[Yang Nak-gyu's Defence Club] Will the Defense Exhibition That Kills Defense Companies Ultimately Be Held?

As the novel coronavirus disease (COVID-19) continues to spread worldwide, the defense industry exhibition 'DX Korea 2020' is expected to proceed as scheduled next month.

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] Amid the global spread of the novel coronavirus infection (COVID-19), the defense industry exhibition 'DX Korea 2020' is expected to proceed next month. The defense industry is distressed, saying they have no choice but to participate reluctantly as even the Army, the main user of weapons, is encouraging participation.

According to military officials on the 21st, the defense exhibition 'DX Korea' is hosted by the Army Association and organized by DXK Co., Ltd. On this day, officials from DXK Co., Ltd., the Army Association, the Army Headquarters Event Support Team, the Defense Acquisition Program Administration's International Cooperation Office, and the Ministry of National Defense's Power Policy Office will gather at Gyeryong Spatel in Daejeon to make a final decision on whether to proceed with this year's 'DX Korea' event. However, defense companies participating in the exhibition have been excluded from providing opinions on whether the exhibition will proceed this year. This is why the defense industry is raising their voices, saying it is effectively a decision to confirm the event while ignoring the objections of defense companies.

The reason the Army is pushing to proceed with 'DX Korea' is due to the revenue structure. DXK Co., Ltd., a private company, donates a portion of the profits earned from the exhibition each year to the Army Association as an Army Development Fund. Although DXK Co., Ltd. maintains that the amount donated to the Army Association is a business secret, it is known to be around 100 to 200 million KRW annually. To maintain this revenue structure, the current Army Chief of Staff is appointed as the Vice President of the Army Association and concurrently serves as the Chairman of the DX Korea Promotion Committee after completing their term.

In 2014, the Chief of the Planning and Management Staff at Army Headquarters caused controversy by sending official letters in his name to defense company representatives, pressuring them to participate in DX Korea hosted by the Army Association. This year as well, the Chairman of the DX Korea Promotion Committee reportedly sent letters directly to defense company representatives encouraging participation. Given this situation, defense companies, which must consider the military's stance, have no choice but to pay participation fees of 100 to 200 million KRW and take part in the event.

The government has also pointed out the inefficiency of the numerous defense exhibitions. When multiple defense exhibitions hosted by each military branch became rampant, the Prime Minister's Office instructed the military in 2008 to integrate the Ground Forces Festival, held by the Army every even year, and the 'Seoul International Aerospace and Defense Exhibition (Seoul ADEX),' held by the Air Force every odd year. This was because the exhibitions held by each military branch were small in scale and had low participation rates from overseas defense companies.

Nevertheless, the defense industry does not understand why various defense exhibitions are forced ahead every year. In particular, there are concerns that this year's 'DX Korea' will remain a domestic event as military officials and buyers from export target countries are unlikely to attend as expected. The organizers of the 'DX Korea' exhibition promoted that the largest number of overseas buyers, including chiefs of staff from various countries, would visit, but it is known that fewer than 11 countries will participate this year. Especially, Philippine officials are focusing more on visiting defense companies' factories rather than the exhibition itself, making the claim of buyer participation at the exhibition seem hollow. This year, the display of weapon systems deployed in the Army has been significantly reduced, and the mobile firepower demonstration has been canceled, so there is virtually nothing for overseas buyers to see at the exhibition.

The defense industry is already calling for a partial refund of the participation fees paid to DXK and the cancellation of the exhibition schedule. With social distancing continuing due to the spread of COVID-19 and major buyers from export target countries unlikely to visit Korea, they question the necessity of forcing the exhibition to proceed.

Kang Dae-sik, a member of the National Assembly's Defense Committee from the People Power Party, said, "With the number of invited countries and companies drastically reduced due to COVID-19, it is difficult to achieve the practical purpose of revitalizing the defense industry through the event," adding, "Since companies only bear the costs, it seems more appropriate to cancel the event from a broader perspective."

The Army stated, "The DX Korea defense exhibition is organized by the Army Association, and the Army participates as one of the sponsoring organizations, supporting part of the event," adding, "We are not involved in matters related to 'defense companies' participation in the exhibition.'"