Line founder named co-chief executive as Japan goes cashless

Seoul

LINE Corp is elevating its founder to co-chief executive officer as Japan's largest messaging service looks to reignite growth by tapping into the country's push to go cashless.

Shin Jung-ho's promotion will take effect from April 1, the Tokyo-based company said in a statement on Thursday. Along with CEO Takeshi Idezawa, he is part of a triumvirate that also includes chief strategy officer Jun Masuda.

Faced with a stagnant user base and a business model that relies on advertising, Line is doubling down on payments to underpin other financial offerings and transform into an all-in-one app like Tencent Holdings Ltd's WeChat. Mr Shin's move comes just a day after the company announced a mobile-payments partnership with online marketplace Mercari Inc.

"What's most important is that Japan is moving from a cash-centred society to a cashless one," Mr Shin said in an interview before the board meeting. "This year will mark a very important kickoff for competition."

Mr Shin, the third-largest investor in Line, will focus on making Line's services competitive and promoting innovation with Mr Idezawa concentrating on management, revenue and recruitment, the company said.

Mr Shin said he wants to break down silos and oversee the evolution of the messenger app, which boasts about 80 million users in Japan alone.

Shares of Line were little changed on Thursday before the announcement . The stock is little changed this year compared with a 5.9 per cent advance for the benchmark Topix index. Naver Corp, South Korea's biggest search engine, remains the controlling shareholder of Line with a 73 per cent stake, according to data compiled by Bloomberg.

After a meteoric rise in Japan, fuelled by rapid adoption when phone networks faltered after the country's massive 2011 earthquake, Line set about expanding overseas. Since its 2016 initial public offering, the company has scaled back to focus on markets where it is dominant. While its position in Taiwan and Thailand is secure, Mr Shin said it may struggle to get back to the top in Indonesia.

More importantly, Line is growing its share of the Japanese market, which is key to the push into mobile payments as it battles about a dozen rival services.

Mr Shin said the strength of Line's position in Japan will give it an "absolute competitive edge" as it adds financial service because consumers will want to use the app they find most indispensable.

"Shin faces competition from very deep-pocketed rivals, but his advantage is in having an app with very high usage," said Vey-Sern Ling, a Bloomberg Intelligence analyst.

Smart speakers are another area of focus on to show off Line's prowess in AI, Mr Shin said. BLOOMBERG