat Defense: recent contract wins
7.3.60 Tellumat Defense: financial analysis
8 Business Environment and Country Risk
8.1 Business Confidence
8.1.1 Business confidence indicator
8.1.2 Market capitalization trend - Johannesburg stock exchange, South Africa
8.1.3 FDI inflows by sector
8.1.4 Deployment of credit by sector
8.2 Economic Performance
8.2.1 GDP at constant prices (US dollars)
8.2.2 GDP per-capita at constant prices (US dollars)
8.2.3 GDP at current prices (US dollars)
8.2.4 GDP per-capita at current prices (US dollars)
8.2.5 GDP split by key segments
8.2.6 Agriculture net output at current prices (South African rand)
8.2.7 Agriculture net output at current prices (US dollars)
8.2.8 Agriculture net output at current prices as percentage of GDP
8.2.9 Manufacturing net output at current prices (South African rand)
8.2.10 Manufacturing net output at current prices (US dollars)
8.2.11 Manufacturing net output at current prices as percentage of GDP
8.2.12 Mining, manufacturing and utilities net output at current prices (South African rand)
8.2.13 Mining, manufacturing and utilities at current prices (US dollars)
8.2.14 Mining, manufacturing and utilities at current prices, as percentage of GDP
8.2.15 Construction net output at current prices (South African rand)
8.2.16 Construction net output at current prices, (US dollars)
8.2.17 Construction net output at current prices as a percentage of GDP
8.2.18 Crude steel production
8.2.19 Crude oil consumption
8.2.20 Inflation rate
8.2.21 Fiscal balance as a percentage of GDP
8.2.22 Current account balance as a percentage of GDP
8.2.23 Exports as a percentage of GDP
8.2.24 Imports as a percentage of GDP
8.2.25 Exports growth
8.2.26 Imports growth
8.2.27 External debt as a percentage of GDP
8.2.28 Annual average exchange rate US$–ZAR
8.2.29 End of the period exchange rate US$–ZAR
8.2.30 Debt service ratio
8.3 Infrastructure Quality and Availability
8.3.1 Railways and roadways
8.3.2 Passenger vehicle production volume
8.3.3 Commercial vehicle production volume
8.3.4 Automotive components exports trend
8.3.5 Automotive components imports trend
8.3.6 Passenger car penetration
8.3.7 Total installed capacity for electricity generation
8.3.8 Installed capacity for the generation of conventional thermal electricity
8.3.9 Electricity production
8.3.10 Installed capacity for the generation of hydro–electricity
8.3.11 Installed capacity for renewable electricity generation
8.3.12 Electricity consumption
8.3.13 Electricity exports
8.3.14 Electricity imports
8.3.15 Healthcare expenditure
8.3.16 Healthcare expenditure as percentage of GDP
8.3.17 Healthcare expenditure per-capita
8.3.18 Total internet subscribers
8.3.19 Broadband internet subscribers
8.3.20 Personal computer penetration rate
8.3.21 Mobile phone penetration rate
8.3.22 R&D expenditure as a percentage of GDP
8.4 Labor Force
8.4.1 Labor force
8.4.2 Unemployment rate
8.5 Demographics
8.5.1 Annual disposable income
8.5.2 Annual per-capita disposable income
8.5.3 Annual consumer expenditure on food
8.5.4 Annual per-capita consumer expenditure on food
8.5.5 Total population
8.5.6 Urban and rural population
8.5.7 Female percentage of population
8.5.8 Male percentage of population
8.5.9 Mean age of population
8.5.10 Median age of population
8.5.11 Population density
8.5.12 Age distribution of the total population
8.5.13 Age distribution of the male population
8.5.14 Age distribution of the female population
8.5.15 Number of households
8.6 Political and Social Risk
8.6.1 Political stability
8.6.2 Terrorism index
8.6.3 Transparency index
9 Appendix
9.1 Contact Us
9.2 About ICD Research
9.3 Disclaimer

List of Tables

Table 1: South African Defense Expenditure (2005–2010)
Table 2: South African Defense Expenditure (2011–2016)
Table 3: Defense Expenditure as a % of GDP (2005–2010)
Table 4: Defense Expenditure as a % of GDP (2011–2016)
Table 5: South African Defense budget Split between Capital and Revenue Expenditure (2005–2010)
Table 6: South African Defense budget Split between Capital and Revenue Expenditure (2011–2016)
Table 7: South African Defense Capital Budget Allocation (2005–2010)
Table 8: South African Defense Budget Allocation (2011–2016)
Table 9:South African Defense Capital Expenditure (2005–2010)
Table 10: South African Defense Capital Expenditure (2011–2016)
Table 11:South African Air Force Capital Expenditure (2005–2010)
Table 12:South African Air Force Capital Expenditure (2011–2016)
Table 13:South African Naval Capital Expenditure (2005–2010)
Table 14:South African Naval Capital Expenditure (2011–2016)
Table 15:South African Defense Intelligence Capital Expenditure (2005–2010)
Table 16: South African Defense Intelligence Capital Expenditure (2011–2016)
Table 17: South African Homeland Security Expenditure (2005–2010)
Table 18: South African Homeland Security Expenditure (2011–2016)
Table 19: Benchmarking with Key Markets - 2005–2010 vs 2011–2016
Table 20: Benchmarking with Large Defense Spenders in the World - 2010 and 2016
Table 21: ICD Research Terrorism Index
Table 22: Top Country Ranking by Arms Imports by Volume, (2005–2010)
Table 23: Top Country Ranking by Arms Exports by Volume, (2005–2010)
Table 24: Offset Regulations in South Africa
Table 25: Methodology for Offset Credits
Table 26: DENEL, Major Products & Services
Table 27: DENEL Alliances
Table 28: Denel recent contract wins
Table 29: Ansys Limited, Major Products & Services
Table 30: Ansys Limited , Alliances
Table 31: Ansys Limited , recent contract wins
Table 32: Reutech Major Products & Services
Table 33: Reutech Alliances
Table 34: Reutech Major Products & Services
Table 35:Saab Grintek, Alliances
Table 36: Saab Grintek, Recent Contract Wins
Table 37: Reutech Major Products & Services
Table 38:Land Systems South Africa, Alliances
Table 39: Land Systems South Africa, recent contract wins
Table 40: IVEMA Major Products & Services
Table 41: IVEMA, recent contract wins
Table 42: Aerosud Major Products & Services
Table 43:Aerosud, Alliances
Table 44: Aerosud, recent contract wins
Table 45: Turbomeca Africa Major Products & Services
Table 46:Turbomeca Africa, Alliances
Table 47: Turbomeca Africa, recent contract wins
Table 48: Global Armour: Major Products & Services
Table 49:Global Armour, Alliances
Table 50: Milkor (Pty), Major Products & Services
Table 51: Milkor (Pty), Ltd: recent contract wins
Table 52: Advanced Technologies and Engineering, Major Products & Services
Table 53: Advanced Technologies and Engineering, recent contract wins
Table 54: Tellumat Defense, Major Products & Services
Table 55: Tellumat Defense, Alliances
Table 56: Tellumat Defense, recent contract wins


List of Figures

Figure 1: South African Defense Expenditure (2005–2010)
Figure 2: South African Defense Expenditure (2011–2016)
Figure 3: Defense Expenditure as a % of GDP (2005–2010)
Figure 4: Defense Expenditure as a % of GDP (2011–2016)
Figure 5: South African Defense budget Split between Capital and Revenue Expenditure (2005–2010)
Figure 6: South African Defense budget Split between Capital and Revenue Expenditure (2011–2016)
Figure 7: South African Defense Budget Allocation (2005–2010)
Figure 8: South African Defense Budget Allocation (2011–2016)
Figure 9: South African Defense Budget and Capital Expenditure Share for Army, Navy, and Air force–2011
Figure 10: South African Defense Capital Expenditure (2005–2010)
Figure 11: South African Defense Capital Expenditure (2011–2016)
Figure 12: South African Air Force Capital Expenditure (2005–2010)
Figure 13: South African Air Force Capital Expenditure (2011–2016)
Figure 14: South African Naval Capital Expenditure (2005–2010)
Figure 15: South African Naval Capital Expenditure (2011–2016)
Figure 16: South African Defense Intelligence Capital Expenditure (2005–2010)
Figure 17: South African Defense Intelligence Capital Expenditure (2011–2016)
Figure 18: South African Homeland Security Expenditure (2005–2010)
Figure 19: South African Homeland Security Expenditure (2011–2016)
Figure 20: ICD Research Terrorism Heat Map
Figure 21: Benchmarking with Key Markets - 2005–2010 vs 2011–2016
Figure 22: Benchmarking with Large Defense Spenders in the World - 2010 and 2016
Figure 23: Benchmarking with Large Defense Spenders as % of GDP - 2010 and 2016
Figure 24: Benchmarking with Large Defense Spenders on per-capita basis - 2010 and 2016
Figure 25: South African Defense imports TIV value (US$ Million), 2005–2010
Figure 26: South African Defense Imports TIV Value by Country (US$ Million), 2005–2010
Figure 27: South African Defense Imports by Country (%), 2006–2010
Figure 28: South African Defense Imports by Country (%), 2006–2010 and 2010
Figure 29: South African Defense Exports (US$ Million), 2006–2010
Figure 30: South AfricanDefense Exports by region (%), 2005-2010 and 2010
Figure 31: South African Defense Exports share by country (US$ Million), 2006–2010
Figure 32: South African Defense Exports by Category (%), 2006–2010
Figure 33: Industry Dynamics – Porter’s Five Forces Analysis
Figure 34: Denel –Revenue Trend Analysis (2006–2010)
Figure 35: Denel –Operating Profit Trend Analysis (2006–2010)
Figure 36: Denel –Net Profit Trend Analysis (2006-2010)
Figure 37: Ansys Limited –Revenue Trend Analysis (2006–2010)
Figure 38: Ansys Limited –Operating Profit Trend Analysis (2006–2010)
Figure 39: Ansys Limited –Net Profit Trend Analysis (2006–2010)
Figure 40: South African Business Confidence Indicator, Q12008–Q32010
Figure 41: Johannesburg Stock Exchange Market Capitalization (US$ Billion), 2003–2009
Figure 42: South African FDI Inflows by Sector (US$ Billion), 2003–2008
Figure 43: South African Deployment of Credit by Sector (US$ Billion), 2003–2009
Figure 44: South African GDP at Constant Prices (US$ Billion), 2003–2015
Figure 45: South African GDP Per-Capita at Constant Prices (US$), 2003–2015
Figure 46: South African GDP at Current Prices (US$ Billion), 2003–2015
Figure 47: South African GDP Per-Capita at Current Prices (US$), 2003–2015
Figure 48: South African GDP Split by Key Segments (%) 2003 and 2007
Figure 49: South African Agriculture Net Output at Current Prices (ZAR Billion), 2003–2015
Figure 50: South African Agriculture Net Output at Current Prices (US$ Billion), 2003–2015
Figure 51: South African Agriculture Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 52: South African Manufacturing Net Output at Current Prices (ZAR Billion), 2003–2015
Figure 53: South African Manufacturing Net Output at Current Prices (US$ Billion), 2003–2015
Figure 54: South African Manufacturing Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 55: South African Mining, Manufacturing and Utilities Net Output at Current Prices (ZAR Billion), 2003–2015
Figure 56: South African Mining, Manufacturing and Utilities Net Output at Current Prices (US$ Billion), 2003–2015
Figure 57: South African Mining, Manufacturing and Utilities Net Output at Current Prices as a percentage of GDP (%), 2003–2015
Figure 58: South African Construction Net Output at Current Prices (ZAR Billion), 2003–2015
Figure 59: South African Construction Net Output at Current Prices (US$ Billion), 2003–2015
Figure 60: South African Construction Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 61: South African Crude Steel Production (Million Metric Tons), 2003–2015
Figure 62: South African Crude Oil Consumption (Million Tons), 2003–2015
Figure 63: South African Inflation Rate (%), 2003–2015
Figure 64: South African Fiscal Balance as a Percentage of GDP(%), 2003–2009
Figure 65: South African Current Account Balance as a Percentage of GDP (%), 2003–2009
Figure 66: South African Exports as a Percentage of GDP (%), 2003–2015
Figure 67: South African Imports as a Percentage of GDP (%), 2003–2015
Figure 68: South African Exports Growth (%), 2003–2015
Figure 69: South African Imports Growth(%), 2003–2015
Figure 70: South African External Debt as a Percentage of GDP (%), 2003–2008
Figure 71: South African Annual Average Exchange Rate US$–ZAR, 2003–2009
Figure 72: South African End of the Period Exchange Rate US$–ZAR, 2003–2009
Figure 73: South Africa Debt Service Ratio (%), 2003–2009
Figure 74: South African Railways and Roadways (Kilometers), 2009
Figure 75: South African Passenger Vehicle Production (Units), 2003–2015
Figure 76: South African Commercial Vehicle Production (Units), 2003–2015
Figure 77: South African Automotive Components Exports (US$ Billion), 2003–2015
Figure 78: South African Automotive Components Imports (US$ Billion), 2003–2015
Figure 79: South African Passenger Car Penetration (per 1000 people), 2003–2015
Figure 80: South African Total Installed Capacity for Electricity Generation (Million Kilowatts), 2003–2015
Figure 81: South African Installed Capacity for the Generation of Conventional Thermal Electricity (Million Kilowatts), 2003–2015
Figure 82: South African Electricity Production (Billion Kilowatts Hours), 2003–2015
Figure 83: South African Installed Capacity for the Generation of Hydro–electricity (Million Kilowatts), 2003–2015
Figure 84: South African Installed Capacity for the Generation of Renewable Electricity (Million Kilowatts), 2003–2015
Figure 85: South African Electricity Consumption (Billion Kilowatt Hours), 2003–2015
Figure 86: South African Electricity Exports (Billion Kilowatts Hours), 2003–2015
Figure 87: South African Electricity Imports (Billon Kilowatts Hours), 2003–2015
Figure 88: South African Healthcare Expenditure (US$ Billion), 2003–2015
Figure 89: South African Healthcare Expenditure as a Percentage of GDP (%), 2003–2015
Figure 90: South African Per-Capita Healthcare Expenditure (US$), 2003–2015
Figure 91: South African Internet Subscriptions (Millions), 2003–2015
Figure 92: South African Broadband Internet Subscriptions (Millions), 2003–2015
Figure 93: South African Personal Computer Penetration Rate (per 100 people), 2003–2015
Figure 94: South African Mobile Phone Penetration (%), 2003–2015
Figure 95: South African R&D Expenditure as a Percentage of GDP (%), 2003–2015
Figure 96: South African Size of Labor Force in 15–59 Age Group (Million), 2003–2015
Figure 97: South African Unemployment Rate (%), 2003–2015
Figure 98: South African Annual Disposable Income (US$ Billion), 2003–2015
Figure 99: South African Annual Per-Capita Disposable Income (US$), 2003–2015
Figure 100: South African Consumer Expenditure on Food (US$ Billion), 2003–2015
Figure 101: South African Annual Per-Capita Consumer Expenditure on Food (US$), 2003–2015
Figure 102: South African Total Population (Million), 2003–2015
Figure 103: South African Urban and Rural Population (%), 2003–2015
Figure 104: South African Female as Percentage of Population (%), 2003–2015
Figure 105: South African Male as Percentage of Population (%), 2003–2015
Figure 106: South African Mean Age of Population (Years), 2003–2015
Figure 107: South African Median Age of Population (Years), 2003–2015
Figure 108: South African Population Density (per Square Kilometer), 2003–2015
Figure 109: South African Population Distribution by Age (%), 2003–2015
Figure 110: South African Male Population Distribution by Age (%), 2003–2015
Figure 111: South African Female Population Distribution by Age (%), 2003–2015
Figure 112: South African Households, Number of (Million), 2003–2015
Figure 113: Global Terrorism Heat Map, 2010
Figure 114: South African Transparency Index, 2003–2009

Defense Industry in World