Korean IT Start-ups Make Headway in Japanese Market

Korean IT start-ups are making headway in the Japanese market, which has proved virtually impenetrable for big Korean conglomerates like Samsung and Hyundai.

The start-ups operate smartphone apps offering anything from plastic surgery to education that have risen to the top in the Japanese market by adapting to the needs of consumers there.

Gangnamunni provides information on plastic surgery clinics and has attracted 500 registered clinics in the year since it started services in Japan. It is now the leader in its field with 300,000 monthly users.

The company kept its Korean name to take advantage of the reputation of Seoul's Gangnam as a mecca for plastic surgery. "We acquired a Japanese app that provided information about plastic surgery clinics and hired an entire marketing team from a large Japanese company to pursue the local market aggressively," Gangnamunni chief Hong Seung-il said.

The company has also developed its own booking and patient-management software that will be marketed to hospitals in Japan.

Qanda, a math app, focused on Japanese students' fear of asking their teachers questions face to face. Users photograph a math problem with their phone and upload it onto the app for an expert to solve.

Qanda topped educational apps in both Google and Apple stores just four months after it was launched there in November 2018 and remains popular.

Spoon Radio, meanwhile, is a leading social audio app and has more monthly users than Clubhouse. It entered the Japanese market three years ago and capitalized on the country's unique fan community of anime voice actors and actresses by getting them on its radio.

Around 100,000 people now host podcasts on Spoon Radio every month. A staffer said, "More than half of our sales are being generated in Japan this year."

The keys to success are patience and loyalty. Japanese consumers tend to stick to a brand once they have become used to it and rarely change. Newcomers are therefore advised to expect no significant returns for the first four or five years at least.

H2O Hospitality, which provides cleaning, maintenance and customer services for accommodation businesses, launched in Japan in 2017. Chief Lee Woong-hee said, "The Japanese market prizes trust and principles, so it takes time for a business to take root. We started off by managing five rooms but soon numbers rose to 20 and then 200 as we built up trust." Now it manages 7,300 rooms in Japan.

There is little independent IT entrepreneurship in Japan but regulations for online platforms and financial services are relatively lax. Hong of Gangnamunni, said, "Unlike Korea, it is not illegal in Japan for platforms to recommend clinics to patients, so we can bring Japanese clients to Korean plastic surgery clinics."

H2O Hospitality was able to expand its business in Japan quickly after a law was introduced in 2018 allowing residential homes to be run as airbnbs.