Korean technology companies are growing increasingly concerned about their Middle East expansion plans as the risk of war between the United States and Iran escalates.
The Middle East has been an attractive market for Korean firms due to relatively limited influence from global Big Tech players and government-led initiatives to develop advanced industries. While businesses have not suffered immediate damage, industry observers warn that prolonged conflict could force strategic changes.
According to IT industry sources on January 11, employees at Yanolja's offices in Israel and the United Arab Emirates are currently taking shelter in bomb shelters and personal bunkers while monitoring the situation.
Yanolja, a travel platform and solutions provider, has been acquiring overseas companies for several years to expand its B2B hotel management solutions business. As a result, its enterprise solutions division revenue grew rapidly, reaching 261.7 billion won in the first three quarters of last year—exceeding 34% of total revenue of 769.046 billion won.
MST Travel, a Middle East-based subsidiary with numerous hotel clients across the Middle East and Europe, played a significant role in this growth. The subsidiary's key business hub is now within the conflict zone.
The concerns are particularly acute as Yanolja had planned to more aggressively target the Middle East region starting this year. The hotel enterprise solutions business involves digitalizing overall accommodation facility management, making it well-suited for regions with high receptivity to digital transformation and numerous new lodging facilities. Saudi Arabia and the UAE are markets the company cannot afford to abandon, given their national-level tourism industry development and large-scale DX initiatives.
Korean tech companies facing obstacles in the Middle East span multiple sectors including digital twin technology, mobility, and gaming.
Naver secured a $100 million digital twin development project from the Saudi government in 2024 and has been conducting work on-site. The company established a local subsidiary, Naver Arabia, in Riyadh last year and dispatched Korean employees, but temporarily recalled them due to the current situation. Some personnel have reportedly returned to Saudi Arabia recently to continue operations.
Nexon, which operates cryptocurrency issuer Nexspace in Abu Dhabi, UAE, is temporarily repatriating all local employees. Kakao Mobility recently signed a paid proof-of-concept contract to supply large-scale parking solutions to the Diriyah area near Riyadh, Saudi Arabia, and is closely monitoring the war situation. Krafton, which invested in gaming companies in Jordan in 2021 and Turkey last year, faces similar concerns.
Companies maintain that hub cities like Dubai and Riyadh face less direct impact from the war and business operations remain unaffected. However, observers predict Middle East operations could become more challenging if the conflict becomes prolonged.
"It's true that this incident has heightened our sense of crisis," said an IT industry official. "We need to reexamine our risk management strategies."
Kim Tae-hwang, professor of international trade at Myongji University, advised: "If companies can develop strategies to minimize geopolitical factors in response to this situation, the Middle East market could actually become a breakthrough opportunity in the medium to long term."
