[ANALYSIS] Southeast Asia: Battlefield for local platform operators

By Kim Jae-heun

A number of domestic platform operators are gathering in Southeast Asia to compete against each other in the belief that the region is the bridgehead to a global market.

The average income per capita of Southeast Asian countries is about $4,400, but the region's market has great potential for growth as the size of the middle class is expected to increase to 200 million by 2025

In Jakarta, the capital Indonesia, annual income is now over $10,000 having soared recently and making it an attractive investment area for Korean firms.

Platform operators Grab and Gojek that started in the local markets of Singapore and Indonesia, respectively, have already become eponymous "Super-Apps" in Southeast Asia based on massive populations with relatively equally high purchasing power.

However, Korean firms ― riding the wave of Korean culture' increasing popularity there ― are seeking opportunities in "blue oceans" that have not yet been cultivated.

Kakao, Naver to compete in IP sector

Kakao Entertainment, a mass media and publishing company that owns KakaoPage and Kakao M, said it will launch a "webtoon" service in Taiwan and Thailand in June.

"We will introduce a webtoon service in the two countries in the first half of the year. The market for digital comics is already fierce but we see potential growth in the two markets and have decided to challenge ourselves to advance into the global market," a company official said.

Kakao Entertainment will release 70 webtoons and expand the number to a maximum of 300 by the end of 2021. Its strategy in Taiwan and Thailand is to strengthen its marketing based on webtoons of various genres that have proved popular in other countries.

This means the company will be in head-to-head competition with Naver Webtoon, especially in Thailand where the IT firm already holds the No.1 position.

Line is an affiliate of Naver, which holds 50 percent of the shares of Z Holdings, the parent company of Line that Naver and SoftBank launched as a joint venture.

Line is referred to as "national" mobile messenger application in Thailand that has 49 million monthly active users (MAU), the second largest after Japan with 88 million.

Based on its powerful mobile messenger platform, Naver was able to expand its webtoon service under the name of its affiliate.

Line has launched the first mobile banking platform Line BK in Thailand and the number of customers has surpassed 2 million already. Its food delivery player Line Man-Wongnai has revealed its plan to expand its service across the country to 77 districts.

In the case of Kakao Entertainment, it started to prepare the launch of its webtoon service in Thailand from last year. Unlike Naver, which runs its digital comic service utilizing Line's messenger platform, Kakao will introduce an independent mobile application.

Line has focused its business on four countries mainly ― Japan, Taiwan, Thailand and Indonesia ― but established two overseas corporations in Vietnam recently.

This is not the first time Naver and Kakao have faced each other in overseas markets. Line Webtoon competed with Piccoma, Kakao's webtoon platform in Japan. The two companies are also preparing for initial public offerings by acquiring international story-telling platforms. Naver took over Wattpad in January and Kakao is in process of acquiring two platforms Raddish and Tapas Media.

"This is similar to the competition between Samsung and LG in the past when they fought to secure global home appliance markets. Naver and Kakao are vying in the IP sector to become global platform operators," a Kakao Entertainment official said.

Naver to invest in Indonesia, Vietnam

Naver is also expanding its business in the Southeast Asian market separately, investing $150 million in Indonesian entertainment firm Emtek, with which it plans to run a story-telling business.

The IT giant's overseas corporation in Vietnam recently opened a research center together with the Hanoi University of Science and Technology to foster professional manpower in the field of artificial intelligence for its platform business.

Coupang and Woowa Brothers enter Southeast Asian market too

Coupang has picked Singapore as its first overseas business location after successfully listing on the New York Stock Exchange in the United States.

It hired 15 people to start a new business, which will not be related to online shopping. Coupang has established overseas corporations in the United States and China for direct overseas purchases.

"It is hard to adopt purchasing services in each country as they have different retail systems. However, since Singapore is a city-state, Coupang's overnight delivery service is viable and that is why the e-commerce giant wants to test its business before advancing to other countries in Southeast Asia," an industry source said.

Woowa Brothers, an operator of Baedal Minjok, the No.1 food delivery service in Korea, entered the Vietnamese market in May 2020. It is currently operating in Ho Chi Minh and Hanoi and the company is quickly increasing its local market share. Compared to its performance in the early stages year, the number of food orders per day has increased 200-fold recently.