Kakao is downsizing its overseas business by liquidating its foreign subsidiaries in China and India. Accordingly, there is an analysis that the management goal vision set by founder Kim Beom-soo to change Kakao's business structure, which is focused on the domestic market, namely, "Beyond Korea" (expanding the proportion of overseas sales to 30% by 2025), has become virtually impossible.
According to Kakao's first-quarter report released on the Financial Supervisory Service's electronic disclosure system on the 21st, Kakao's local subsidiaries in China, DK China, and in India, Cross Comics India, were liquidated in April.
DK China was established in 2012 when Daum entered China and became a subsidiary of Kakao following the merger of Daum and Kakao in 2015. Kakao has pushed forward with gaming and portal businesses in China over the past decade but has struggled due to various regulations imposed by the Chinese government. In January 2019, the Chinese government blocked access to Daum, effectively halting its portal business in China. DK China recorded net losses in all years except for 2017, 2019, and 2020. The local Indian subsidiary, Cross Comics India, was liquidated in April, but the local webtoon platform's service has already been terminated since March 2023.
In the first quarter, the number of overseas subsidiaries of Kakao was 67, a 16% decrease compared to 80 in 2023. Kakao also liquidated its overseas subsidiary, Kakao IX, which distributed character products and licensed character intellectual property (IP). Starting with "Kakao IX UK" in 2021, it successively liquidated "Kakao IX US" in 2022 and "Kakao IX Japan" in 2023. Last year, it also closed down "Kakao IX China" and "Kakao IX HK" in Hong Kong. The subsidiary "Piccoma Europe," established by Kakao in France in September 2021, also ended its local services and was liquidated in September last year.
Industry insiders and observers are leaning toward the view that achieving the objective of 30% of overseas sales by 2025 set by founder Kim Beom-soo will be challenging. With the repeated withdrawal of overseas subsidiaries, Kakao's strategy to expand its overseas sales is inevitably facing setbacks, and the resignation of Kim from the co-chairmanship of the CA council due to health reasons has weakened the momentum for pushing "Beyond Korea."
When the Beyond Korea vision was declared in 2022, the proportion of Kakao's overseas sales was 20.6%, and in the following year, 2023, it recorded 19.5%, slightly rebounding to 20.8% in 2024. In contrast, Kakao's competitor Naver had a proportion of overseas sales (including LINE Yahoo) that reached 45.25% last year, an increase of 11.05 percentage points compared to 2022 (34.2%).
Kim Byeong-kyu, a professor at Yonsei University's Business School, noted, "Kakao has shown prominence by expanding various businesses domestically, but it is struggling to achieve results overseas due to handicaps as a latecomer, leading to the liquidation of unprofitable subsidiaries." He added, "For Kakao to avoid stagnation in growth, it needs to expand its influence in overseas markets, and the momentum to achieve its management goal of increasing the proportion of overseas sales to 30% by this year has weakened."