Korean Internet Firms Jostle for Chances in Indonesia

      July 01, 2015 11:28

      Several Korean IT firms are venturing into the burgeoning markets of Indonesia, home to the world's largest Muslim population.

      Daum Kakao, one of Korea's biggest Internet companies, acquired its first foreign firm in May this year when it bought Path, a U.S. company that became the third-largest social media platform in Indonesia.

      Naver, Korea's largest portal, meanwhile, joined hands with Samsung Electronics in April last year and installed the popular Line messaging app on Galaxy smartphones sold in Indonesia and elsewhere.

      And Optis, a company in Suwon, Gyeonggi Province that manufactures optical disk drives, signed a memorandum of understanding to acquire ailing Pantech, aiming to sell smartphones in Indonesia.

      Customers look at smartphones at a shopping mall in Jakarta, Indonesia. /Bloomberg

      ◆ World's 4th Most Populous Country

      Indonesia is home to 250 million people, the world's fourth most populous. Not only is the market vast, but its smartphone penetration rate remains low and harbors huge growth potential.

      Lee Kang-hyun at Samsung's Indonesian office said, "Until early last year, the bulk of sales were still 2G handsets, but now 80 percent are smartphones."

      At present, Samsung holds the largest share of the Indonesian smartphone market at 32.9 percent, followed by local manufacturers Smartfren and Evercoss and Chinese companies.

      Smartphone penetration in Indonesia is expected to speed up even more once 4G communication becomes available there, because 65 percent of the population is economically active, and people under 30 account for about half of the population.

      This means Indonesians are very aware of the latest IT trends. The country ranks second in the world in terms of Facebook postings, despite its weak communications infrastructure.

      ◆ Challenges

      But the Indonesian market is anything but a cakewalk since Korean firms tend to be relatively unfamiliar with the Muslim culture and tastes. Almost 90 percent of the Southeast Asian country's population is Muslim, and BlackBerry, despite a weak presence in the global market, dominates mobile messaging services there.

      Naver is hoping to change that and make Line as popular there as it is elsewhere in the region, not least by developing emoticons that are designed to appeal to customers there. One is dressed in the traditional Indonesian costume, while another rolls around feeling hungry during the holy month of Ramadan, when Muslims fast during the day.

      More than 3,000 people in Indonesia have signed up with Line so far.

      Daum Kakao intends to do the same with its Kakao Talk messaging app, which has 18 million users worldwide, and the customer base of Path.

      Competition is fierce in Indonesia's online game and electronic commerce markets as well. The top online game is a gun-fighting game from Korean game developer Zepetto.

      The Indonesian government is keen to give more opportunities to domestic IT companies to benefit from the boom. One regulation requires smartphone makers selling handsets in Indonesia to procure more than 40 percent of parts from the local market, and Jakarta is mulling a 20-percent tariff on imported smartphones.

      • Copyright © Chosunilbo & Chosun.com
      Previous Next
      All Headlines Back to Top