TOKYO, Jan 22 (Reuters) - Kyoto-based Mitsufuji got its

start nearly 70 years ago as a weaver of decorative belts for

kimonos. One day soon, it could be spinning high-tech fibres to

shield fighter jets from electromagnetic interference.

The company, whose core business is making consumer-facing

wearable gadgets, is one of dozens of small ventures that have

caught the Japanese government's eye in recent years as it looks

for dual-use technologies to beef up its military capabilities.

Cultivating a home-grown defence industry was a key plank of

Japan's 43 trillion yen ($275 billion) military build-up

strategy launched in 2022 to counter escalating security threats

from China, Russia and nuclear-armed North Korea.

But it faces a challenge. Unlike some of its allies, Japan

has no defence industry champions, such as Lockheed Martin Corp ( LMT )

in the U.S. and BAE Systems in Britain, that

depend on military work for almost all of their sales. Even at

Mitsubishi Heavy Industries ( MHVYF ), Japan's leading defence

contractor, sales of combat aircraft, warships and other

military equipment account for less than a fifth of revenue.

Nudged also by the fast-changing landscape of modern

warfare, including the use of small drones in Russia's war with

Ukraine, Japan's military - officially called the Self-Defense

Forces (SDF) - decided to court smaller companies to cast a

wider net for procurement.

"If we don't pioneer on our own, we won't be able to keep up

with global trends," former defence minister Minoru Kihara told

Reuters. "Japan should invest in research and development that

contributes to national security, including dual-use

technologies, without fear of failure."

In the latter part of 2023, the government began holding

meetings with several companies at a time, looking to see what

innovative products and technology they had on offer. Mitsufuji,

which was already supplying the SDF with wrist bands that

monitor heat stroke risk, attended the second such meeting.

"We don't know what the needs are, so we basically

showed them what we have," Mitsufuji CEO Ayumu Mitera told

Reuters. "It's not that we have a desire to enter the defence

business, but if there's demand, we're happy to make proposals."

Using its highly conductive silver-metallised fibre,

Mitsufuji produced a small-scale prototype of a hangar tent that

could shield military aircraft and other equipment from

electromagnetic interference.

In some cases, the meetings have led to deals. The Air

Self-Defense Force (ASDF) last year procured powered exoskeleton

"muscle suits" from Tokyo startup Innophys and introduced

cutting-edge wind measuring instruments from Kyoto's Metro

Weather on a trial basis.

"I don't think matching dual-use technologies with national

security can be achieved unless the government plays an active

role and does not simply wait for companies to come to it," said

former vice defence minister Kazuhisa Shimada.

BUILDING BRIDGES

The ASDF has been particularly active in approaching

companies, meeting about 300 firms for its space operations

since late 2023 in downtown Tokyo.

"Times have changed," said ASDF Colonel Ryoji Kondo, a

former F-2 fighter jet pilot. "We really need to get help from

startups."

His team is in talks towards a deal with startups

CollaboGate Japan and Wyvern.

The government has also helped smaller firms set up booths

at international defence exhibitions to tout their wares under

the Japanese flag and drum up interest overseas.

Mitsufuji's Mitera said his company had displayed at several

such exhibitions, including the Vietnam Defence Expo last month.

The company has secured deals to supply its high-tech fibre to

companies in Asia and Europe, he said.

Building those bridges could also fortify Japan's security

bonds with friendly nations, Kihara said.

"Even if it doesn't go as far as using the same technology

or equipment, using the same parts will strengthen cooperation

between nations, in terms of security," he said.

($1 = 155.88 yen)