Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Naver faces challenges in global expansion bid
Lee Hae-jin, Naver's board chairman, speaks to reporters after the company's annual shareholders' meeting in Seongnam, Gyeonggi Province, March 26. Courtesy of Naver.
By Nam Hyun-woo
Naver blocked from m
essaging app LINE's operation
Korea’s dominant web portal, Naver, is striving to expand globally, but its efforts face uncertainty despite a new strategic division and the return of founder Lee Hae-jin to the board.
As of Tuesday, Naver reorganized its global business divisions, appointing former Chief Financial Officer Kim Nam-sun to lead its strategic investment division and drive the company’s global investments.
The company also established a strategic business division to put greater emphasis on businesses in overseas markets, including Saudi Arabia. In February, Naver established Naver Arabia as the control tower of its Middle East businesses, including digital twin and Arabic large language models.
The moves came in the wake of Naver founder Lee’s return as the company’s board chairman, which was approved during the company’s annual general meeting of shareholders on March 26.
After leaving the company’s board in 2017, Lee has held a position called global investment officer, reflecting the company’s bid to expand into the global market.
Naver said it expects Lee’s return will “accelerate the development and execution of its own unique strategies to strengthen its global competitiveness.”
Naver CEO Choi Soo-yeon, who received another three-year term as a board member during the shareholders' meeting, also noted that “the responsibility for global investments and business initiatives has been handed over to the management team” after Lee’s return.
Naver CEO Choi Soo-yeon speaks during the company's annual general meeting of shareholders in Seongnam, Gyeonggi Province, March 26. Courtesy of Naver
Despite these efforts, the company is still facing questions over the viability of its global businesses.
During the meeting, shareholders expressed concerns that “Naver’s recent global investments resulted in no tangible achievements” and “profits from overseas operations account for only a small portion of the company’s total earnings.”
According to the company’s regulatory filing, Naver’s overseas sales stood at 1.53 trillion won ($1.04 billion), accounting for 14.3 percent of its total sales of 10.7 trillion won.
By business segment, 36.8 percent of Naver’s total revenue came from ads on its search platform, 27.2 percent from commerce, 16.7 percent from content and 14 percent from its fintech business.
This means that the company’s sales are largely dependent on its web portal's dominance in searching vast Korean-language-based content in blogs and forums it operates.
“Naver has built a dominant search portal and platform ecosystem in Korea but lacks localized content and services tailored to different languages, cultures and user experiences,” said an industry official who asked not to be named.
The company’s LINE mobile messenger gained huge success in Japan and a number of Southeast Asian countries, but a fresh report on Wednesday showed that the company was blocked from the app's operation.
According to LY Corp., the app's Japanese operator, it reported to the Japanese government that "Naver and Naver Cloud have been completely disconnected from (LINE's) system, authentication infrastructure and network linkages" and "will continue consultations on the capital relationship (with Naver)."
Naver is controlling LY Corp. through a 50:50 joint venture with SoftBank but has been facing pressures from the Japanese government to divest from LINE.
Though Naver said in a statement that "our stance on the equity relationship remains unchanged," market observers speculate that LINE will likely be separated from Naver eventually.
Against the backdrop, Naver Cloud, a fully owned cloud computing subsidiary of Naver, is viewed as an alternative that can assist Naver’s global expansion. Naver Cloud’s sales have grown from 1.01 trillion won in 2022 to 1.4 trillion won last year, and it is spearheading Naver’s artificial intelligence (AI)-related businesses in Saudi Arabia.
During Nvidia GTC earlier this month, Naver Cloud CEO Kim Yu-won said the company and Nvidia are in talks to build a business model for sovereign AI businesses, targeting the Southeast Asian market.
Another global expansion driver for Naver is vertical AI, a system designed for a specific industry or domain. As part of this vision, Naver last week teamed up with Hyundai Motor to apply an AI agent specialized in mobility so that Naver’s HyperCLOVA X AI model can provide personalized information such as weather updates, news and schedules for drivers.