Japanese funds surging into Korean venture firms
Japanese venture capitalists and large companies are stepping up investments in Korean startups, industry watchers said yesterday. They said funds from Japan are pouring into Korean business ventures and Internet startups in answer to pleas from local entrepreneurs, who have seen their expansion plans withering from the shortage of financing available in the local capital market.
As a result, Japanese investors can find good bargains in high-tech fields. An Internet startup Digital FK was successful in attracting $3 million on Thursday from the Japanese venture capital firm JAFCO Co., an affiliate of the Nomura group. Broadband Internet service provider Thrunet also received $250 million from the Japanese Softbank-managed "SB Thrunet Fund," on the same day. Translation software developer Unisoft Co. attracted $3 billion from Japan's Sony Communication Network Corp. Mitsubishi Corp. and three domestic financial institutions have invested $3.8 billion in personal digital assistant (PDA) manufacturer Cesscom Inc.
Japanese venture capitalists are paying close attention during investor orientation sessions set up by startups. Six major venture capital business heads attended a session combining 12 local startups hosted at KTB Network Thursday. Some companies brought their investment promotion sessions to Japan, and others are scheduled to follow.
On Sunday, Korea Management Association Consultants hosted an explanatory meeting for Korean startups at which some 20 Japanese venture capitalists attended. Financial analysts say Japanese investors are trying to seize the opportunity that passed when the financial crisis hit Korea in late 1997. At that time, foreign investors could have picked up local high tech investments at substantially reduced rates. Many feel the market's tumble in the second half has left several firms undervalued this time as well.
E-commerce boosts revenues, but far from profitability
Business-to-consumer (B2C) e-commerce failed to win consumers' hearts and wallets in 2000, while the much touted business-to-business (B2B) exchange still has a long way to go to fulfill its promise of fast, efficient, cheap business deals.
The domestic B2C market is estimated to reach 1.13 trillion won in 2000, a 300 percent growth year-on-year, and sales revenue of major operators including Hansol CS Club, Samsung Mall and Interpark more than doubled.
But profitability is a distant prospect for most e-retailers, due to a fierce price competition that lowered their margins and heavy costs in system, marketing, logistics, and customer management.
Large online department stores are faced with competition from smaller, specialized shopping malls, notably bookstores like Yes24 and Aladdin, which are increasingly catching on with customers in niche markets. Government data show shopping malls selling particular lines of products accounted 85 percent of the total 1,850 B2C sites in the third quarter.
Major hurdles for e-retailers are security and settlement system. A major progress was made in these aspects with development and wide adoption of security and electronic payment solutions. The government also promoted the use of digital signature and introduced new certificate system regarding safety of online transaction.
Under a strong government support and industry expectations of streamlined procurement and trading process, the number of B2B exchanges have sharply increased this year. But of a total of 170 Internet exchanges in operation in the third quarter, only 24 have actual transaction records.
Industries raced to establish vertical B2B portals, or sites specializing in specific fields, including textile, electronics, information technology (IT), chemical and health care businesses. But companies were hesitant to bring the business online, in favor of their existing offline channels. A modest success was achieved in the maintenance, repair and operation (MRO) marketplace, which distributes office fixes and offers maintenance service online.
Unlike general e-markets, online auction houses that encompass B2B, B2C, and C2C (customer-to-customer) are proving the strong potential of their business model.
The total transaction volume is estimated to reach 300 billion won, a whopping four-fold jump from 70 billion won recorded last year.
Industry leader Auction.com said it mediated a 3.15 billion won worth of products in December, a 20-fold growth from the comparable period of last year. Its members swelled to 2.5 million from 420,000 at the end of last year. The company began to charge fee on transactions last December.
Its success has ignited the launches of a host of auction sites while prompting portals and other e-commerce mediators to adopt the method, which is regarded as suitable for the interactive nature of the Internet.
E-commerce boosts revenues, but far from profitability
Business-to-consumer (B2C) e-commerce failed to win consumers' hearts and wallets in 2000, while the much touted business-to-business (B2B) exchange still has a long way to go to fulfill its promise of fast, efficient, cheap business deals.
The domestic B2C market is estimated to reach 1.13 trillion won in 2000, a 300 percent growth year-on-year, and sales revenue of major operators including Hansol CS Club, Samsung Mall and Interpark more than doubled.
But profitability is a distant prospect for most e-retailers, due to a fierce price competition that lowered their margins and heavy costs in system, marketing, logistics, and customer management.
Large online department stores are faced with competition from smaller, specialized shopping malls, notably bookstores like Yes24 and Aladdin, which are increasingly catching on with customers in niche markets. Government data show shopping malls selling particular lines of products accounted 85 percent of the total 1,850 B2C sites in the third quarter.
Major hurdles for e-retailers are security and settlement system. A major progress was made in these aspects with development and wide adoption of security and electronic payment solutions. The government also promoted the use of digital signature and introduced new certificate system regarding safety of online transaction.
Under a strong government support and industry expectations of streamlined procurement and trading process, the number of B2B exchanges have sharply increased this year. But of a total of 170 Internet exchanges in operation in the third quarter, only 24 have actual transaction records.
Industries raced to establish vertical B2B portals, or sites specializing in specific fields, including textile, electronics, information technology (IT), chemical and health care businesses. But companies were hesitant to bring the business online, in favor of their existing offline channels. A modest success was achieved in the maintenance, repair and operation (MRO) marketplace, which distributes office fixes and offers maintenance service online.
Unlike general e-markets, online auction houses that encompass B2B, B2C, and C2C (customer-to-customer) are proving the strong potential of their business model.
The total transaction volume is estimated to reach 300 billion won, a whopping four-fold jump from 70 billion won recorded last year.
Industry leader Auction.com said it mediated a 3.15 billion won worth of products in December, a 20-fold growth from the comparable period of last year. Its members swelled to 2.5 million from 420,000 at the end of last year. The company began to charge fee on transactions last December.
Its success has ignited the launches of a host of auction sites while prompting portals and other e-commerce mediators to adopt the method, which is regarded as suitable for the interactive nature of the Internet.
