Kakao discusses overseas expansion, consolidation and a fund

Kakao's board chairman Kim Sung-soo, center, speaks during a press conference on Tuesday. [KAKAO]

Kakao aims to increase overseas sales to 30 percent of total by 2025 from the current 10 percent, with a focus on webtoon and entertainment businesses.

The top executives of the internet company, including new CEO Namkoong Whon, announced the overseas expansion strategy on Tuesday. They also discussed a plan to consolidate subsidiaries and create a 300-billion-won ($247 million) fund to support creators and small, independent merchants.

To build business abroad, Kakao will introduce more webtoons and novels in major markets like North America by collaborating with related company outside of Korea — such as U.S.-based Tapas and Radish and Hong Kong-headquartered Wuxiaworld.

The company aims to generate 500 billion won of transactions from its webtoon and online fiction efforts in the North American region.

In Japan, where its webtoon service is already No. 1 in market share, Kakao will jump into new businesses related to the metaverse, games and non-fungible token (NFT).

In line with that direction, Kakao's Piccoma Japanese subsidiary acquired a controlling stake in Sakura Exchange Bitcoin, an Osaka cryptocurrency exchange.

According to multiple media reports, the unit bought a 50 percent stake in the exchange, although the Korean parent company confirmed neither the size of the deal nor the amount being acquired.

"The deal was made as Kakao Piccoma is seeking new business opportunities surrounding NFTs and the metaverse," said Kim Sung-soo, the board chief at Kakao who doubles as the head of Corporate Alignment Center. The center is tasked with overseeing the operation of Kakao subsidiaries and other related companies to avoid conflicts of interest and excessive expansion into the areas where smaller merchants dominate.

Kakao plans to bring its webtoon service to new markets including France and Indonesia.

The board chairman also announced that Kakao will reduce the number of related companies to around 100 this year from the current 134, following criticism that it encroached into endeavors that compete with small businesses.

The operator of Kakao Talk has ceased the operation of flower delivery and chauffeur hailing services and has considered suspending an app that offers hair salon appointments and reviews of hair salons.

The company also detailed how it will use a 300-billion-won investment fund over five years.

Of that, 100 billion won will be reserved for small merchants, like the owners of mom-and-pop stores in traditional open-air markets. The funding could help them digitalize their payment systems and learn marketing tactics for the digital environment.

Another 55 billion won will be spent supporting content creators, including cartoonists, while 15 billion won will set aside for performance artists.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]