LG Electronics to boost mass market presence vs Chinese peers
Eui-Myung Park
Sep 09, 2024 (Gmt+09:00)
LG Electronics CEO Cho Joo-wan speaks to reporters at IFA 2024 in Berlin (Courtesy of LG Electronics) BERLIN – LG Electronics Inc., the world's largest home appliances maker, will adjust its premium-oriented strategy to expand its mass market product lineup to stay ahead of Chinese rivals rapidly gaining market ground with their diverse products, its Chief Executive Cho Joo-wan said last week.
"We should no longer downplay Chinese home appliances, but need to be afraid of them," Cho told reporters in a news conference on Sept. 6 on the sidelines of IFA Berlin 2024. IFA Berlin is the world’s largest consumer and electronics show.
At IFA 2024, he discussed the significant narrowing in its lead against Chinese rivals such as TCL and Hisense, which showcased some of the world's first and world's leading products for the event.
“We need to be on high alert (to Chinese companies) from the perspective of product diversification,” Cho added.
In the global robot vacuum cleaner market, LG is trailing China’s Roborock, the world’s No. 1 robot vacuum cleaner brand.
To maintain its leadership in the home electronics market, Cho said that it will increase its product affordability to 70-90% of the customer group, from its current target of 60%.
“We must not follow in the footsteps of Japanese companies that lost market share to us by maintaining a premium strategy, not producing cost-effective products,” he noted.
LG Electronics CEO Cho Joo-wan checks out the company's exhibition booth at IFA 2024 in Berlin (Courtesy of LG Electronics)COMMUNICATION WITH GLOBAL INVESTORS
After IFA 2024, he will fly to London to meet with global investors and present the company's business achievements and portfolio in detail as it is transforming into an AI-based company with a focus on future mobility, robots and smart factories.
“In the home appliance sector, played down as a mature market, we have achieved a growth rate of over 10% for several years with an operating profit margin close to 10%,” Cho told reporters
“We have a balanced business portfolio, with business-to-business transactions accounting for 35% of total sales. We will actively share these details (with investors),” he said.
In May, Cho met with global investors in the US as part of the company’s efforts to boost communication with investors and achieve a fair valuation.
But since its earnings release on July 25, its share price has slid 10.4% to close at 103,400 won on Monday, in line with the wider Kospi market’s decline of 10.8% over the same period.
LG Electronics' robot cleaners To strengthen its AI push, LG has been collaborating with Big Tech such as Google, Microsoft and Qualcomm. As an example, it in June unveiled home robots featuring Google’s AI intelligence model GeminiAI.
Cho recently held a one-on-one meeting with Microsoft CEO Satya Nadella, after sitting down with him at a Microsoft CEO summit.
“We discussed in what areas we can make good use of AI and what its potential is,” he said about the one-on-one meeting with Nadella.
LG is also exploring cooperation with Qualcomm to develop infotainment technology. LG is the US chipset maker's biggest customer among automotive electronics makers.
“We will discuss with Qualcomm how to realize the evolution of AI in vehicles,” Cho added.
INDIA UNIT IPO
Regarding an IPO of LG Electronics’ Indian arm, he reiterated that this is one of several options under consideration and nothing has been yet confirmed about its trading debut on the Indian stock market.
“In India, LG has been a household brand, so we’re considering various options with a vision of becoming a national brand. We’re aiming to triple sales in India by 2030," Cho said.