TOKYO/SEOUL/BANGKOK -- SoftBank-backed Yahoo Japan and messaging app Line have agreed to merge amid a sense of crisis that the Japanese companies could not individually compete in the global internet sector and could even lose their home markets unless they develop a worldwide presence.
The situation has become particularly critical at a time when global tech players such as Google are rapidly expanding their operations and hoovering up valuable data related to a wide range of user activity. The merger, engineered by the two groups' parent companies, is partly an attempt to protect the Japanese market from encroachment from outside.
The deal can be traced back to a dinner in the early part of this year, attended by, among others, Kentaro Kawabe, CEO of Z Holdings, the SoftBank Group-backed operator of Yahoo Japan, and Takeshi Idezawa, CEO of Line, which is majority-owned by South Korean internet group Naver. The executives, who also included Takao Ozawa, senior management corporate officer of Z Holdings, and Jun Masuda, director of Line, later held a series of meetings in Tokyo and elsewhere.
The project to integrate the two companies' management was codenamed "Gaia" -- a word from Greek mythology meaning the personification of Mother Earth.
In early September, Lee Hae-jin, founder of Naver, visited the Tokyo head office of SoftBank Group for talks with Chairman and President Masayoshi Son. The two agreed that Z Holdings, Yahoo Japan's official name, and Line should merge.
Lee is rarely in the limelight but is widely known in the internet industry. Despite Google's global offensive, starting in the 2000s, for search engine market share, South Korea is one of the few countries where it has failed to grab a majority hold. Naver still holds 80% of the domestic market.
South Korean media describe the Yahoo Japan-Line deal as a "Son-Lee alliance." The two executives have fostered mutual trust amid deteriorating relations between Japan and South Korea.
Although Lee has succeeded in protecting Naver's home market, he has been pushed into a corner due to competition with big U.S. and Chinese IT groups. Over the past several years, he has repeatedly issued warnings to his staff that Google and Tencent have the world's best manpower.
Naver subsidiary Line also has difficulties, including a shortage of funds for financing sales promotions and competition in mobile payment services.
At a press conference to announce the merger agreement between Yahoo Japan and Line, both Kawabe and Idezawa repeatedly referred to a sense of crisis related to global tech giants from the U.S. and China.
While Yahoo Japan and Line respectively have some 67 million and 160 million monthly users of their services, the biggest tech companies each have more than 2 billion. In contrast, with a total of 20 billion yen ($184.34 million) set aside annually by Yahoo Japan and Line for research and development, the Big Four tech companies known as GAFA -- Google, Amazon, Facebook and Apple -- each spend trillions of yen.
An official at one GAFA member dismissed the Yahoo Japan-Line deal as "too small in scale to care about".
Japanese internet companies have been making concerted attempts to push their services abroad, with varying degrees of success.
Rakuten, which has a strong domestic presence, in 2016 decided to pull the plug on online shopping services in three Southeast Asian countries after less than five years. "You have no chance of winning unless you spend as much capital as Chinese companies do," said a local industry official.
During the merger negotiations, Z Holdings and Line agreed to strengthen their combined internet platform in Japan before expanding to Asia and the rest of the world. The pair will create a platform serving 100 million customers in Japan -- which should be no match for other domestic players. However, this will not be enough to expand the scale of their operations unless they win market share overseas and earn capital for R&D investment.
Messaging app Line has been used by 84% of Thailand's population in 2019, according to a British research group. However, a positive sign has come from Thailand. According to British research company We Are Social, messaging app Line has been used by 84% of the country's 70 million population in 2019, compared to 72% using Facebook Messenger and 25% each for WhatsApp and Tencent's WeChat, with people using several apps in tandem.
Starting with its messaging app, Line offers services including payments, taxi hailing and shopping, including some that are not available in Japan, such as "Line TV" video streaming and indoor theme park.
"I always watch Line except when I sleep, because all of my friends commonly use it," said a 36-year-old self-employed man in Bangkok.
But Line has failed to achieve the same success in other countries. Although it once had 30 million users in Indonesia, the number has dropped to 16 million.
The difference is attributable to the timing of its market entry and its localization efforts.
Line set up a subsidiary in Thailand in 2014. Holding its stake at 50%, the company appointed a Thai executive to run the unit, which has expanded its market share by offering services appropriate to the local culture.
Line Village, a Bangkok indoor theme park operated by Line as a pilot project, has been popular with consumers. In Indonesia, Line established an almost wholly owned subsidiary in 2016. As well as entering the market relatively late, the subsidiary has failed to diversify its services and fallen behind WhatsApp.
Internet-based consumption has sharply increased in Southeast Asia, prompting American and Chinese companies to boost investment there. With the turf war now becoming a race against time, the Yahoo Japan-Line merger risks ending up as a so-called "Galapagos alliance" -- isolated and unable to keep up with global trends -- unless it develops innovative services that are unavailable elsewhere and promptly localizes operations in cooperation with SoftBank Group.
Additional reporting by Kotaro Hosokawa in Seoul, Mamiri Kishimoto in Bangkok and Akira Yamashita in Tokyo.
"line" - Google News
November 23, 2019 at 04:58PM
https://ift.tt/33hMcpc
Yahoo Japan and Line aim for Southeast Asia dominance - Nikkei Asian Review
"line" - Google News
https://ift.tt/33OHZdp
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
No comments:
Post a Comment