paper 28 Restructuring of Korea’s Defense Aerospace Industry Challenges and opportunities? Restructuring of Korea’s Defense Aerospace Industry Challenges and opportunities? by Myeong-Chin Cho Published by ©BICC, Bonn 2003 Bonn International Center for Conversion Director: Peter J. Croll An der Elisabethkirche 25 D-53113 Bonn Germany Phone: +49-228-911960 Fax: +49-228-241215 E-mail:
[email protected] Internet: www.bicc.de Table of contents Table of contents Acronyms and Abbreviations 5 Acknowledgements 6 1. Introduction 7 2. Security Environment in Terms of Air Power Context 9 2.1 The Context of Air Power 10 2.2 Reshaping ROK’s Air Power 12 2.3 Air Power of North Korea 13 2.4 Balance of Air Power in East Asia 14 3. Period before Korea Aerospace Industries, Ltd. 16 3.1 Korea Air’s Dominance Period (1976–1983) 19 3.2 Rivalry and Competition Period (1984–1993) 20 3.3 Samsung’s Emergence and Consolidation Period (1992–1999) 22 3.4 Comparative Analysis on Corporate Strategies of Four Aircraft Firms 25 3.4.1 Korean Air 25 3.4.2 Daewoo Heavy Industries 27 3.4.3 Samsung Aerospace Industries 32 3.4.4 Hyundai Space & Aircraft 40 4. KAI’s Establishment 42 4.1 Background of KAI’s Birth 43 4.2 KAI’s Challenges 44 Table of contents 4.3 KAI’s Businesses 45 4.3.1 T-50 Golden Eagle (previously KTX-2) 45 4.3.2 The KT-1 basic trainer 47 4.3.3 Others 49 5. Analysis of Next-generation Fighter (F-X) Selection Process 51 5.1 Background 51 5.2 A Comparative Analysis on Marketing Strategies of Four Bidders 53 5.2.1 Boeing 53 5.2.2 Dassault 56 5.2.3 Rosoboronexport 56 5.2.4 European Consortium 56 5.3 Final Decision 59 5.3.1 Offset Package 59 5.3.2 Announcement of the FX winner 60 5.3.3 Price Re-negotiation 62 5.3.4 Concluding Remarks 63 6.