Korea’s No. 1 Search Engine to Expand Overseas

NHN’s Global Services Based on Understanding of Cultural Differences

By Kim Chang-keun

Head of Game Publishing Division, NHN Corp.

NHN Corp., the largest Internet company in South Korea, has achieved strong growth and a dominant market share in the local search market in recent years despite fierce competition among numerous rivals _ particularly Google and Yahoo!

However, in order to become a true global leader in Internet service, we realize NHN must now look beyond South Korea to other regional and global markets.

NHN is at a crucial turning point and we must act strategically and with great foresight if we hope to replicate our domestic success in the international market.

At this juncture, we believe that Japan, a neighboring country which shares a similar but at the same time quite distinct culture, offers a sound starting point for NHN to begin its development into a leading global Internet search company.

Currently commanding a market share of more than 70 percent in the local search market with leading search portal Naver.com, NHN will begin testing its newly developed global search engine in Japan late this year, as we enter into this lucrative but challenging market.

We are well aware that the Japanese market, which has been largely dominated by Yahoo! Japan with a market share of nearly 80 percent, is not an easy market to penetrate.

Several other ambitious newcomers including Baidu.com, China's largest search engine, have been seeking inroads. Even Google is a distant second place with less than 20 percent in the Japanese search industry. Baidu.com set up a subsidiary in Japan earlier this year and is preparing for a cutthroat competition.

Despite the challenging situation, NHN is positive about launching a new search business in Japan, based on our deep knowledge of the industry and top-notch search technology.

Tapping Into Overseas Markets

Few people know that NHN has already experienced success internationally, with our online game businesses in Japan and China.

NHN has spent time learning and examining the different tastes of Japanese users through trial and error while carrying out our online game businesses run by NHN Japan since 2001.

We judged the online game business was a better tool to overcome the language barrier and cultural differences, which often frustrate foreign companies in the Japanese market.

Even when NHN's head office was facing tough competition at home in 2001, the firm's founders launched the first online game portal in Japan, HanGame Japan.

The site has grown to be the No. 1 game destination in Japan with more than 22 million subscribers and 128,000 concurrent users.

This did not come without difficulties as Hangame's products, which enjoyed great popularity in Korea, had to go through a painstaking localization process to attract Japanese users.

NHN Japan has focused on carefully modifying its more than 150 online games, ranging from traditional card games to futuristic ones, to satisfy Japanese customers.

With such efforts and the leadership of Chun Yang-hyun, head of NHN Japan, Hangame had the honor of being named Web site of the Year by Yahoo! Japan for three years in a row from 2004 to 2006.

Backed up by the success of the online game businesses, NHN Japan also introduced Cururu (www.cururu.jp), the Japanese-type blog service, in 2005.

Located in bustling Shibuya Street in Tokyo, over 80 percent of NHN Japan's 350 workers are Japanese, a testament to our dedication to the localization of services.

These experiences provide many invaluable lessons as we launch our new search business in Japan. We know it is important to differentiate our services from other foreign players such as Google by providing even more appealing localized services than Yahoo! Japan.

After learning the unique needs of Japanese users through these experiences, we are ready to provide Japanese users with more advanced Internet search services, which have been developed with the help of South Korea's high Internet penetration rate.

According to a recent survey conducted by comScore, a research and survey company specializing in online and digital businesses, in May South Korea boasted the highest rate of Internet usage in the Asia-Pacific region, with 65 percent of its population using the Internet (home and work locations, age 15 or older). Japan has a 49 percent penetration rate.

Top Search Technology

Last year, in an effort to strengthen our search technology and capabilities to enter the international market, NHN acquired 1Noon, an Internet company that operated a promising Internet search engine.

Engineers of 1Noon, who had drawn keen attention from local Internet users with its unique ranking algorithm that searches information based on the repetition rate of the keyword in a web document, made up their minds to unite with NHN to explore a broader market, instead of the relatively small domestic arena.

In China, the largest emerging market in the world, NHN has also operated an online game portal Lianzhong (www.ourgame.com) jointly with China's SeaRainbow Holding since June 2004. It has some 170 million members and 750,000 concurrent users.

The decisive advance into the Chinese market helped NHN solidify its position as a leading Internet company in Asia. Now the company as a whole has more than 1 million concurrent users from the three East Asian countries _ Korea, Japan and China.

NHN is also making strong efforts to enter the American game market while testing its U.S. online game portal (www.ijji.com). Although the game portal is still at an initial stage, the site has so far secured some 3.5 million subscribers and 26,000 concurrent users.

Venture Spirit

NHN's success has been possible because we have maintained our venture spirit. We have never been hesitant about challenges, once we made a decision to go forward.

For instance, starting out, NHN's founders had faced a lack of Web content and databases in the Korean language, but they refused to be frustrated and discouraged by this.

In 2002, their ceaseless efforts led to the creation of the famous ``Knowledge iN'' services, in which Internet users helped each other in a kind of real-time question-and-answer platform.

With such creative services, NHN's businesses in Korea recorded 299 billion won ($325 million) in profit on 573 billion won in sales last year. The company's market value reached nearly 8 trillion won, the largest in Korea's tech-heavy Kosdaq.

No matter how difficult it is to advance into overseas search markets, NHN is determined to continue to make ceaseless efforts to apply its competitive online services.

We are committed to realizing our dream to help all people share information freely and heart-warming life stories through the next human network (NHN) that we are building up.