Japan arms industry will learn from submarine setback

Subject

Japan's failure in an Australian submarine procurement deal.

Significance

Canberra has awarded a 39-billion-dollar submarine contract to the French firm DCNS despite a Mitsubishi-Kawasaki consortium bid from Japan being seen as the front-runner. The surprise loss is a blow to Japan's arms export push and highlights the difficulty of entering the higher end of the global arms market, and the steep learning curve required to compete successfully.

Impacts

• Tokyo will expand the number of bilateral defence technology agreements.
• India may be the next priority market for Japanese arms exports.
• Japan-Australia security ties will remain strong and are likely to strengthen.
• Joint development projects with firms from other countries may become more attractive.