Late last month, Daum, Korea’s second largest internet portal, and Kakao, an extremely popular internet messenger service announced plans for a merger. It has the potential to be be a 3 trillion won deal with implications for Jeju.
Details of the merger have yet to be released, and the deal will first be put to shareholders for approval in August. But with the two companies joining forces, it is expected to become the second largest firm listed on the tech-heavy KOSDAQ stock market.
The new company will reportedly be called Daum Kakao and is set to launch on Oct. 1.
Daum was established in 1995 and grew quickly into a site that offers a wide range of services to its customers, including search, news, and shopping.
Kakao started in 2006 and rode the tidal wave of growth in the mobile phone market to become the top free mobile messenger service for South Korea. According to recent numbers, it has about 35 million subscribers worldwide. That’s expected to grow as the merger takes effect.
Daum Communications moved its headquarters to the JDC’s Jeju Science Park in 2012 in accordance with a deal inked back in 2004. This is part of the provincial government’s plan to encourage tech companies to come to Jeju, and ultimately for the island to possibly become Korea’s Silicon Valley. The Science Park is one of the JDC’s “core projects,” which include the multi-billion won Global Education City and Jeju Aerospace Museum.
Regarding the establishment of the Science Park, the government put 580 billion won into a 109-hectare piece of land just south of the island’s biggest university, Jeju National University in 2003. The project, which began construction in 2005 and is estimated to be complete in 2021, offers high tech companies, research institutes and the like, a central location where they can easily work together.
They are also incentivized with the opportunity for big corporate tax cuts and land subsidies. However, regulations stipulate that their head offices must be located here and that they register as Jeju companies. Depending on a company’s cumulative investment and number of employees, the corporate tax break could be as high as 100 percent for the first three years and up to 50 percent in years four and five.
According to a public report prepared by Korea Investment & Securities Company in January 2013, Daum’s corporate taxes went down by 20 percent after relocation. Gaming giant NXC made the move in 2011, relocating its headquarters to Jeju City.
But Jeju does have its work cut out for it in terms of competition on the mainland, and difficulties with doing business from an island.
Seoul set up its own trillion won Digital Media City in Sangam-dong, western Seoul in 2006. It now has 350 tech companies headquartered there. And with the Jeju – Gimpo air corridor being particularly popular, it is often difficult to get tickets, especially around national holidays. Weather, too, can ground all flights and ferries.
However, employees do enjoy a higher quality of life than in a big metropolitan city. Daum employees have reported an 80% satisfaction rate. Shorter commute times, lower costs of living, and a clean environment are just three benefits to living here.
This a reworked article, written by the author, which first appeared on KCTV English News. — Ed.