Export Controls and Localization of Korean Defense Production
2026.09.30.
Korean defense companies are moving beyond the export of finished products manufactured in Korea and increasingly pursuing localization, involving production facilities in the importing country, local suppliers, and the development of local maintenance and upgrade capabilities.
Poland’s K2 tank program illustrates this shift. Under the second implementation contract signed in 2025, 61 of the 64 K2PL tanks are expected to be produced in Poland. The Polish government has stated that the project encompasses technology transfer and the development of maintenance and operational capabilities, as well as the establishment of a production line. At the International Defence Industry Exhibition (MSPO) in September 2026, a K2 tank was displayed with a Mobile Camouflage System (MCS) made by a Polish company. The display shows how localization is progressing beyond assembly to the integration of locally made components and equipment into the weapon system itself.
This shift may strengthen the competitiveness of Korean defense companies by expanding local industrial capacity and making supply chains more resilient. However, localization raises new export control issues as well. Once locally sourced components and technology become part of a weapon system, managing the initial export of the finished product may no longer be enough. Companies may need to track which countries’ components and technology are incorporated into the system, and how each country’s export controls apply, throughout subsequent upgrades, maintenance, repair and overhaul (MRO), component replacements, and exports to third countries.
For more details, please refer to the full report attached below.
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