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Line Corporation has eyes on China despite block

When Japanese messaging app Line found itself shut out of China, it took a somewhat unusual step.

Instead of packing its bags at the disappointment of losing access to the largest smartphone market in the world, it started banking on plush toys and other merchandise.

"Our messenger app remains unavailable in China at the moment. But when Line first entered China, we saw a huge popularity for its characters, and that remains today," said Takeshi Idezawa, Line Corporation's chief executive.

China blocked a number of foreign chat services in August 2014 in a bid to tighten censorship on mobile messaging apps, hitting Line and Korean chat app KakaoTalk, among others.

Despite the government move, Line is undeterred.

"We haven't given up (on China even though) our messenger app is not available in China at the moment. We'll monitor the situation and proceed accordingly," Idezawa told CNBC's "Managing Asia".

The Japan-based company which is owned by South Korea's largest web portal operator Naver. is popular in Asia and it has more than 200 million active users globally. Line's key markets are Japan, Taiwan, Thailand and Indonesia.

The company is keen to expand its reach and will now focus on the Middle East and the rest of Southeast Asia, said Idezawa.

Takeshi Idezawa, Line CEO.
CNBC
Takeshi Idezawa, Line CEO.

The company is competing in a crowded global marketplace dominated by Whatsapp, Facebook Messenger and Wechat in China.

"Of course, overtaking the internet giants of the world to become number one is our objective."

Last year, Line posted revenues of over US$1 billion, a 40 percent jump over the year before. The company is profitable and expanding its services beyond chat.

"Revenue contributions have been changing. We are currently seeing the biggest growth from advertising, so much so that the three major pillars of advertising, gaming and sticker sales are somewhat balanced now," said Idezawa.

In Japan, where Line is the dominant chat app, users buy digital stickers to link to messages and use the app for music searches.

Idezawa said it will create platforms in key markets to access the internet and has introduced a news service "Line News" and a live broadcast service "Line Live". The company also launched the B612 camera app for selfies which has been downloaded over 150 million times since its launch in August 2014.

To expand its user base, Line is working to offer a low-cost mobile phone service in Japan that will come with unlimited data at a small fee.

"Among the Asian nations, Japan has a relatively low ownership rate of smart phones. Currently only half of the entire population is using smart phones."

"As we're a smart phone service, the more smart phone users there are, the greater the convenience we can bring them through Line. Our biggest objective here is to convert the remaining 60 million phone users to become smart phone users," said Idezawa.

The company believes the new offering could be profitable in a short time and has received queries from outside Japan about similar low-cost smartphone services.

The chat app will remain free, affirmed Idezawa.

While there are reports of an impending initial public offering in the works, Idezawa is not giving anything away, other than that the company is not for sale.

"Apart from IPO there are various other options for funding. There are also trends of the day and trends of funding. We will make a comprehensive decision."

"All options are possible."