Canada's next-generation submarine project, valued at approximately 60 trillion won, has been awarded to Germany's TKMS, marking another setback for Hanwha Ocean in securing large overseas defense contracts. Following a similar disappointment with Poland's ORKA project, the export strategy led by Hanwha Group Vice Chairman Kim Dong-kwan is now under increased scrutiny.
According to the defense industry on July 7, the Canadian government has selected TKMS as the preferred bidder for the CPSP, a project aimed at acquiring up to 12 new diesel submarines.
The CPSP is intended to replace Canada's Victoria-class submarines, which are set to retire in the mid-2030s. The project involves constructing up to 12 submarines, and when factoring in maintenance, repair, and operational costs over the next 30 years, the total project value is estimated at around 60 trillion won, roughly three times the amount of South Korea's defense export contracts last year.
South Korea made significant efforts to win this contract, including sending the submarine Dosan Ahn Chang-ho to Canada for demonstrations, with full support from both the public and private sectors.
Hanwha Ocean, which led the project, proposed a rapid delivery timeline with the first submarine expected by 2032 and projected an economic impact of about 70 billion Canadian dollars (approximately 75 trillion won) by 2044. Kim Dong-kwan also participated in the G7 summit in Evian, France, as part of a government defense delegation to bolster support, but ultimately, the bid did not succeed.
Industry analysts suggest that the outcome of this bidding process hinged more on political and diplomatic considerations than on technological capabilities. While TKMS offered the 212CD submarine, which is part of a multinational project and lacks operational deployment examples, South Korea showcased its latest operational submarines.
Ultimately, the structural advantage of Germany being a NATO member played a significant role in the final decision. Canada has been pursuing a strategy to reduce its reliance on U.S. military equipment while enhancing security cooperation with European allies.
In a statement, Hanwha Ocean acknowledged, "We approached this project with a diligent attitude, but ultimately could not overcome the high barrier of NATO alliances."
This setback presents a considerable challenge for Vice Chairman Kim Dong-kwan, who has focused on expanding Hanwha's defense exports through Hanwha Aerospace and enhancing maritime defense capabilities via Hanwha Ocean.
However, the consecutive losses in securing large overseas contracts highlight the urgent need for Hanwha Ocean to establish a solid reference in the global naval market. Currently, Indonesia remains the only country to have imported submarines from Hanwha Ocean.
Experts agree that to consistently build export performance, the K-defense export strategy must evolve. They emphasize the need to move beyond competing solely on technology and price, advocating for a "package strategy" that considers the security environment, diplomatic relations, and industrial cooperation of the target countries.
Nam Sung-wook, a professor at Korea University, stated, "Strategic weapons are heavily influenced by political and security judgments between countries. For weapon systems like submarines, where technology is similar, factors such as alliance relationships, security cooperation, and diplomatic trust often determine the final contract award." He added, "In the future, customized strategies that take into account the security environment and industrial cooperation needs of each country will be necessary. This outcome should not be viewed solely as a failure but rather as a realistic acknowledgment of the situation and a process of building overseas export performance and trust over the long term."
* This article has been translated by AI.
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