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  • Sep 11, 2012


Korean Internet Trend: The Emergence of the “Tech Galapagos”

Samsung, Naver (NHN), KakaoTalk, LG—The names of companies, products, and services from South Korea seem to come up much more often in recent years, particularly in the IT industry. In the first quarter of 2012, Samsung took the top spot in the global market for mobile phones, including smartphones. While we use such products every day without thinking about it, we also occasionally get a reminder that, “Oh yeah, this is from Korea.” It is like that whether you are in Japan or here in San Francisco.

Looking inside the South Korean Internet Powerhouse

South Korea gives off a strong impression of that drive toward the outside world, but what is it like inside the country?

  • Internet users: about 37,180,000 (2011)
  • Internet penetration rate: 78% (2011)
  • Internet penetration by age: 3-9 years (86.2%), 10-19 (99.9%), 20-29 (99.9%), 30-39 (99.4%), 40-49 (88.4%)

So, as one might expect from a country known as an Internet powerhouse, the Internet is an absolute necessity for the younger generation in South Korea. As Internet game addiction among young people has become a societal problem even legal measures have been taken. Further, given South Korea’s unique course of development, its own products and services tend to do extremely well there. Virtually all the names to be found among e-commerce sites for example are unfamiliar in Japan. However, with the rapid spread in the last two or three years of services from overseas through its social media sector, South Korea’s IT situation seems to be changing little by little.

Focusing in particular on the four areas below while mixing in some of my own South Korea experience, I hope to provide an introduction to the rather unique conditions in South Korea’s Internet sector.

  • Web portals
  • E-commerce sites
  • Social media
  • Popular mobile apps


Naver’s incredible market dominance: The state of web portals in South Korea

* Graph: South Korean 2012 web portal market share

For many people in Japan, talk of web portals will probably bring to mind Yahoo or Google, but in South Korea people are most likely to think of Naver by far. In fact, it occupies nearly 80% of the market. According to a KoreanClick survey in the first half of 2012, 96.31% of domestic Internet users, or over 30 million people visit Naver at least once per month.

Daum (meaning “next” in English), the number two South Korean web portal, is holding out. Google has been expanding its market share little by little in the last few years, but it still has not had much success. (* However, it appears that, as the provider of Android OS and Android Market, Google has recently been gaining users in mobile.)

An interesting aspect of Naver is its search screen. Interaction among fellow users is very active in South Korea, and Naver has the users of blogs, cafes (communities), Q&As, etc. as its core and tends to emphasize the information that they send. Apparently as many as 60,000 items appear every day on the Q&A service. (When I would ask questions of my Korean friends, they would say, “Wait a just a minute. I’ll ask on the net right now.”)

For example, when you do a search for “social media” on Naver, you get this:

The results are shown in the categories “Knowledge Encyclopedia,” “Blogs,” “KnowledgeIN” (Q&A), etc.

Further, as you can probably somehow guess from this search screen, many consider the Naver web portal to be unsuitable for SEO. With the search results appearing in different categories, each with its own algorithm, it can be extremely difficult to get into the first page. For this reason, it appears that companies and services that are expanding in South Korea often prefer purchasing fee-based advertising space rather than putting effort into SEO measures.

Foreigners can’t shop? The state of e-commerce site in South Korea

*  Table: 2011 and 2012 first half e-commerce site ranking (based on unique visitors)

This table is probably full of unfamiliar names. As you can see, e-commerce sites in South Korea are primarily of domestic origin and have a very active user base. Likely all we would have known about is the presence of Groupon Korea, ranked ninth in 2011. (Although the first-ranked Gmarket is making its way into Japan as well.) Incidentally, when I told a friend, “I can’t seem to find the site for Amazon Korea,” I received only a perplexed look in return.

In part because the prices are already low, South Korean e-commerce sites are generally inexpensive and attractive. But the truth is, there is a pitfall if we foreigners try to shop at South Korean e-commerce sites. With the prevalence of the resident registration number system in South Korea, you will almost always be asked for a residential number as personal information when you try to register for membership, not only on e-commerce sites but on any web service.

So if you were wondering what becomes of foreigners in South Korea, I’m sorry to say that there are many places where you cannot get membership. Still, it is possible to make purchases at some major sites such as Gmarket as they have had features like boxes to check for “foreigner” and special pages for foreigners.

*Red: Korean locals // Blue: Foreigners


Market upheaval with explosive growth of Facebook & Twitter and further moves by KaKaoTalk platform: The state of social media in South Korea

I have discussed the aspect of South Korea in which its own services are prioritized, but in the same country drastic changes have been occurring in the last few years in the area of social media. Twitter and Facebook have seen explosive growth, and the new domestically developed mobile service KakaoStory has spread rapidly. In articles considering the practical use of social media in business one can find many references to blogs, Facebook, and Twitter. Below, let’s take a step-by-step look at the changes in the state of social media.


South Korea’s unique visitors to Twitter grew by 1900% from 2009 to 2010, and by April 2010 the number had broken 3 million users. Meanwhile, although the domestic micro-blogging service me2DAY had experienced a sudden rise in popularity in the middle of 2009, it lost users after that and ended up being completely overtaken in terms of monthly users by Twitter in 2010. In combination with the spread of Smartphones, Twitter continues to add users even now, with domestic data showing that it had 11 million users by April 2012.


Graph: Usage rate of Facebook and Cyworld among Internet users (on PC)

Facebook started to experience explosive growth in 2010. It quickly closed in on Cyworld (“cy” means “relationship,” the service is similar to Japan’s mixi and Ameba), which until that time had boasted overwhelming dominance, and after the start of 2012 there was a reversal in usage rates on PCs. In terms of overall reach (percentage of users with Internet user population as parameter), Facebook achieved 39.3% by May of 2012 (Nov. 2009: 2.6%), close behind Cyworld (Nov. 2009: 71.1% – May 2012: 54%), which continues its downward trend.

Facebook is said to have had as many as 6 million users overall in South Korea as of April 2012, and its mobile app reportedly surpassed 5 million unique users in the first half of 2012. (KoreanClick survey)

Platformization of KakaoTalk and Kakao’s continuing expansion

Meanwhile, among social networking chat apps, the domestically produced KakaoTalk is so overwhelmingly popular that it would be no exaggeration to say that any Korean with a smartphone has the app. According to data from June 2012 an astounding 97% of smartphone users in South Korea were using KakaoTalk. The photo-centered social networking service KakaoStory, begun at the end of March 2012, is also achieving success, with over 9.7 million unique users and nearly 70% reach within 3 months after start-up. (KoreanClick survey)

Characteristics of the service include the following:

  • Only for mobile smart devices (smartphones, tablet PCs)
  • Functionality is much simpler than Facebook and Twitter, and there is no need to understand concepts like newsfeeds
  • Emphasis on offline connections (in order to utilize KakaoTalk’s network as it is)

Kakao continues to take action, having announced its foray into the business of mobile gaming platforms on July 31, 2012. As of now Kakao is only available on mobile, but I wonder, where might they go in the future in this rapidly changing social media market?


LINE comes next after KakaoTalk? App Store’s top free apps in the first-half of 2012

* Table: 2012 first half iPhone app ranking by downloads

Surprisingly, Naver Japan’s LINE app climbed to the top of the most downloaded iPhone app ranking for the first half of 2012. (Note: Although Naver is a South Korean company, apparently Naver Japan did the design and development for LINE.) LINE itself is certainly fun and appealing, but KakaoTalk’s connection trouble in April likely played a role as well. After all, with the whole country using KakaoTalk at once some problems may well arise when relying on that service alone. The “Koreanness” of this ranking can be felt by the presence of other contenders including the social commerce apps Ticket Monster (known as Timon) and Coupang, ranked 3rd and 7th respectively, as well as Naver Map and Naver Music in 4th and 8th place.


Bonus: The immediate abbreviation of popular culture. The state of naming in South Korea

Let’s take a break from the technical trends to take a look at a bit of fun facts. This does not apply to everything, but in South Korea there is a tendency to give abbreviated names to things that are popular (particularly when the name is somewhat long). For example, KakaoTalk goes by “Kato,” and Facebook something like “Pebu.” Of course, this practice is not limited to web services. The examples are endless, including “mido” for American TV dramas popular in South Korea (from the first syllables of “American drama” in Korean) and “Suju” for the popular Korean boy band Super Junior (pronounced “syupo junio” in Korean). It is rather interesting to consider that Japan’s similar practice may also signify that something is popular or well-liked.


Summary of trends in the first half of 2012

  • South Korea is an Internet powerhouse gaining even more momentum in 2012
  • Search still dominated by Naver (emphasizes blogs and Q&A, ill-suited to SEO)
  • E-commerce also still largely made up of services started and developed domestically
  • In social media Facebook and Twitter are spreading through South Korea too
  • KakaoTalk now default, KakaoStory successful too, in the future will they advance in gaming too?
  • LINE following in the wake of KakaoTalk

Summary of trends in South Korean web culture (with some subjectivity)

  • They love the Internet, they love communication, and they love community
  • They are confidently patriotic and value the country’s own services
  • If they hear something is good, they all go for it at once
  • They just love it when things are free (who doesn’t?)
  • Popular things get abbreviated names

This concludes my introduction to the latest developments in the South Korean Internet sector. I hope you found it useful.

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