Denel is extending its footprint into the lucrative Asia-Pacific defence markets with the establishment of a joint venture company in Hong Kong.
Denel Asia is a partnership between the South African defence and technology group, Denel and VR Laser, a company with 20 years’ extensive experience in defence and technology in SA.
Zwelakhe Ntshepe, acting group CEO of Denel, says there are a number of opportunities opening up in Asian countries where defence budgets are increasing.
“This is a vitally important region for Denel to expand its business and find new markets for our world-class products, especially in the fields of artillery, armoured vehicles, missiles and unmanned aerial vehicles,” says Ntshepe.
Research shows by 2018, the Asia-Pacific nations will command more than half of global defence procurement outside of the United States, and two-thirds of non-US defence research.
“We need a firm foothold in this region, and the establishment of Denel Asia with its headquarters in Hong Kong will give us a strong presence and the ability to pursue opportunities that will soon arise,” says Ntshepe.
Denel Asia will focus its marketing attention on countries such as India, Singapore, Cambodia, Indonesia, Pakistan, Vietnam and the Philippines, which have all announced their intentions to embark on major new defence acquisitions and grow their research and development budgets in the next four years.
Ntshepe says it is prudent to form a joint venture with a company that has an established record in SA and a good understanding of those markets and opportunities.
Peter van der Merwe, CEO of VR Laser, says his company welcomes the opportunity to work with Denel and to make inroads into new regional markets. “Denel is a trusted name in the global defence industry. As one of the top 100 industry companies in the world, VR Laser has expertise in defence technology and understanding of the Southeast Asia defence markets,” he says.
The partnership also gives Denel access to VR Laser’s strong capabilities in fabrication, production and support of armoured vehicles, which will now be combined with Denel’s strengths in the areas of design and systems integration.
Stephan Burger, divisional CEO of Denel Land System, says the Asia-Pacific market is a key region for Denel to market its products and grow its order book. At the end of the 2015 financial year, the company showed a sustained annual growth in revenue of 28% and a projected order book of more than R35 billion.
Joint ventures with partners that have the ability to penetrate new markets are vital to the company’s future success. A similar joint venture with the Tawazun Group in the United Arab Emirates led to the establishment of Tawazun Dynamics, a company that manufactures the Al Tariq strap-on bomb kits for international clients.
“Denel Asia is a bold step into the future for Denel. It will grow our reputation in the global defence industry and enable us to penetrate new markets in a rapidly growing region,” says Ntshepe.
