Japan's defence industry and dual-use technology sectors have experienced significant growth and transformation in recent years. As Japan bolsters its defence capabilities and adapts to evolving security challenges, it is increasingly turning to “dual-use” solutions to address its needs.
The Kishida government is also looking to quickly build and deepen relationships in the region with an eye to practical cooperation and collaboration to leverage technology to maintain a free and open Indo-Pacific.
The Japanese defence and dual-use technology sector offers promising opportunities for collaboration with Australia, among others.
It is essential for governments, industry stakeholders, and research institutions to foster closer ties and explore mutually beneficial partnerships in this rapidly evolving landscape.
Emerging Trends in Japan's Defence Industry
Japan’s highly industrialised market economy is one of the largest in the world. Its domestic workforce is well-educated, and its large, relatively affluent population makes it one of the world’s largest consumer markets.
In the face of rising competition from the People’s Republic of China, the Republic of Korea and others, Japanese firms are increasingly diversifying their manufacturing processes by building global value chains and acquiring foreign companies.
While Japan has traditionally relied on imports for much of its defence equipment, in recent years, there has been a competitive effort to develop indigenous defence capabilities from Japan’s existing industrial base.
The Japanese national and regional governments and private sector have increased investment in research and development (R&D) initiatives in defence technologies and dual-use applications of commercial products. We have also seen greater support for enhanced R&D cooperation between Japan, the US and Australia by the three defence ministers at the recent Trilateral Defence Minister’s Meeting (TDMM).
This political support is positive; however, it will require a combined effort across industry, academia, and private capital providers to fully realise the vision.
Secure data sharing will be required especially on the Japanese side, something that the Japanese government has acknowledged as a key challenge. As a result, the government has been investing in technologies related to cybersecurity, information technology, and data analytics. These technologies are not only critical for defending against cyber threats but also have applications in critical infrastructure sectors such as finance, healthcare, and telecommunications.
Japan has also been increasingly exploring dual-use technologies – technologies with both military and civilian applications. This includes areas such as artificial intelligence, robotics, unmanned systems, advanced materials, and space technologies. The use of dual-use technologies offer the potential for cost savings, innovation, and cross-sector collaboration compared to traditional defence acquisition programs.
Opportunities for Collaboration with Australian Industry
There has been cooperation in R&D between Japan and the US, and more recently with Australia, for some time but this step highlights the importance of this collaborative approach to meet the geopolitical challenges faced in the region.
Australia offers experience in aerospace, hypersonics, quantum, uncrewed aerial vehicles (UAV) (particularly long-range, heavy lift), uncrewed underwater vessels (the Advanced Strategic Capabilities Accelerator, for example, is rapidly progressing the Ghost Shark program) and others.
Collaboration between Japanese and Australian companies could also facilitate supply chain integration and promote greater interoperability between defence systems. Strategic steps forward could include joint manufacturing, component sourcing agreements, and logistics partnerships to streamline production and reduce costs.
These joint capabilities are rapidly becoming a priority for the Japanese government as well as the US Indo-Pacific Command (INDOPACOM). Contested logistics and secure data sharing will be key challenges that all three nations face in the region. The good news is that there are already several initiatives underway to meet this challenge and will increase with practical outcomes going forward.
Finally, collaborative projects between Japanese and Australian, and trilaterally with the US or others, companies could also create opportunities for joint export ventures.
Japan: an unknown market
The development of the Australia-Japan defence and security relationship has been an incremental one compared with the economic and trade relationship. This is understandable for numerous reasons on both sides and is often the nature of international defence engagement. However, the current geopolitical pressures are forcing change – quickly.
Australia and Japan have a strong and broad-ranging security relationship. Japan describes Australia as its most important security partner after our common ally, the US. The 2007 Joint Declaration on Security Cooperation provided a foundation for wide-ranging cooperation on security issues between Australia and Japan. This was strengthened with the renewed Joint Declaration on Security Cooperation (JDSC) issued by Prime Minister Albanese and Prime Minister Kishida in October 2022 deepened and expanded cooperation to respond to the most pressing security challenges in our region.
The signing of a Reciprocal Access Agreement (RAA) in January 2022 further deepened our strategic and security relationship. The RAA entered into force on 13 August 2023. This agreement will facilitate even deeper collaboration on joint defence exercises and humanitarian and disaster support.
They now need to lift practical cooperation in the dual-use and defence technology sectors.
Japan hasn’t traditionally been a key market for Australian defence industry and dual-use technology companies. This has largely been due to the self-imposed constraints the Japanese government has had since the end of WWII.
It is only recently that the Japanese government has taken the first regulatory and policy steps to facilitate industry cooperation both ways. For Japan watchers, this has happened at remarkable speed and the government is committed to undertaking the necessary reforms required to ‘normalise’ Japan as a global defence industry partner.
There have been attempts at defence industry cooperation, such as the proposed acquisition of the Soryu-class submarine in 2013-14, though this effort failed for a range of reasons on both sides.
In the current geopolitical environment, and with growing support for deeper trilateral and multilateral engagement with Japan, Australian companies who are ready to work with Japan will have an ideal market position. Demand will continue to expand for Australian-Japanese dual-use technology collaboration with Allied Nations driving those requirements across sectors including defence, humanitarian assistance and disaster relief, critical infrastructure and maritime security, and global pandemic resilience.
Bernice Kissinger is a Senior Fellow with the Australian Strategic Policy Institute, a Strategic Advisor to Armatus which specialises in dual-use technology in Japan and has been working in the defence technology and innovation space in Japan and the US for decades.