LG expects 20% growth
Established in 1958, LG Electronics is a leader and technological innovator of consumer products, home appliances and mobile communications, employing more than 82,000 people in more than 110 operations, including 81 subsidiaries around the world. Comprising four business divisions – mobile communications, digital appliance, digital display and digital media, LG Electronics is pursuing its 21st Century vision of becoming a true global digital leader that can meets its customer needs with its innovative digital products and services.
LG Electronics sales in the Gulf, Middle East and Africa recorded a 25 per cent increase to reach $3.2 billion (Dh11.7bn) in 2007, compared to about $2.3bn (Dh8.4bn) in 2006. LG’s President for Middle East and Africa operations Ki Wan Kim said sales in the Gulf, excluding Saudi Arabia, rose to $800m (Dh2.9bn), with the Saudi market coming on top at $500m (Dh1.8bn) followed by the UAE and other Gulf markets with $300m (Dh1.1bn).
What percentage was the region’s contribution to LG’s total sales volume?
The region contributed seven per cent to LG’s total sales worldwide. And we expect the region’s share to go up in 2008, given the pace of development in the Gulf.
What are your expectations for 2008?
We expect a rate of growth exceeding 20 per cent.
What is your share of the market?
The share differs from one market to another and from one product to another. But I can say we have 24 per cent of the LCD market and 45 per cent for the plasma screens. However, we lag behind in the mobile phone market since we entered the segment late compared to others.
What is your country-wise share?
We occupy the first position in Saudi Arabia, especially in air conditioning, as we have an assembly plant there.
Do you have plans to open a plant in the UAE?
No, not at the moment. The shortage of importers of electronics and electrical appliance components in the region is an obstacle because the shipping of these items costs a great deal of money as the majority of exporters are in China and Japan. Also the cost of labour in the UAE is high compared with India, China and Indonesia, where we have plants.
What is your marketing strategy in the light of tough competition?
Competition is tough in the region, especially in the UAE market, which is open and difficult. The absence of taxes and duties has contributed to attracting companies from all over the world. On the other hand, to understand a multi-national and multi-background market is also difficult. The UAE market has 133 nationalities and addressing them is a challenge in itself. Therefore, we have adopted the priority policy: we now focus on the new generation and those with a high income, as well as nationals.
Has your manufacturing strategy changed with the change in the LG concept?
Yes. LG has changed its policy to keep up with demand and the needs of consumers. We started to make what the consumer wanted and desired rather than what LG wanted. We listen to our customers and change according to their demands. This is our slogan, to reach customers. Also we invest four to five per cent in research and development to be able to satisfy our customers.
What are your plans for the UAE market?
We are studying the possibility of partnerships with a number of UAE institutions to support training for our air conditioning products. Shortage of experience and skills as well as our desire to give the best to our customers pushes us to find solutions to set up training centres. We also plan to open new showrooms in Abu Dhabi as it is a promising and important market.
What makes LG products special?
As I said, we design our products in the way the customer wants them. And we use high technology. For instance, all LG refrigerators have been designed according to principles of healthy living, which preserves vitamins for a longer time. The refrigerators are also supplied with an anti-bacteria system. LG also has a washing machine that generates steam to kill germs. And LG’s air purifier boosts the rate of oxygen by two per cent, which is good for people with asthma. As you can see our innovative products are suitable for the Gulf region.
Have your sales been affected by the drop in the value of the dollar?
Yes, they have been affected and our profits have gone down. But we try to compensate through lowering the cost with the use of high technology as we are not able to raise prices in the light of competition.
But we notice that LG prices are higher than other brands’?
It is true, because we use high technology and good design.
Have you been affected by Chinese products?
Chinese products are a headache and we try, through the LG control unit, to keep them in check. And from time to time, unknown products attempt to enter the market using the LG name, forcing us to keep a close and constant watch.
What are your main challenges in the Middle East and Africa and how do you intend to handle these?
My strategy in the Middle East and Africa is what I call STP or segment/ target/ positioning. I believe to grow, one needs to be different.
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