'My Naver never fails to deliver'
By Jung-a Song, Financial Times
Published: Jan 24, 2007
Reference: http://search.ft.com/ftArticle?sortBy=gadatearticle&queryText=nhn&y=14&x=308&id=070124001035&ct=0
Kim Ji-won, a 31-year-old South Korean housewife, is an ardent fan of Naver, the leading local web portal run by NHN.
She recently visited the website to search for information on bank loans as she prepares to buy a new apartment.
"I wanted to know which bank offers the lowest rates. And there was so much information offered by those who recently took out loans," says Ms Kim.
Ms Kim uses Naver's Knowledge iN service to search for all kinds of information, ranging from where she should buy nice wallpapers for her new apartment to which kindergarten is best for her five-year-old daughter in her neighbourhood and which treatment is good for her chronic back pain.
"I ask Naver for everything. Sometimes, I wonder whether there will be any answers to my peculiar questions, but so far it has never failed to deliver."
Ms Kim is not alone. Most South Koreans go to Naver, not Google or Yahoo, to search for information, attracted by the huge Korean database created by Naver's users. Google is a dominant global search engine, but it is only a small player in Korea, overshadowed by Naver, which controls 70 per cent of the domestic market.
Analysts say the key to Naver's success is its huge user-created Korean content, as Korean-language online data are scanty, although both Google and Yahoo offer Korean services.
To make up for a lack of Korean database, NHN created a web platform called Knowledge iN, where users can post questions that are answered by other users, which resulted in a database that now totals 490m entries.
"We want to bring out people's knowledge, information and know-how to the web through Q&A, so that people can do more than just find search results of existing information," says Choi Jae-hyeon, director of NHN's Naver division.
While Google helps users find links to most referenced sites with its computers trawling the web, Naver relies on its people-created database. A search on Naver usually brings up existing web information, together with the Knowledge iN database, news and other blogs.
Now, Google is trying to figure out what works in Korea through a research and development centre it plans to set up in the country.
But NHN is also investing heavily to maintain its dominance in Korea, spending more than 10 per cent of annual revenue on R&D. The R&D workforce accounts for about 60 per cent of its employees. The company expects to make Won205bn of operating profit this year on sales of Won540bn, thanks to its well-balanced business portfolio ranging from search and games to shopping and advertising.
As well as its search prowess, NHN boasts a strong presence in Asia's online game market. It controls 30 per cent of the domestic online game market and has more than 18m subscribers in Japan and its Chinese joint-venture boasts 170m subscribers.
Now, on the back of its success at home, NHN is trying to reach out to the world. It launched an English-language online game site in the US in July to make inroads into the lucrative market and plans to offer a web search service in Japan next year.
It also aims to enter the US and Chinese search markets in the long term, to become a truly global player.
"We will start our overseas expansion with online games, which have fewer cultural or language barriers. After securing a user base with the games, we will advance into search and community services in other countries," says Mr Choi. "I bet our strategy will work in the global markets as well."
