Becoming a "Third Pole" from Japan: Expansion of LINE's Hyper-Localization Strategy in Asia

The Z Holdings Group provides services from the three major action points of "communication," "information," and "payment." Among these services supported by many users in Japan, the LINE communication app has the largest number of monthly active users. The LINE app is widely used not only in Japan, but also in Asia, and is central to the Z Holdings Group's global businesses. In this article, we explore the current position of LINE Corporation's overseas businesses and its future prospects.

Approximately 200 Million Monthly Active Users Worldwide

The LINE app, launched in Japan in June 2011, has marked its 11th anniversary and now has 194 million monthly active users (MAU) around the world.

LINE has established a firm position as a communication app boasting an overwhelming market share, with approximately 70% of the Japanese population using the app. The service is widely used not only in Japan but also in other Asian countries and regions, accounting for approximately 90% of the population of Taiwan, and approximately 80% of the population of Thailand.

Factors Contributing to the Global Growth and LINE's Strategy

We can think of several reasons why LINE Corporation ("LINE") has been able to advance its overseas businesses significantly, mainly in Taiwan and Thailand.
One explanation is the distinctive communication culture in the Asian region in which emotions tend to be expressed indirectly or ambiguously. The LINE app focuses efforts on enriching its range of stickers, and through these stickers, users frequently convey emotions and feelings that may be difficult to express in text. The characteristic of the LINE app matched the Asian communication culture which prefers non-verbal communication.
Another factor supporting the app's success is the "networking effect" generated by communication services. As the name suggests, "communication services" connect people, and the services will not exist unless there is someone to connect with. Once a service gains popularity in a certain place, it spreads to surrounding areas, and through increased connections among friends, a virtuous circle comes about bringing even more new users to the network. LINE thoroughly examined this process and conducted large-scale marketing initiatives at the right moment, to acquire additional users and to increase activity. This reinforced the "networking effect," enlarging the user base in each market. Although the generation of such effects is not unique to the LINE app, LINE's close observation and implementation of appropriate marketing measures led to an increase in market share.
These initiatives gave shape to LINE's "hyper-localization strategy," a strategy differing from other communication apps, enabling the LINE app to achieve a dramatic leap forward. "Hyper-localization" seeks not for an internationally standardized global service, but for a thorough localization process that respects the diverse cultures and customs of a target region. It is a philosophy which contrasts with global big tech companies providing uniform, standardized services across the world.
LINE's stickers are a good example illustrating this concept. Stickers are released in line with local cultures, for example, stickers related to the Lunar New Year in Taiwan, and stickers related to the Buddhist culture in Thailand. Moreover, representatives of LINE's local subsidiaries are selected locally meaning that various initiatives which add value to LINE as a communication app, are developed under the leadership of management teams accustomed to local traditions and cultures.

Service Diversification through Hyper-Localization

In Taiwan, the number of sticker sets downloaded per user in one year is 18 (according to LINE's internal statistics of 2020), which is about double the amount in Japan. LINE also engages with Taiwan's creative industry, where the cumulative number of local LINE sticker creators exceeds 770,000, and the number of sticker sets created over the past 11 years reached 9 million. To further boost the production of stickers, creative education programs and sticker making competitions are being planned. Furthermore, in Taiwan, LINE Pay, a service launched in 2014, has become No. 1 in all mobile remittance/payment services. The LINE app is no longer a simple communication app, but a foundation upon which a range of services are developed.

With about 90% of the population using LINE, Taiwan is the market in which the LINE app has spread the most among all regions where the app is deployed. LINE has built a strong ecosystem on its platform around six core businesses: Communication, Digital Marketing Solutions, Entertainment & Content, Commerce, OMO, and Fintech.
In particular, the LINE Fact Checker (available free of charge) launched within the Communication business in July 2019, is an example of successful hyper-localization. It is also a distinctive service which forms a part of the company's CSR efforts.

In Taiwan, the spread of fake news has become a serious social problem. According to research results published in March 2022 by Sweden's V-Dem Institute, as of 2021, Taiwan, for the ninth consecutive year, was the most targeted area for foreign governments to spread false information. LINE Fact Checker was launched to restrict the spread of such false information and by the end of 2021, the service gained more than 550,000 users. A total of 26,878 messages were fact-checked, of which 82% were fake, 14% were partially accurate, and only 4% were accurate. To provide accurate information to users, a fact-checking category within LINE's news service LINE TODAY was further introduced.

In Thailand, where approximately 80% of the population are LINE users, Commerce, Fintech, Content & Community, and Marketing Solutions are the main businesses. Of these, one of the most dynamic businesses is LINE MAN Wongnai.

The base of LINE MAN Wongnai is LINE MAN launched in April 2016, which operates food delivery, groceries/daily necessities delivery, express mail, and taxi dispatching services. In Thailand, where traffic jams are common, it can be difficult for individuals to go out and run errands. As an on-demand assistant app, LINE MAN addresses such daily issues experienced in Thailand to support users' daily lives. In September 2020, LINE MAN merged with the restaurant search platform Wongnai, and through synergies with the LINE app used by approximately 80% of the Thai population, the number of monthly orders grew more than 15 times between January 2020 and August 2022. Wongnai's restaurant search and review service covers one million merchants, and its POS solution is the No. 1 system in the restaurant industry, used by more than 50,000 merchants. In September 2022, LINE MAN Wongnai raised US$265 million in a Series B funding, and its corporate value exceeded US$1 billion.

LINE's mission is "CLOSING THE DISTANCE (to bring people, information and services closer together)" and to achieve this, it upholds the vision "Life on LINE." Both the LINE Fact Checker in Taiwan and LINE MAN Wongnai in Thailand succeeded in expanding their businesses by planning, developing, and operating their services in response to local needs. Both cases demonstrate the versatility of the LINE app as a platform for creating various services. LINE also partly approaches its CSR, which is essential for a company that constitutes an integral part of society, through its hyper-localization strategy of offering services suitable to each country and region. In the future, generating synergies between the initiatives will be the key to creating even more convenient products for users and expanding the company's businesses.

Five Domains to Be Strengthened in the Global Business

There are five major domains in which LINE is reinforcing its services, and the areas of focus vary by country and region.

In places with a high market share such as Taiwan and Thailand, the focus areas include banking, electronic payment services, and commerce.

LINE's banking business, launched in 2018, now operates in Thailand, Taiwan, and Indonesia. Under the slogan "Banking in Your Hand," the business is moving forward through partnerships with local financial companies. In Thailand, where LINE first began its banking business, LINE established a joint venture with KASIKORNBANK, a major local bank, and launched LINE BK in October 2020. As the first social banking service in Thailand, its number of users reached approximately 5 million as of the end of September 2022. The number of users of LINE Bank provided by LINE Bank Taiwan, in which Taipei Fubon Bank is one of the shareholders, exceeded approximately 1.32 million at the end of September 2022, while its cumulative number of digital accounts (type 3)* between April and June 2022 reached No. 1. LINE Bank, which opened in Indonesia in collaboration with Hana Bank, a major South Korean bank, had over 460,000 users in September 2022.

  • *Type 3: A type of digital account that can be opened with the verification of another bank's credit card

LINE Pay, a mobile payment service originally launched in Japan in 2014 is now available in Taiwan and Thailand, and has more than 60 million registered users globally. In Taiwan, it has grown into a No. 1 payment service in usage rate. Furthermore, in Thailand and Taiwan, where e-commerce business continues to grow, services centered on social graphs are also developed. In both markets, LINE SHOPPING is a key service, and measures utilizing LINE POINTs are actively implemented to attract users and to encourage continued use.

All these services take advantage of LINE's strengths as a platform operator, and are established as user-friendly services from LINE's high market share, which in fact, embodies LINE's vision of "Life on LINE."

At the same time, LINE also focuses on areas that have the potential to develop new markets, and at the center are the IP and Web3 businesses.

Since its first pop-up store opened in South Korea in October 2013, LINE FRIENDS, a global character brand originating from LINE's stickers, has opened more than 400 stores in total. Currently, 34 stores are operating in 15 countries around the world and online store sales are also strong. The South Korean headquarters of LINE FRIENDS which operates the stores changed its name to IPX in 2022 to focus on areas such as the metaverse, virtual IP, NFT, and fandom related businesses, aiming to become a "digital IP platform."

Web3 is a concept for the next-generation Internet which, in recent years, is generating huge amounts of interest. Since 2018, LINE has been engaging in the development of blockchain technology, the foundation of Web3, and has developed its own mainnet LINE Blockchain. Services such as wallet, NFT marketplace, and crypto-asset exchange are amplified based on this foundation. While promoting the LINE app as a platform in Japan where its market share is high, LINE also aims to develop new markets through its original NFT platform DOSI in other countries and regions.

To Realize the Mission "CLOSING THE DISTANCE"

What are the future prospects of LINE, which is actively expanding businesses not only in Japan but also in Asia, including in Thailand and Taiwan? In Joon Hwang, CFO of LINE Corporation and CGIO and Global Business CPO of Z Holdings Corporation, answers:

"Basically, we will expand our current markets and businesses. While developing our core businesses in advertising, communications, and content-related services mainly in Taiwan and Thailand, we will aim for growth in areas of fintech such as banking, and commerce businesses. Meanwhile, we will also take on challenges in new areas such as Web3 and aim to develop new markets. In March 2021, Z Holdings Corporation and LINE went through a business integration. The SoftBank Group, to which Z Holdings Corporation belongs, offers a variety of services and we hope to work closely together over the long term."

By strengthening businesses in Japan, Taiwan, Thailand, and Indonesia, where there are many LINE users, and by reaching even more countries through initiatives in IP and Web3, LINE is very near to realizing its mission "CLOSING THE DISTANCE."

On November 21, 2022, LINE hosted a press briefing session on its global business that is introduced in this article. In Joon Hwang, CFO of LINE Corporation/CGIO and Global Business CPO of Z Holdings Corporation presented the session. A report on the session is available on the following webpage.

Reasons Why Line's Global Business Continue to Expand Their Market Share (Japanese only)

  • Date of interview: November 21, 2022 Article published: March 15, 2023
    (This article is based on the global business press briefing organized by LINE Corporation on November 21, 2022.)
    The companies/titles in the article are as of the date of the interview.
    Interview/article by: Ryota INOUE
    Edited by: Dellows
  • Please note that the English translation is provided for reference only. The original, official article is in Japanese.