* Sign In to E-Mail or Save This
* Print
* Single Page
* Reprints
* Share
o Del.icio.us
o Digg
o Facebook
o Newsvine
o Permalink
By CHOE SANG-HUN
Published: January 1, 2008
SEOUL, South Korea — Whenever Park Kyung Jin goes shopping, she methodically reviews which of her many credit cards to pull out. Not that Ms. Park, a 28-year-old office worker, is a shopaholic; rather, like millions of other South Koreans, she knows this is a way to trim costs.
Skip to next paragraph
Choe Sang-Hun/International Herald Tribune
Lee Ji Won, 29, with her credit cards and membership cards, which provide discounts but are not used for payment.
“You feel like a loser if you pay in cash,” she said, noting the generous discounts South Korea’s credit card companies offer as incentives.
In part because of a government campaign to fight corruption in the late 1990s, South Korea has become one of the world’s most credit-card-friendly countries. The government encouraged consumers to use credit cards and threatened tax audits of enterprises that refused to accept them as part of its effort to fight the all-too-free flow of cash in the underground economy. It even gives income tax rebates to people who report their annual expenditures using credit cards.
As a result, in 2006 nearly half the 454 trillion won, or $491 billion, in private consumption in South Korea was settled with credit cards, one of the highest ratios in the world, government officials said.
Although South Korea ranked 34th in per capita income among countries in 2005, it ranked fifth in per capita credit card spending, according to the Bank of Korea, the country’s central bank.
Paying electronically is easy in this technology-aware, densely populated country. In 2005, for every million people, there were 403,000 electronic cash registers that allowed them to pay with credit and debit cards, Bank of Korea data show. In Japan, there were 10,765 such terminals for every million people. South Koreans can pay for virtually anything with credit cards: parking tickets, highway tolls, pizza deliveries or a 2,000-won bill at a street-corner noodle shop.
With cards everywhere, the challenge to vendors is to stand out to attract consumers. Gasoline stations, bookstores, airlines, shopping malls, telephone companies, bakeries, amusement parks, KFC outlets — even hospitals — give discounts if a customer presents the right card.
The incentives are so many and so diverse that, Ms. Park said, “Here a credit card is not just a tool of payment, it’s also a way of saving money.”
For instance, when Ms. Park wanted to buy a knitwear shirt for her husband, she visited a department store run by the Hyundai conglomerate, because her Hyundai card gave her a 5 percent discount and she could pay in interest-free installments over three months.
She often buys groceries at a store owned by the Lotte conglomerate, where her Lotte card gives her a 5 percent discount.
Elsewhere, she uses her Citibank card, which gives her two free miles on the South Korean airline Asiana for every 1,500 won she spends. With 30,000 miles, she hopes to get a round-trip ticket to Japan.
Card companies also give their cardholders “point cash,” a small percentage of each settlement. This point money, saved in the cardholder’s account, can be spent like cash. People use it to buy movie tickets, pay for gasoline, make political contributions or donate to the homeless.
Card companies can deposit the point money in the customer’s personal bank account, as happened to Ms. Park in October, when she received 50,000 won of point money saved on subway and bus fares she had paid by credit card.
For both card companies and retailers, point money has become an essential tool for attracting customers. For each credit card, there are up to two million shops where the consumer can use the card and get point cash.
“In South Korea, for virtually any payment you make at retail shops, there is a way you can save money if you use a credit card,” said Jeong Sang Ho, a vice president at Hyundai Card, which has six million cardholders and controls 13 percent of the country’s credit settlement market. “South Korea is a tough place to be a card company. You have to keep coming up with creative new incentives to stay in competition.
“But,” he added, “it’s the best place to be a cardholder.”
Hyundai Card, a joint venture of the South Korean automotive giant Hyundai Motor and General Electric of the United States, plans to expand into the United States, China and India. It hopes that some of the business models developed for the picky South Korean retail market — where some of the most competitive global brands, like Wal-Mart, Nokia, Nestlé and Google, have struggled or pulled out — will help.
* 1
* 2
Wednesday, January 02, 2008
Google left behind as Koreans Naver-gate web
By Anna Fifield
Published: January 2 2008 00:27 | Last updated: January 2 2008 00:27
When South Koreans want to find something on the internet, they almost never “Google it”. They much prefer to “Naver it”.
Koreans are so loyal to their home-grown search engine that Naver has become the world’s fifth-largest portal, according to comScore, the US internet researcher. Not bad for a nation of 48m people, even if it is one of the most wired countries on earth.
EDITOR’S CHOICE
Google in challenge to Wikipedia - Dec-14
Google at bottom of openness search - Dec-04
Yahoo settles China dissident case - Nov-14
Analysis: China traps online dissent - Nov-12
“I love Naver because everything I need is conveniently shown on the first page,” says Hwang Ji-sun, a 22-year-old college student in Seoul. “I get everything from news, shopping advice, the latest entertainment gossip, interesting pictures and hot search words. On Google you see nothing but a search box.”
Naver – based on the English word “navigator” – attracts about 16m unique users a day, generating a total of 1bn page views.
This means that it commands more than 77 per cent of the internet search market in Korea – streets ahead of its local and international rivals.
Daum, another Korean portal, has about 11 per cent of searches, but Yahoo has only 4 per cent and Google trails in a distant fourth with less than 2 per cent, according to KoreanClick, an internet market research company.
The secret to Naver’s success lies in the way it has harnessed the human.
“Korea has very advanced infrastructure and Koreans rely on the internet a lot in their daily lives,” Chae Hwi-young, chief executive of NHN, Naver’s parent company, says.
“That meant we needed to come up with a way to have these people interact continuously, to understand the way they interact, and to satisfy their internet needs,” he adds.
NHN also owns Hangame, the popular game portal, and is Korea’s most profitable internet company.
Third quarter sales from search-related services grew by 55 per cent from the previous year to Won123bn ($130.296m), while those from its gaming business more than doubled to Won65bn.
As Ms Hwang noted, Koreans think Naver offers a more user-friendly interface than many of its rivals. When users search Naver, the answers don’t appear as a simple list, such as on Google or Yahoo, but are categorised by type – such as websites, news, blogs, photos, video, books and shopping.
But one of Naver’s most popular features, and one that distinguished it from other search engines, is “Knowledge In”, where Korean internet users – or “netizens”, as they are known – ask an average of 44,000 questions each day. Fellow netizens supply more than 100,000 responses each day.
Questions posted by users range from the serious – such as the best bus route from one part of town to another, or why the death penalty should be abolished – to the more esoteric, such as why stomachs rumble or how to kiss well.
This kind of facility came about simply because when Naver started in 1999, it was a search engine with nothing to search.
There was simply not enough Korean language content on the internet to make the engine viable.
“Since we didn’t have much Korean content, we had to find information and if we couldn’t find it, we had to make it,” Mr Chae says.
“We had to focus on the knowledge that our users had. So rather than saying we created the content, I prefer to say that we digitalised the offline information in our users’ heads.”
Naver retains ownership of all the content and does not allow other search engines to access it.
Indeed, search remains at the heart of the operation, Mr Chae says.
“Even though we are developing new areas, search is still our core competency and we continue to try to make our search engine better,” he says.
“Our rivals don’t invest as much as we do into search but we continue to focus our attention on search.”
Naver’s engineers – who comprise about 60 per cent of the 2,300 workers at its headquarters just south of Seoul – are now testing about 100 new innovations.
But the international players are hopeful of occupying more of the market.
“South Korea’s internet market is expected to rise 20 per cent on average annually over the next four years,” Susan Decker, president of US search engine Yahoo, said in Seoul in October.
“Higher penetration of personal computers, innovative technology and amazing mobile speed well explain why we should increase investments here,” she said, adding that Korea was the company’s single largest market outside its domestic market of the US.
But Wayne Lee, an internet analyst at Woori Securities, says it will be hard for any competitors to take on Naver.
“Naver will retain its competitive edge in the domestic market because it has a very valuable database,” he says.
“Knowledge In is a great feature and it’s growing very fast, so no one else will be able to catch up with it.”
Meanwhile, Naver is looking at expanding abroad.
It will enter the Japanese search market in the first quarter of 2008, hoping to apply its winning formula there.
“We don’t need to invest a lot of money into the Japanese market because we already have a multi-language search engine, so we can just tinker with it and then enter the Japanese market efficiently,” Mr Chae says.
Mr Lee of Woori says this will be a crucial test. “No one knows whether they will be successful in Japan. This is will determine Naver’s enterprise value.”
Copyright The Financial Times Limited 2008
Published: January 2 2008 00:27 | Last updated: January 2 2008 00:27
When South Koreans want to find something on the internet, they almost never “Google it”. They much prefer to “Naver it”.
Koreans are so loyal to their home-grown search engine that Naver has become the world’s fifth-largest portal, according to comScore, the US internet researcher. Not bad for a nation of 48m people, even if it is one of the most wired countries on earth.
EDITOR’S CHOICE
Google in challenge to Wikipedia - Dec-14
Google at bottom of openness search - Dec-04
Yahoo settles China dissident case - Nov-14
Analysis: China traps online dissent - Nov-12
“I love Naver because everything I need is conveniently shown on the first page,” says Hwang Ji-sun, a 22-year-old college student in Seoul. “I get everything from news, shopping advice, the latest entertainment gossip, interesting pictures and hot search words. On Google you see nothing but a search box.”
Naver – based on the English word “navigator” – attracts about 16m unique users a day, generating a total of 1bn page views.
This means that it commands more than 77 per cent of the internet search market in Korea – streets ahead of its local and international rivals.
Daum, another Korean portal, has about 11 per cent of searches, but Yahoo has only 4 per cent and Google trails in a distant fourth with less than 2 per cent, according to KoreanClick, an internet market research company.
The secret to Naver’s success lies in the way it has harnessed the human.
“Korea has very advanced infrastructure and Koreans rely on the internet a lot in their daily lives,” Chae Hwi-young, chief executive of NHN, Naver’s parent company, says.
“That meant we needed to come up with a way to have these people interact continuously, to understand the way they interact, and to satisfy their internet needs,” he adds.
NHN also owns Hangame, the popular game portal, and is Korea’s most profitable internet company.
Third quarter sales from search-related services grew by 55 per cent from the previous year to Won123bn ($130.296m), while those from its gaming business more than doubled to Won65bn.
As Ms Hwang noted, Koreans think Naver offers a more user-friendly interface than many of its rivals. When users search Naver, the answers don’t appear as a simple list, such as on Google or Yahoo, but are categorised by type – such as websites, news, blogs, photos, video, books and shopping.
But one of Naver’s most popular features, and one that distinguished it from other search engines, is “Knowledge In”, where Korean internet users – or “netizens”, as they are known – ask an average of 44,000 questions each day. Fellow netizens supply more than 100,000 responses each day.
Questions posted by users range from the serious – such as the best bus route from one part of town to another, or why the death penalty should be abolished – to the more esoteric, such as why stomachs rumble or how to kiss well.
This kind of facility came about simply because when Naver started in 1999, it was a search engine with nothing to search.
There was simply not enough Korean language content on the internet to make the engine viable.
“Since we didn’t have much Korean content, we had to find information and if we couldn’t find it, we had to make it,” Mr Chae says.
“We had to focus on the knowledge that our users had. So rather than saying we created the content, I prefer to say that we digitalised the offline information in our users’ heads.”
Naver retains ownership of all the content and does not allow other search engines to access it.
Indeed, search remains at the heart of the operation, Mr Chae says.
“Even though we are developing new areas, search is still our core competency and we continue to try to make our search engine better,” he says.
“Our rivals don’t invest as much as we do into search but we continue to focus our attention on search.”
Naver’s engineers – who comprise about 60 per cent of the 2,300 workers at its headquarters just south of Seoul – are now testing about 100 new innovations.
But the international players are hopeful of occupying more of the market.
“South Korea’s internet market is expected to rise 20 per cent on average annually over the next four years,” Susan Decker, president of US search engine Yahoo, said in Seoul in October.
“Higher penetration of personal computers, innovative technology and amazing mobile speed well explain why we should increase investments here,” she said, adding that Korea was the company’s single largest market outside its domestic market of the US.
But Wayne Lee, an internet analyst at Woori Securities, says it will be hard for any competitors to take on Naver.
“Naver will retain its competitive edge in the domestic market because it has a very valuable database,” he says.
“Knowledge In is a great feature and it’s growing very fast, so no one else will be able to catch up with it.”
Meanwhile, Naver is looking at expanding abroad.
It will enter the Japanese search market in the first quarter of 2008, hoping to apply its winning formula there.
“We don’t need to invest a lot of money into the Japanese market because we already have a multi-language search engine, so we can just tinker with it and then enter the Japanese market efficiently,” Mr Chae says.
Mr Lee of Woori says this will be a crucial test. “No one knows whether they will be successful in Japan. This is will determine Naver’s enterprise value.”
Copyright The Financial Times Limited 2008
Subscribe to:
Posts (Atom)
