Messages from
the Co-CEOs
Last updated: 12/22/2022
We will continue to take up new challenges based on our belief in the enormous potential of the Z Holdings Group.
Takeshi IdezawaRepresentative Director, Co-CEO,Marketing & Sales CPO
Steady Progress on PMI at the Governance and
Organizational Administration Levels
One-and-a-half years have passed since the business integration between LINE Corporation (“LINE”) and Z Holdings Corporation. The post-merger integration (PMI) process is progressing well, and we are strengthening aspects of governance that will form the foundation for our future growth. These include company-wide data governance, which was our first major priority. I see this work as an essential requirement for the future success of the Z Holdings Group in the global market. We have also made progress with organizational development. We have rationalized our operations and improved efficiency through the integration or restructuring of duplicated functions and services, resulting in cost synergies of around JPY10 billion in just the first fiscal year after integration.
Another focus has been the development of our management structures. Since product strategies are the key to business growth, we have developed a resource allocation structure targeted toward group-wide optimization instead of optimization for individual group companies. This was achieved through the collaboration between Group Chief Product Officer (GCPO), Jungho Shin and CPOs supervising specific domains, who are responsible for the development of products in their respective areas. This structure ensures timely investment of management resources by allowing us to set priorities and decide what products and technologies are needed most at a given time, by looking at our service and technology infrastructure across the entire Group.
We have created a technology development structure based on our Co-Group Chief Technology Officer (Co-GCTO) framework. Our two Co-GCTOs, Chiaki Fujimon from Z Holdings and Euivin Park from LINE, led the integration of our Group-wide development operations. Our technical staff interact frequently through working groups, collaboration meetings, case study sharing sessions and other activities. This in-depth sharing of technical knowledge is an important phase of our evolution towards an AI tech company.
Wide-Ranging Business Synergies
The integration is also yielding service-related synergy benefits in various areas. A notable example of this is Yahoo! JAPAN Mart by ASKUL, a new quick commerce service created by Yahoo! JAPAN, ASKUL, and Demae-can. With this revolutionary service, which became popular during the COVID-19 pandemic, meals and groceries are delivered in as little as 15 minutes after ordering and payment. In August 2022, we also began operating drop-in stores. We were able to create value through this initiative by bringing together the diverse strengths that exist within the Z Holdings Group.
We have also realized various synergy benefits through our existing businesses. For example, LINE GIFT’s transaction value has expanded dramatically over the past year thanks to its collaboration with Yahoo! JAPAN. This growth was the result of cooperation on various levels, including marketing support provided by the Yahoo Japan Corporation's President, Takao Ozawa and his commerce team, as well as the sharing of expertise about inventory management and e-commerce site operation, aimed at expanding the range of products handled. Synergies between LINE and Yahoo Japan also include the LINE Linkage service introduced by Yahoo! JAPAN Shopping. This service, which allows merchants to chat directly with individual customers through LINE Official Accounts, has been extremely popular and has contributed to bringing substantial growth in transaction value.
The Limitless Potential of Z Holdings
We are making excellent progress with PMI on various levels and achieving significant results. However, I believe that we have only just started to scratch the surface of our potential. From the standpoint of LINE, which I am the CEO of, the business integration with Z Holdings has not only multiplied the size of our business but also expanded the scope of what we can achieve. I anticipated this outcome when we first began to consider the integration, but since our two companies joined, I have become even more aware of the limitless potential of the new Z Holdings Group.
For example, before the integration, LINE was extremely strong in the field of social media but had no major assets in the area of commerce. In contrast, Z Holdings has some extremely powerful commerce-related assets, including Yahoo! JAPAN Shopping, ZOZO, Ikyu, and ASKUL. Their presence has dramatically enhanced LINE’s opportunities in the commerce field.
The PMI process has only just begun, and there is still much that we can and should do. From an organizational development point of view, we need not only to improve our systems, but also to deepen reciprocal understanding among our frontline operations in each segment, and to combine the cultures of LINE and Yahoo Japan to create a corporate culture for the new Z Holdings Group. From a business development view point, too, there are many challenges to take up and new fields to develop, such as the creation of an integrated loyalty program based on ID linkage across LINE, Yahoo Japan, and PayPay.
For example, we have brought together marketing members from LINE and Yahoo Japan to form project teams with the task of exploring future opportunities in the area of sales promotion. These teams have already started to develop products and pursue marketing initiatives. Another challenge will be to develop new opportunities and expand our earnings in the financial services market by combining the capabilities developed by Z Holdings and LINE in the fintech area, which we have positioned as a Strategic Business.
LINE, the Key to the Growth of the Z Holdings Group
I am confident that LINE will play an increasingly important role in the future growth of the Z Holdings Group. A key feature of LINE is that it is extremely effective as a tool for linking not only people and people, but also people and businesses and people and content. LINE currently has approximately 92 million monthly active users*1 just in Japan. It is also Japan’s biggest marketing automation tool, thanks to LINE Official Accounts and other features. As I stated earlier, Yahoo! JAPAN Shopping merchants have substantially increased their transaction value by using LINE Official Accounts. The Z Holdings Group has many other services that can be used to deepen communications with users, such as ZOZO and Ikyu.
LINE is also likely to be the Group’s user contact point and gateway for the proposal of new services and content created by the Z Holdings Group. In this sense, LINE will be a vital hub for the expansion of the Group’s business, and we are therefore determined to drive further growth in LINE’s own business operations through service collaboration across a wide range of areas.
Another important role LINE has to play is the vanguard for the overseas expansion of the Z Holdings Group. Currently we earn most of our revenues within Japan. However, given the characteristics of the Internet sector and our growth scenario for the Z Holdings Group, expansion into overseas markets seems inevitable in the near future. The business base that LINE has built in overseas markets, especially in Asia, will be an important asset at that time.
LINE has used its messaging services as a foundation for steady expansion into other business areas, such as commerce, food delivery, and fintech, in Asian markets, including South Korea, Taiwan, Thailand, and Indonesia. In Taiwan, for example, LINE Pay is the clear leader in the payment service market, and LINE’s banking service has also made an excellent start following its launch in 2021. Moving forward, we aim to use LINE’s customer base and brand power in Asian markets, together with the success formulae that we have established in the Japanese market, to achieve global expansion across the entire Z Holdings Group.
*1 Own survey; LINE app monthly active users in Japan; as of March 31, 2022.
Bringing “WOW!” Experiences to an Expanding User Base
My most important focus as the manager of an Internet-based company can be expressed in just one word: “WOW”. The word “WOW” symbolizes users’ excitement in response to new experiences and the urge to tell friends about these amazing experiences. LINE had consistently identified the “WOW” experience as a key value long before the business integration. We acknowledged the importance of this concept by making “providing new (WOW!) experiences using data/AI” the first of the revised materialities adopted for the Z Holdings Group in March 2022.
I believe that our value as an Internet company is defined by our ability to make as many users as possible say “WOW!” by providing new and amazing experiences. In that sense, this concept can also be called our “user first value.” Until now, the Z Holdings Group has used its diverse assets to provide highly convenient services to large numbers of people in a wide range of fields. To achieve sustainable improvement in our corporate value going forward, we must continue to offer new “WOW!” experiences and new levels of excitement and emotion to more and more users.
Our Continued Commitment to New Challenges
Another element of our corporate philosophy that I have taken to heart is our continuing commitment to new challenges.
When I first started working in this industry, the Internet was still regarded by society in general as a peripheral business area. I continually took up new challenges with my colleagues, and through a trial-and-error approach, we gradually increased the scope and depth of our services and expanded our business and the company. Like LINE, every company in the Z Holdings Group shares such history of taking up new challenges. I see the spirit of challenge as part of the DNA of the entire Group.
However, both companies and people tend to become more conservative as they grow, and before we know it, we find that we are no longer able to take up new challenges. The Internet industry has come to form society’s mainstream, and the Z Holdings Group has emerged as one of Japan’s biggest Internet group with overwhelming market shares and a vast user base. Most of our services, including LINE, Yahoo! JAPAN and PayPay, have become integral parts of the lives of tens of millions of users. As a result, we now have extremely significant social responsibilities as a company.
Yet regardless of the scale of our activities or our increased responsibilities, we must never lose the spirit of continuing to challenge the new and unchartered. The Z Holdings Group has achieved growth by using data and IT to address various “pain points” (unmet user needs) in society. However, many pain points are yet to be addressed. We need to respond to these unmet needs by using our diverse and powerful assets and maximizing our synergies. I think of this as an absolute imperative in terms of our ability to fulfill our social responsibilities while also achieving growth.
I am determined to foster a corporate culture in which people are never satisfied with the status quo and are always looking to the future, without fear of change, and with a continued commitment to taking up new challenges. I believe that the Z Holdings Group has a very bright future.