Woowa Brothers Corp. and Viva Republica Inc., South Korea’s most valuable unicorns, have pulled the plug on some of their overseas businesses after failing to win the hearts of local consumers, raising concerns over their future growth momentum.
Its Vietnam operation Baemin Vietnam suffered from consecutive losses after failing to lure local consumers away from its bigger regional rivals Grab and ShopeeFood, which control 45% and 41% of the country’s online food ordering and delivery market, respectively, said a company official.
Baemin, Korea’s No. 1 food delivery app, advanced into about 10 cities in Vietnam and spent a lot on marketing to attract local people but its plans did not pan out, causing the company massive losses, the official added.
WBV Retail Co., Woowa Brothers’ retail operation in Vietnam in charge of meal kits and grocery delivery services, also shuttered its business less than a year after its launch.
(Graphics by Sunny Park) Industry experts attributed the Korean startup’s failure in developing its unique localization strategies that could meet local people’s special demands to its defeat by bigger regional rivals in Vietnam.
A lack of communication with the local government on country-specific regulations and policies is also blamed for Korean startups’ early withdrawals from the market.
EXITS BY OTHER KOREAN UNICORNS
Woowa Brothers is not the only Korean unicorn, valued at over $1 billion, which has stumbled during global expansion.
It made inroads into Vietnam with Toss armed with non-financial services such as pedometer rewards in 2019 and then later offered fintech services such as small loans, issuance of virtual prepaid cards and credit rating services.
The app secured more than 3 million local users for its pedometer reward service in the Southeast Asian country but failed to grow into a major financial platform.
Its plan to introduce new financial services in the market also hit a snag due to the Vietnamese government’s and central bank’s strict regulations.
As of 2022, Toss operations in Vietnam recorded 10.9 billion won ($7.8 million) in comprehensive deficit. It liquidated its Vietnamese operations last year.
Danggeun Market Inc. is also struggling in Canada and Japan, where in both countries it operates the hyperlocal marketplace and community app Karrot, which is very popular in Korea.
NEED MORE TAILORED STRATEGIES FOR DIFFERENT MARKETS
So many Korean companies quickly gave up their businesses in Vietnam after failing to find reliable local resources to help them address various domestic issues, ranging from legal to regulatory and taxation, said a chief executive of a Korean startup operating in Southeast Asia.
An overseas operation head of a Korean venture capital firm also cited low-income base and purchasing power in Southeast Asian countries for Korean startups’ failure to generate profit in these markets, especially in the healthcare, fashion and game businesses.
A series of Korean unicorns’ global expansion flops raises concern that they will soon hit their growth ceiling.
As they are already major players in their respective markets in Korea, they need to find new opportunities abroad.
But what they have found so far in overseas markets is their lack of competitive edge to help them against global rivals.
Write to Eun-Yi Ko at koko@hankyung.com Sookyung Seo edited this article.
