Home World Japan wary of China… Review of contract review structure for defense contractors

Japan wary of China… Review of contract review structure for defense contractors

by news dir

Purpose of internal information review of companies contracted with the Ministry of Defense
The intention is to prevent the influx of Chinese tech companies such as Huawei.
Proposal of next year’s bill and target of operation in 2023

▲ The Japanese Self-Defense Forces Air Force disembarks from a C-130 at Islamabad Airport, Pakistan on August 25. Islamabad/AP News

The Japanese government is expected to effectively ban the use of Chinese-made equipment by improving the contract review structure for defense companies. The Nihon Keizai Shimbun (Nikkei) reported on the 21st that it is a stepping stone for strengthening the border with China and laying the foundation for joint development with the United States.

According to Nikkei, the Japanese government is planning to review a new review structure that examines inside information of contracting companies in relation to contracts for defense equipment necessary to manufacture missiles and ships.

The authorities are preparing a related bill, and it is scheduled to be introduced to the National Assembly next year and will be operated from 2023. In addition to the company information at the time of the contract, the bill also required information on the nationality and experience of the person in charge of the company, and information about the person in a special capital relationship with the person in charge.

This is to prevent confidential information from leaking from contracting companies, and it is interpreted as an intention to prevent the inflow of Chinese-made equipment. Japan, which began to strengthen supply chain protection under the Kishida administration, which places importance on economic security, decided to increase the proportion of domestic equipment and strengthen joint development with the United States along with a new law.

Japan has been procuring defense equipment from Chinese tech companies such as Huawei. The Japanese Defense Ministry receives important information from the Self-Defense Forces, such as equipment and uses necessary for manufacturing aircraft and ammunition, and delivers them to companies, and the company provides the appropriate parts. However, if secrets are leaked during this process, there is a risk of exposing operational information or equipment weaknesses, Nikkei explained.

The risk of cyber attacks has also accelerated the government’s enactment of new legislation. Last year, some companies with a history of trading with the Ministry of Defense, such as Mitsubishi Electric and NEC, were found to have been subjected to cyber attacks. Japan has already banned all ministries from procurement of communication devices that pose a security risk from 2019, but the plan is to strengthen cyber countermeasures through legislation.

If the bill is passed, the Ministry of Defense officials will be able to investigate the parts used, communication lines connected to the Internet, and terminal equipment, targeting companies that have signed contracts.

Furthermore, when a contract company introduces facilities for the purpose of manufacturing parts, it is required to obtain prior permission from the government, and for the already introduced facilities, which country’s facilities were used will be reviewed. Failure to meet the standards of the Ministry of Defense may result in termination of the contract.

Nikkei said, “The government considered that establishing security by controlling capital and manpower alone was insufficient and decided that a structure to check even the parts and corporate facilities that go into the manufacturing process was necessary. We are also preparing a bill to promote economic security in preparation for what will happen,” he explained.


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