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Mon, Jan 02, 2006 - Page 12 News List

E-business booming for South Korea's Web giant

ONLINE REVOLUTION NHN, the Korean equivalent of Google, is leading the way in the country's e-business sector, thanks to innovative thinking and unique culture

AFP , SEOUL

Employees of South Korea's online media company, NHN, relax at a company-run coffee shop in its headquarters in Bundang, south of Seoul, on Thursday.

PHOTO: AFP

It looks like a student hangout: dozens of young people dressed in casual wear sit absorbed in virtual reality on computer screens or stand around chatting with coffee cups in hand.

But this is the headquarters of South Korea's most booming company -- online business leader NHN, the country's equivalent of Google, which is leading a similar revolution in traditional company working practices.

Chae Hwi-young, the 41-year-old CEO of the fast-rising Internet company, is one of the rare employees who can be found in a business suit on the 16th floor of this upmarket building in Bundang Venture Town, south of Seoul.

"This is a business of young people. The average age of the staff is 30," Chae says of the company's 1,000 employees, adding that creativity is as vital as youth for an online business.

"We always have to try something new to find ways to hold customers who tend to click away to find other sites if they don't see on our sites the things they want," Chae said in an interview.

Born in 2001 as a result of the merger between Navercom, an Internet portal service, and Hangame Communications, Next Human Network (NHN) was listed on the tech-heavy Kosdaq stock market in October 2002.

As the operator of South Korea's largest portal Naver and the biggest online game site Hangame, NHN soon become the star of KOSDAQ, with its share price more than doubling this year alone to around 260,000 won (US$256).

Market analysts say NHN shares, 53 percent of them in foreign hands, are still undervalued in light of its high current market share and operating income.

The total value of NHN's shares, worth US$4 billion, is merely three percent of that of Google, although NHN takes up more than 70 percent of the country's on-line and e-business market.

Google accounts for 38 percent in the US market, which is more than eight times bigger.

Daishin Securities' Kang Rok-hee says the company's annual sales for this year are expected to jump 40 percent from this year to 488 billion won and operating income up 43 percent to 181 billion won.

"To operate an Internet business, you don't need raw materials or a lot of electric power. Most of the costs are wages," Chae says, explaining the high rate of return on sales.

"This good result is also because, as I believe, we are apt to think from a users' point of view and satisfy their needs in real time," Chae says as he turned to his computer for explanation.

Punching in bi, meaning rain in Korean, in the search window of NHN's search portal, does not bring up anything about the weather first, but rather content on South Korea's top singer, Rain.

"We always try to guess why users enter a certain word in the search engine. They don't type in bi just to know about the natural phenomenon," Chae says.

"I also believe we are good at finding frequently searched words that can be turned into profitable key words," he says.

Then he types in kotjip [florist's] in Korean. Ads by florists' and their addresses immediately showed up on screen, with their order arranged in accordance with the money they have paid to NHN. A premium spot sells for some US$1,200 for three months' use.

The search ads currently account for 50 percent of NHN's incomes, Internet games 25 percent and the rest comes in the form of banner ads and e-business.

"NHN operates a Korean language search service and it has an inborn weakness in terms of overseas service but it successfully makes up for this shortage through its game service overseas," says Kim Chang-kwean, a Daewoo Securities analyst.

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