3. Helping small businesses
Kakao COVID-19 Report, 2nd Edition
Emergency financing for small business owners: 22.34 billion won
The domestic economy suffered due to the endless social distancing regulations enforced during the pandemic. While our daily life stopped, small business owners on the streets and farmers producing agricultural products faced big challenges. For these small businesses going through financial difficulties, the Kakao community has tried to develop various support measures to help them overcome them. To this end, Kakao has provided support for small businesses for market development, service fee refund, financing for loan interest and so on, which worth 22.34 billion won.
# Kakao Games – Cheer up, internet cafe owners!
<Internet cafes subject to refund>
Internet cafes subject to refund: 8000 businesses
Kakao Games D-Coin refund amount: 700 million won
As social distancing to prevent COVID-19 has continued, preventive measures for risk-prone facilities such as internet cafes and karaokes have been reinforced.
On top of these regulations, citizens avoided most indoor facilities in fear of COVID-19 infection. Thus, these facilities were put under economic pressures. According to media reports, the number of karaokes, internet cafes and bars which have closed up for the past 2 years is 13,000, among which 7,000 facilities have closed business only in the second half of 2020.
To console and help internet cafe owners facing difficulties, Kakao refunded the business owner fee (D-Coin) in full for one month between Sept. 22, 2020 and Oct. 21, 2020 by converting them into free D-Coins. About 8,000 internet cafes were subjected to the refund, with the total refund amount reaching 700,000,000 won.
Homepage of the internet cafe support service in Kakao Games# Kakao Makers – Until all produce prices are stabilized
Volume of overproduced agricultural and fishery products sold: 1,017 tons
(12 items: Tomato, zucchini, radish, red pepper powder, ginseng, Odae white rice, red ginseng, carrot, mountain trout, Jeju radish, onion, sweet potato)
Number of customers participating in the projects: 148,052
The Kakao Makers platform operates based on the slogan, “Production without stocks.”
It took an interest in the reduction of food consumption caused by extended social distancing measures imposed due to the prolonged COVID-19 pandemic. This is because farmers and fishermen lost markets and were faced with increasing stocks. Since agricultural and fishery products have a shorter shelf life than industrial products, farmers and fishermen were also saddled with disposal costs.
Thus, Kakao Makers attempted to find markets for stocks piled up in farming and fishing villages. It planned to contribute to lessening the burden of overproduction for farmers and fishermen in the short term, and to recovering market prices by stabilizing supply and demand in the long term.
Agricultural and fishery products which could be shipped in good shape, were sold directly on the Kakao Maker platform, while soft and fragile products like eggs and tangerines, which could not be shipped directly from farms in large quantities, were processed as food products containing original ingredients as much as possible.
Between Aug. 2021 and Apr. 2022, 12 items among overproduced agricultural and fishery products (tomato, zucchini, radish, red pepper powder, ginseng, Odae white rice, red ginseng, carrot, mountain trout, Jeju radish, onion, sweet potato) were sold. The sales volume was 1,017 tons in total. 148,052 users participated in these projects to help farmers.
Overproduced agricultural products sold on Kakao Makers# Kakao Commerce – Developing new online sales channels
<Support for market development for local specialties and marketing events>
Participation by 16 local government bodies
Annual sales recording 13B won
Due to stronger social distancing policies and the economic contraction caused by COVID-19, people began to avoid going outside for grocery shopping, and many small business owners suffered due to the loss of existing sales channels.
Kakao Commerce joined the efforts to help small business owners, traditional business owners and SMEs find new sales channels through online platforms and overcome financial difficulties.
First, Kakao Commerce sold online agricultural and fishery products whose sales volume had decreased due to COVID-19, and also supported marketing events through KakaoTalk Shopping and Kakao Farmer Talk Channel in 2021. In 2021 alone, 16 local government bodies participated in this campaign and total sales recorded approximately 13,000,000,0000 won. Kakao won a commendation from the Governor of Gangwon Province in late 2021 in recognition of its support for sales channel development. In Nov. 2021, Kakao Commerce signed business agreements with South Jeolla Province and South Chungcheong Province to strengthen sales support for local specialties and win-win relationships in 2022.
<Support for SME entrepreneur consulting>
12 online live training courses, participated by 1,719 sellers
Number of friends in Talk Store Community Talk Channel: 19,000
Kakao Commerce provides online and offline consulting for small businesses selling products in the KakaoTalk Store.
In 2021, there were 12 online live training events, with seven new courses launched, and 1,719 trainees participated in the program. For business owners who are unable to attend the live training courses, lecture videos and basic manual videos are available for viewing in the Talk Store Community Service (YouTube, Kakao TV). There is also a open chatroom for Talk Store sellers to facilitate information exchange among themselves. Currently, the number of friends in the Talk Store Community Talk Channel stands at 19,000.
# Kakao Commerce – Finding ‘untact’ sales channels for SMEs
Kakao Commerce also provided support for the sustainable growth of SMEs.
In Nov. 1, 2021, it signed a business agreement with the Seoul Business Agency to support the development of online sales channels for locally based small business owners in collaboration with six Creative Economy Innovation Centers around the country. To this end, the 2021 Kakao Class courses were created, and trainings and consulting for online business were provided.
In Dec. 2021, it organized a special Talk Deal event selling products made by Korean food grand masters in collaboration with the Korean Food Grand Master Association, aiming at promoting traditional Korean food and creating online sales channels. 16 food products made with the know-how of Korean food grand masters were carefully selected and introduced. Marketing events were also held to attract interested customer and generate sales.
In addition, Kakao Commerce also worked with the Cobe Baby Fair, a baby product exhibition, in Oct. 2021 and held the Talk Deal Baby Fair using the Talk Deal in Kakao Shopping. To date, 9 ‘untact’ fairs have been organized by converting offline shopping events facing the threat of reduction or cancellation into online events in order to help Kakao’s partners facing difficulties due to COVID-19 as well as consumers who wanted shopping information and purchase opportunities. Over 100 sellers became partners in Talk Store through the untact fairs in KakaoTalk Shopping even though they had no experience in online business in the past. As such, Kakao Commerce is substantially contributing to finding new sales channels for offline business owners.
# Kakao Bank – Cheering for mid-to-low credit holders
<Kakao Bank's support for mid-to-low credict customers
Support for 1st month interest for loans for mid-to-low credit holders: 210,000 customers (8 billion won)
Support for the 26-week installment savings account: 640 million won
Application service for the National Support Fund: Used by 1.5 million users
Due to the spread of COVID-19, a number of people experienced financial instability.
In early 2021 Kakao Bank announced that it would expand loan services for mid-to-low credit holders, and increased loans for them based on its own credit rating. Loan products were restructured so that even customers with mid-to-low credit ratings in the bottom 50% could get a loan up to 100 million won with the minimum interest rate of 3%. New loan products for low credit holders with a 500 credit score were also introduced. As a result, the total amount of loans for mid-to-low credit holders rose over 3.7 times to 1,716,600,000,000 won (2021) from 467,900,000,000 won (2020).
The proportion of customers with low and medium credit ratings among all loan customers jumped from 4.1% in 2020 to 30% in 2021, and starting from Nov. 2021, new credit loans were allowed only for customers with mid-to-low credit ratings.
Analysis was conducted on the loan repayment status of customers with low and medium credit ratings who obtained loans from Kakao Bank between Aug. 2021 and Jan. 2022. The result showed that six out of ten customers borrowed money from Kakao Bank to repay loans from non-bank lenders.
The average amount of redemption was 3.5 million won. Some customers saw a big increase in credit scores due to the repayment of loans to non-bank lenders and the use of loans provided by the 1st financial sector. Others exercised a right to request interest rate reduction based in improved credit scores, and lowered interest rates on their Kakao Bank loans significantly.
Kakao Bank exempted early repayment fees on loans granted to customers with mid-to-low credit ratings, as well as the first month interest for 210,000 customers, which amounts to 8 billion won, taking out new loans designed for low-and-mid credit holders, helping them save financial costs.
Customers with mid-to-low credit ratings were also offered a special promotion for 26-week installment savings accounts that paid twice as much interest as those with high credit scores. The financial support for these programs were worth approximately 640 million won. In addition, Kakao Bank provided a service through its mobile application enabling users to check if they were eligible for the National Support Fund and to apply for it conveniently. A total of 1.5 million users used this service.
Status of loans for mid to low credit holders# Kakao Pay: Offloading the burden of small businesses
To help small businesses facing difficulties caused by the Covid-19 pandemic, Kakao Pay exempted all service fees regardless of sales volume for offline Kakao Pay affiliate members between March and late June in 2020. In addition, efforts for mutually beneficial cooperation were delivered including providing a SOHO kit containing a QR code sticker along with a notice and service fee exemption for small businesses.
At the same time, a loan program in partnership with SC Bank Korea, Welcome Savings Bank, SBI Savings Bank and People Fund was made available to business owners facing difficulties due to COVID-19. For two months from Mar. 2020, business owners applying for loans through the Loan Comparison service in Kakao Pay received preferential interest rates and a financial support for interest payment.
Meanwhile, Kakao Pay’s payment service offered an environment where users could conduct financial transactions safely amid concerns of the COVID-19 spread. With the payment system of Kakao Pay, customers could just present a QR code on their mobile screen, or scan a QR code on the SOHO kit in a store. It helped both customers and business owners conduct transactions safely and conveniently without risking a direct contact, unlike cash or credit card payment methods.
Kakao Pay’s SOHO Payment sign (left) and a banner on service fee exemption (right)# Kakao – Overcoming COVID-19 with the OECD
In Apr. 2020, Kakao participated in OECD’s Digital for SMEs Initiative (D4SME) as a member of the operational committee and discussed measures to help SMEs recover from the impact of COVID-19. The D4SME is a global dialogue promoted by the Center for Entrepreneurship, SMEs, Regions and Cities of the OECD based on the judgment that digitalization for SMEs is urgent across the globe. The operational committee consists of three companies: Kakao, Amazon and Facebook.
Kakao’s efforts to overcome the impact of the pandemic was also introduced in the report of the International Transportation Forum under the OECD (OECD-ITF) published on Sept. 3, 2020.
In Feb. 2021, Kakao participated in the Roundtable of the OECD D4SME and showcased ‘Kakao Work’ and the ‘Kakao Wallet and ID’ service as the “effective digital tools to improve remote work and quality of life.” The OECD D2SME is a global dialogue discussing “Digital for SMEs,” led by the Center for Entrepreneurship, SMEs, Regions and Cities of the OECD.
In June 2021, Kakao introduced its efforts to overcome the threat of COVID-19 with digital technologies at the global conference RightsCon, the world’s leading summit on human rights in the digital age. In 2011, it began as the Silicon Valley Human Rights Conference and marked its 10th anniversary this year. In the event, Kakao showcased digital technologies to overcome COVID-19, such as QR check-in, public mask sale information, leftover vaccine notification and so on.
The program of the RightsCon 2021 event that Kakao participated in[Kakao TV] What we can do in a world halted by COVID-19
Kakao’s commitment and responsibility to make the world a better place. At the forefront to unprecedented changes brought about by the pandemic, Kakao posed a question “What should we do?” and then tried its best to make meaningful changes in its own ways. This is a story of people at Kakao who have worked round the clock doing their jobs to help other people have a safe tomorrow.
2022 Kakao COVID-19 Report, 2nd Edition
Part 1: Standing up to COVID-19
Part 2: Connecting via Kakao
Part 3: Helping small businesses
Part 4: We are in this together
Part 5: Life goes on
Part 6: Kakao is always nearby
Part 7: For our Krew’s safety
2020 COVID-19 Report, 1st Edition click here
Kakao Corporation owns the publication rights to the Kakao COVID-19 Report, and prohibits the use of the Kakao COVID-19 Report for commercial purposes. The Kakao COVID-19 Report must be mentioned as the source, even when the data is used or cited within circumstances specified by copyright law.
Click below to download PDF version of the Kakao COVID-19 Report.