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Japan to buy defense tech to prevent leaks from failing companies

  • February 22, 2022
  • , Nikkei Asia
  • English Press

TOKYO — The Japanese government will offer to buy technical documents related to defense technologies from companies that are withdrawing from the business to prevent the leakage of such information, Nikkei learned on Monday.

 

The government will acquire and provide such documents free of charge to other Japanese companies capable of taking over defense supplies. The initiative is set to begin this year.

 

The government plans to buy the information from companies withdrawing from defense supplies due to business problems or factory closures. It reflects an increase in the number of medium- and small-sized companies looking to exit the defense industry.

 

If these companies are acquired by foreign companies, sensitive information such as the capabilities of Japanese weapons systems could fall into the wrong hands. The government believes such a risk can be mitigated if a defense supplier can find a company to take over its business.

 

In May 2021, a Chinese company managed to get the designs of some components of machine guns used by Japanese troops. The components were developed by Sumitomo Heavy Industries and its Japanese subcontractor passed those documents to the Chinese company.

 

Separately, a Chinese company was found to have acquired shares of a Japanese company that makes submarine antennae.

 

The risk of technology leakage is considered greater among SMEs, companies in financial trouble, and those that are restructuring. That has led the government to look at ways to acquire those businesses temporarily to prevent such leakage.

Defense equipment includes a wide range of products, such as fighter jets, ships, communication and information systems that require hundreds of thousands of components. As many as 1,000 manufacturers can be involved in the making of just one fighter jet, and more than 7,000 companies for a ship.

 

Under the government’s plans, a company that leaves the defense business will be required to hand in design documents they own. Those documents will be examined by the Ministry of Defense for technological significance. If the ministry judges that the papers require protection, then it will negotiate a purchase.

 

The defense ministry will select a domestic defense contractor capable of inheriting the technology.

 

The government is seeking 1 billion yen ($8.7 million) for the initiative from the state budget for fiscal 2022 starting in April.

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