We recently interviewed Sam Dinte, President of Dinte Executive Search and Vice Chair, Australia & Asia Pacific at IIC Partners, to discuss the global defense industry. Sam shared how geopolitical shifts are reshaping defense strategies and spurring unprecedented growth in defense budgets in countries like South Korea and Japan and across the broader Southeast Asia region.

He also delved into the opportunities and challenges facing U.S. and European defense companies as they navigate complex international markets, emphasizing the growing importance of co-development and long-term partnerships. Additionally, Sam offered valuable insights into the talent shortages affecting the industry and the critical need for innovative human capital strategies to address emerging technological and operational demands.

How is the defense industry evolving in Asia-Pacific?

We have noticed some substantial geopolitical shifts in the Asia Pacific region for essentially the last decade but what we’re seeing now is essentially the culmination of the great power struggle between the United States and China.

What that has done is trigger defense spending throughout the Asia Pacific region, we’re starting to see certain countries like South Korea, Japan, and elements of Southeast Asia,  increase defense budgets to be either at or above 2% of GDP which represents significant growth. 

In response to these demand drivers, as countries look to secure national borders and make sure that they have enough domestic industrial capability, there has been a surge for US and European defense companies to come into the region to enhance their ability to partner and co-develop programs.

What challenges do U.S. firms face when entering markets in Asia-Pacific?

There are numerous challenges facing US and European defense companies that are seeking to expand market share and market presence in Asia Pacific right now.

I think one of the biggest has been the swings from isolationism to globalization that we’ve seen at a political level across again the United States and many countries in Europe, leaving countries in Asia Pacific wondering how much they can rely on expressed and committed levels of investment, partnership, and at the end of the day, military alliances. 

What we have traditionally seen in the region is a strong net import of foreign companies and a strong net import of foreign leaders. So what we’re starting to see is a shift in which countries are demanding co-development, they’re demanding higher offset levels, and they are looking to build up their own organic defense industrial bases. 

There’s still tremendous opportunity for foreign companies but they have to be much more strategic and focus a lot more on demonstrating long-term commitment to the region.

How do human capital strategies need to evolve to meet industry needs?

In terms of how we’re preparing for this from a human capital perspective, one of the biggest issues is that we don’t have enough talent in the defense industry in the United States, in Europe, and certainly in Asia Pacific that has grown up with the requisite training and pedigrees to be able to help propel capabilities across the areas we’ve talked about: satellite systems, space situational awareness, and autonomous systems. 

We’re going to need to rely on more commercial native companies, commercial native technology, and advanced technologies that have not traditionally run towards the aerospace and defense industry. 

It’s going to be incumbent on companies to focus on employee value propositions, make sure they can be very proactive and creative when it comes to executive-level recruitment, and have really strong talent strategies to make sure that they map their human capital needs to their business needs. 

Can you share an interesting case study from Dinte Executive Search?

We have a great example of a partnership that we established with an Asian defense company that was looking to go from having more than just a sales office in  Washington, DC to a real sophisticated manufacturing and development presence in the United States.

We worked hand-in-hand with our Asian client to make sure that requirements were aligned, that cultural sensitivities were understood, and that whoever came into this organization understood the broader vision of where they were trying to take the company not just in the US but overseas.

Through this relationship, we placed the US CEO, the US COO, and several other members of the executive leadership team. And in the last five years, they have gone from being sort of a fledgling company trying to tap into the US defense industrial base to now finding themselves situated on several major programs of record.