Cross-border defence partnerships: Managing commercial risk between Europe and South Korea

A snapshot of South Korea’s defence exports

During a recent visit to Seoul, the Risk Advisory team observed growing confidence around South Korea's expanding role in the global defence industry. The country's manufacturers have emerged as some of the world's leading defence exporters, with Europe becoming one of their fastest-growing markets. Between 2020 and 2024, European countries purchased more than half of South Korea's exports of major conventional weapons, with Poland alone accounting for 46 percent of that volume. 

Increasingly, however, Korean defence companies are moving beyond a traditional export model. Rather than supplying finished platforms from Korea, they are establishing local manufacturing facilities, forming joint ventures, transferring technology, and integrating European suppliers into their production networks. 

In February 2026, Hanwha Aerospace announced plans to establish its first European production facility in Romania, creating a local manufacturing base for guided missiles used in its Chunmoo multiple launch rocket system. It also unveiled a KRW 11 trillion (USD 8 billion) investment plan to expand its presence in the European defence market. 

Hyundai Rotem is pursuing a similar strategy. In April 2026, the company signed an agreement with Polish defence company Bumar-Łabędy, a subsidiary of the state-owned PGZ Group. The agreement will establish local production and maintenance capabilities for the K2PL main battle tank, including its first overseas production line. It also helps advance Poland's ambition to become a European production hub through technology transfer and local industrial participation.

Europe's industrial policy is reshaping defence partnerships

South Korea's defence export expansion has been driven by rising European defence spending and accelerated procurement programmes, alongside South Korean manufacturers' ability to deliver equipment quickly and offer local production and technology transfer.

At the same time, Europe's defence industrial policy is entering a new phase. The European Union is placing greater emphasis on strengthening its defence industrial base, expanding joint procurement and reducing strategic dependencies through initiatives such as Readiness 2030 and its loan instrument, Security Action for Europe (SAFE). Readiness 2030 aims to mobilise more than EUR 800 billion (USD 940 billion) in defence investment, including EUR 150 billion (USD 175 billion) in SAFE loans to support collaborative procurement and industrial capacity across Europe. 

These initiatives are changing how defence programmes are structured and awarded. SAFE funding, for example, requires that at least 65 percent of a weapon system’s component costs originate from the EU, EEA/EFTA countries or Ukraine, encouraging greater European industrial participation while still allowing involvement from eligible partner countries such as South Korea through relevant agreements. More broadly, the European Commission aims to strengthen Europe's defence industrial base by expanding collaborative procurement and industrial capacity by 2030. Poland provides an early example of how SAFE funding is being integrated into national defence investment strategies; see our previous articles on Poland’s defence investment strategy for further analysis, as well as our review of Germany's defence procurement. 

In addition to industrial participation requirements, suppliers will also need to align with Europe's established regulatory framework and evolving industrial priorities. Defence programmes require contractors to demonstrate robust governance, cybersecurity resilience and secure supply chains. While the EU Defence Procurement Directive has long shaped procurement practices, newer regulations such as the NIS2 Directive, which entered into force in 2023, have strengthened cybersecurity and supply-chain security expectations across critical sectors.

Key considerations for cross-border defence partnerships

South Korea's expansion into Europe will increasingly depend on more than winning defence contracts. As procurement shifts toward local production, industrial partnerships and supply-chain integration, companies will need to establish trusted local relationships and manage execution risks throughout programme delivery.

The shift toward deeper industrial cooperation creates opportunities for both South Korean manufacturers and European defence companies. For South Korean manufacturers, companies that align with Europe's evolving procurement priorities, establish local production capabilities, and integrate into regional supply chains will be better positioned to participate in the region's growing defence investment. European companies can also benefit from partnerships with Korean suppliers by accessing additional production capacity, technology, and faster capability delivery.

Across both markets, effective due diligence on counterparties, ownership structures, cybersecurity and regulatory compliance will be essential to supporting long-term cooperation.

At The Risk Advisory Group, we support clients operating in complex defence and industrial environments through market-entry strategy, stakeholder mapping, and bid intelligence. Our expertise helps organisations navigate evolving procurement landscapes, identify trusted partners, and manage the risks associated with cross-border expansion.