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October 10, 2006 11:35 am

Google to open Korean R&D centre

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Google, the global internet search engine, said Tuesday it would set up a research and development centre in South Korea to develop internet search technologies.

It plans to spend about $10m on the R&D centre over the next two years while the Korean government will spend about Won1.25bn in the facility during the same period, according to the state-run Korea Trade Promotion Agency.

Google is the latest global technology company setting up an R&D centre in South Korea, the world’s most wired nation, following Microsoft and other global technology leaders, as the country is increasingly seen as a test bed for innovative technologies.

Google said it was lured by South Korea’s strong growth potential in the technology sector and its world-class engineers. “Korea is one of the most technologically advanced markets in the world,” said Alan Eustace, Google’s senior vice president. “Google’s R&D centre in Korea enables us to recruit local computer scientists to further develop innovative search technologies for Korean users and users around the world.”

Analysts said setting up a research centre in South Korea is part of Google’s efforts to strengthen its presence in Asia, where it is struggling to compete against local rivals.

“Google has done well in English-speaking countries, but it has performed poorly in Asia, especially South Korea. This is an attempt to turn the tables here,” said Wayne Lee at Woori Investment & Securities.

Global internet search engines such as Google and Yahoo have been shunned by South Koreans, who prefer to search information on local portals such as NHN's Naver and Daum Communications. According to KoreanClick, a local online consultancy, Google has just 0.96 per cent share of the Korean web search market and Yahoo has 4.76 per cent, while Naver controls 77.14 per cent and Daum has 10.51 per cent.

Analysts said that Google failed to understand the needs of Korean internet users. Domestic players such as Naver and Daum have rich Korean-language databases because they encourage users to post questions and let others answer them.

“The Korean web search market has been driven by user-created content, as Korean contents are basically limited, which poses a big challenge for Google. It won’t be easy for Google to change the unique search culture here,” said Mr Lee.

Google plans to hire 134 Korean employees, but analysts said a research centre alone will not help the US company change Korean market dynamics much.

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