This report is the result of SDI's extensive market and company research covering the Taiwanese defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.
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Introduction and Landscape
Why was the report written?
The Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Taiwanese defense industry.
What is the current market landscape and what is changing?
With a defense budget of US$10.5 billion in 2013, Taiwan is expected to cumulatively spend a US$59.2 billion on its military over the forecast period. The country's military expenditure is estimated to grow at a CAGR of 4.15% to reach US$12.9 billion by 2018, compared to 2.15% CAGR recorded during the review period. PRC's assertiveness with regards to territorial claims and the need to modernize Taiwan's armed forces to deter PRC from invading the country. In addition, Taiwan is expected to increase its allocation to capital expenditure to an average of 6.4% of its total defense budget, consequently reducing the share of revenue expenditure to 93.6% over the forecast period.
On a cumulative basis, the country is estimated to spend US$3.8 billion over the forecast period, compared to US$2.99 billion spent on procuring defense equipment during the review period. Taiwan is focusing on local development of submarines, missiles, air defense systems, and third generation fighter aircraft. Additionally, Taiwan is upgrading its F-16 A/B fleet to prolong their service life and equip them with modern radars and other equipment.
What are the key drivers behind recent market changes?
During 2014-2018, Taiwan is expected to spend US$59.2 billion on fulfilling its defense requirements. Factors such as a strained relationship with China and the acquisition of military hardware systems are anticipated to drive the country's military expenditure over the next five years.
What makes this report unique and essential to read?
The Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
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Key Features and Benefits
- The report provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
- The report includes trend analysis of imports and exports, together with their implications and impact on the Taiwanese defense industry.
- The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
- The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
- The report helps the reader to understand the competitive landscape of the defense industry in Taiwan. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Key Market Issues
- The growth of the Taiwanese defense industry is hampered by project delays associated with the global financial crisis, which have led to cost overruns and the cancellation of certain projects. Despite seeking to increase its defense budget to 3% of GDP, the country's 2011 defense budget is estimated at just 2.0% of GDP, primarily due to the financial constraints faced by the country. As a result, certain acquisition programs have either been postponed or cancelled. All these factors discourage investors from entering the Taiwanese defense market.
- Despite possessing the capabilities to manufacture and export small weapons to the global defense market, the country has been unsuccessful in establishing itself as an exporter of defense equipment. Countries such as Vietnam and Indonesia have expressed an interest in procuring Taiwanese gunpowder, but stringent regulations prevent the country from exporting gunpowder to these nations.
- Conflict arising out of the People's Republic of China (PRC)'s efforts to bring Republic of China (Taiwan) under its control has marred the relationship between both countries since the end of Chinese civil war. Both PRC and Taiwan have been claimants to the sovereignty over all of ""One China"", including mainland China, Outer Mongolia, and Taiwan since 1949. PRC considers Taiwan as its 23rd province and threatened to use military force if Taiwan tries to declare independence. PRC has a history of using missiles to intimidate Taiwan's government and increased the number of ballistic and cruise missiles deployed along the Taiwan Strait to more than 1,600 by 2012.
- Taiwan has been facing the issue of human trafficking for over a decade with men and children trafficked into the country for forced labor and women for sexual exploitation. People from China, Vietnam, and Cambodia are in the majority for exploitation by human trafficking gangs in the country. Cross strait human trafficking has been the major problem for Taiwan, as its ports have been used as transit points for victims being trafficked from China to the US. In 2012 only, the country identified 462 trafficking victims, of which 152 were victims of labor trafficking and 310 of sex trafficking, most of them Indonesian and Vietnamese. To prevent this, Taiwan will have to invest significantly in surveillance and intelligence technologies such as electronic identification documents, e-passports, automated border crossing systems, and CCTV (closed circuit television) systems during the forecast period.
- Taiwanese defense imports witnessed substantial growth during the period 2008-2012. Imports in 2008 and 2009 were low due to the delayed deliveries by the US, which was under the pressure from PRC. In 2009, to compensate for the delay of imports by the US, Taiwan started importing engines from Germany. The US resumed the exports of defense equipment to Taiwan from 2010 onwards, which peaked in 2012. Over the period 2013-2018, the US is expected to remain the largest exporter of defense equipment as other countries are reluctant to supply military equipment and antagonize PRC.