April 20, 2024

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[THE INVESTOR] Admitting that the technical gap is closing between South Korean electronics giants and Chinese competitors, the head of LG Electronics said Sept. 2  that he would take the firm’s new high-end lineup of LG SIGNATURE as a vehicle to enhance its brand value and customer loyalty worldwide.

Jo Seong-jin, CEO of the home appliance and air solution company of LG Electronics, also implied that the company is taking a different approach in premium marketing from its rival Samsung.

Jo Seong-jin, CEO of LG Electronics’ home appliance.

 
In comparison to Samsung’s strategy in mass producing affordable premium products, Jo said LG will have its super luxury brand SIGNATURE take the lead in improving the value of its products in sub categories.

“If LG SIGNATURE wins recognition, products in sub categories that are considerably similar to that would gain premium status at the same time,” said Jo when asked whether he would consider adjusting the prices of the LG SIGNATURE lineup.

LG recently introduced its SIGNATURE lineup to Europe during the annual IFA technology trade show in Berlin.

The South Korean electronics giant collaborated with renowned industrial designer Torsten Valeur to create timeless designs for refrigerators, air purifiers, washers and TVs.

It is not just the design that matters, with the machines also excelling in performance, durability and energy efficiency that can compete with traditional European players such as Miele, the company said. The brand is not geared toward price competition, it added.

The CEO said he feels confident with Signature’s unexpected performance in the first half of the year. After introducing the lineup in May in South Korea, the SIGNATURE products sold two to three times more than the company had expected. The company is considering making fresh investments to increase production capacity.

“We thought it would be difficult to sell the washing machines priced at around 3 million won ($2,687) and the fridge nearly at 8.5 million won, in the (Korean) market that has nearly a 100 percent of supply rate of those kinds (of products),” he said.

“I am greatly satisfied with (SIGNATURE’s performance) in Korea. … I believe the brand will settle down well in Europe and the US.”

LG putting its SIGNATURE lineup at the core of its global strategy comes amid intensifying market competition fueled by Chinese competitors. At the IFA, Chinese tech companies including Haier, TCL and Skyworth demonstrated their competitive advantages in price while touting technical advances as well.

It is true that LG feels the threat posed by emerging Chinese competitors particularly those in the mid-low segment, Jo said. Their capacities in engineering and selling home appliances have reached 98 percent of the level that South Korean firms currently hold. But they still lack consistency in keeping their designs and identities, he said.

Along with the premium lineup, LG plans to generate more revenue by selling core components – the Inverter Linear compressors of fridges and air conditioners, and directive drive motor for washers.

The CEO said component sales consists of around 20 percent of its overall business-to-business segment. But he wants to bring that proportion up to 50 percent. It currently accounts for around 10 percent of LG Electronics’ sales.

Jo, however, expressed concerns about the looming Hanjin crisis, particularly the possible supply delay to the US market later this year. Debt-ridden Hanjin Shipping last week filed for a court-led restructuring scheme, after its creditors decided to suspend their financial support to the shipper.

“The situation appears to be more serious than we thought. The biggest problem for us is the US market,” he said referring to the peak sales season in November and December.

The US market makes up about 30 percent of LG’s home appliances supply worldwide. Hanjin handled less than 20 percent of LG’s supply to the US, an LG official said, adding that the company is moving fast to secure alternatives. LG has no manufacturing unit of home appliances in North America.

By Cho Chung-un/ The Korea Herald (christory@heraldcorp.com)