U.S. Defense Firms Falter in Asia

The Wall Street Journal

31 May 2015

SINGAPORE—Surging military spending across Asia has made it the world’s second-biggest region for such spending over the past decade, but U.S. companies, the biggest sellers of military equipment, are struggling to take full advantage of that growth, even as revenues back home stagnate.

Demand in Asia for defense equipment—and calls for greater U.S. military involvement—have grown as China’s display of military might in the South China Sea intensifies regional tensions.

Total global spending on defense in 2014 was $1.719 trillion, of which Asia and Oceania contributed $423 billion, or 25%, behind only North America’s $596 billion, according to the Stockholm International Peace Research Institute. The figures are calculated using a 2011 base dollar value.

The total for Asia was over $30 billion more than Europe, which it leapfrogged for the No. 2 spot compared with the previous 10-year period, and up 62% over the past decade. China—a closed market for U.S. defense companies because of a long-standing arms embargo—accounted for $208 billion of the Asia and Oceania total, spurring its neighbors to boost their spending. Asia and Oceania bought 48% of the weaponry that U.S. companies exported during that period, up from 39% in 2009.

… “They can’t turn on a dime and suddenly come up with foreign products,” said Richard Bitzinger of the S. Rajaratnam School of International Studies in Singapore.

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