Middle East, land of dreams for South Korean IT firms

South Korea’s information technology and game companies are rushing to the Middle East to seek global growth drivers as the oil-rich countries in the region are expanding their IT infrastructure.

Naver Corp., South Korea’s online giant, has started setting up a digital twin platform, a virtual representation of an object or system designed to accurately reflect a physical object, in Saudi Arabia. The company last October won a $100 million deal to establish the platforms in major Saudi cities such as Riyadh from the kingdom’s Ministry of Municipal and Rural Affairs (MOMRAH).

Naver Z Corp., the metaverse arm of the online juggernaut, has been working with the United Arab Emirates’ Sharjah Media City to jointly develop metaverse technology and content.

“We aim to get rid of our image as a domestic-only company through global expansion centered on the Middle East,” a Naver official said.

POLICIES TO AVOID RELIANCE ON BIG TECH NAMES

The information and communications technology (ICT) industry in the Middle East was forecast to grow by 12.8% to $95 billion by 2025 from $84.2 billion in 2020, according to business consulting firm Frost & Sullivan.

Major companies in Middle Eastern countries, especially the UAE, are actively investing in artificial intelligence to cut their economic reliance on oil. Government authorities prefer South Korean tech companies as they aim to build IT infrastructures without depending on Big Tech firms in English-speaking nations such as the US.

The UAE has taken great measures to attract IT companies. The country issues a special 10-year visa for investors and experts in AI, big data and software, for example.

Such policies make business in the region easier than major markets such as the US, which has already been dominated by Big Tech companies, and Europe, which has tough privacy and copyright regulations, IT industry sources in Seoul said.

CYBER SECURITY, CLOUD, GAME

South Korea’s cyber security, cloud and game companies have also accelerated their foray into the region.

AhnLab Inc., an information security solutions provider, signed an agreement to establish a joint venture with Saudi Arabian Information Technology Company (SITE), a security and cloud service national enterprise fully funded by the kingdom’s sovereign wealth fund Public Investment Fund (PIF).

Bespin Global Inc., a South Korean cloud infrastructure firm, joined hands with the cloud business of the Emirati telecommunications company e& to become the region’s top managed service provider.

South Korean game developers are actively working on blockchain games in the Middle East.

WeMade Co., the developer of the global hit massively multiplayer online roleplaying game (MMORPG) Mir4, set up WEMIX MENA Ltd., a unit in the UAE as a base for the blockchain game and its cryptocurrency WEMIX businesses.

“The region is business-friendly for the virtual asset and blockchain game sector,” said a WeMade official in Seoul. “UAE Authorities offer tax benefits with easier regulatory frameworks for digital assets in its free zones.”

The UAE has many such free zones, special economic areas that have special tax, customs and import regimes. They are governed by their own framework of regulations.

Gaming Giant Nexon Co. also established subsidiaries in the country – Nexon Universe Global and Nexpace – to expand its global blockchain business.

The South Korean-Japanese game publisher listed on the Tokyo Stock Exchange plans to release MapleStory N, an evolved version combined with the blockchain technology of the iconic MMORPG MapleStory in the near term.

Write to Ji-Eun Jeong and Dong-jin Hwang at jeong@hankyung.com
 

Jongwoo Cheon edited this article.