Rep. Kim Byung-joo of the Democratic Party and Rep. Yoo Yong-won of the People Power Party stressed that for K-defense to establish itself as a core national industry, the country must move beyond a conglomerate-centered structure and build a "Samsung-style defense ecosystem" in which small and mid-sized enterprises and startups grow together with large firms.
Kim diagnosed that K-defense's industrial ecosystem remains stuck in a "conglomerate-centered pyramid structure." "We need to elevate the current startup support programs to statutory programs and provide support for testing and evaluation costs, security certification, pilot operations, and export certification to lower entry barriers for small and medium-sized enterprises," he said.
Kim particularly stressed the need to build a "Samsung Electronics-style ecosystem" across the defense sector. "Samsung Electronics does not make semiconductors and smartphones on its own. It forms an ecosystem together with countless first- and second-tier suppliers and partner companies," he said. "The defense industry also needs to create a structure in which system-integrating conglomerates, mid-sized firms producing core components, startups with specialized technologies, and companies handling maintenance, testing and evaluation, security and software grow together."
Yoo also pointed out that conglomerates currently account for an excessively large share of the defense industry. "It is a structure in which the top 10 companies account for more than 75% of total sales," he said. "Although defense companies are recording unprecedented operating profit margins through exports, some small and mid-sized firms are still complaining of considerable difficulties."
Yoo also proposed efforts to lower entry barriers for ventures and startups. "While some startups have opportunities to participate through fast-track pilot projects, it takes considerable time before this leads to actual military adoption and generates revenue," he explained. "The defense innovation fund also needs to be supplemented in terms of size and operation," he stressed. "We need to establish a 'third track' that widens the window of opportunity for startups and venture firms."
