LG Electronics plans to set up another manufacturing plant in the Middle East, most likely in the Gulf, in the near future.
The South Korean giant has not decided on the location, capital outlay and date but it will set the ball rolling once the regional market reaches critical mass and after entrenching its brand presence.
This date may come sooner as the company expects a turnover of more than $2 billion from the Middle East this year. It reaped a 50 per cent sales gain in the first half of this year and expects to end 2004 with 43 per cent revenue growth in the region, far exceeding the performance in 2003.
In the home appliances segment, the company is eyeing a gain of 10 per cent in the region.Globally, LG Electronics expects a sales growth of 27 per cent in 2004 from $25.7 billion last year.
According to Moon B. Shin, vice-president of Digital Appliance Overseas Sales and Marketing, LG Electronics expects a five to nine per cent jump in profitability and the digital appliance division aims to become the world leader by 2007.
He said the company would enter Iraq via Jordan and would start service centres with regional partners to reach rural areas. LGE has production facilities in Egypt and Turkey and many offices in the region including Dubai.
M.B. Shin said that LG was number two in brand image in the Middle East and had beaten Korean and Japanese rivals to take the top spot in India. The company hopes to become the leading brand in Middle East and Africa by 2005.
LG leads its home rival Samsung in the home appliances market and has caught up with it in profitability.
Early this year, LG Electronics articulated its Vision 2010, aiming to rank among the global top three in electronics, information and communication industries by 2010.
The company is optimistic about achieving this target as it holds product and market leadership globally in display, infotech and audio-video. Its digital TVs, PCs, monitors, optical storage devices and next-generation multimedia products have posted rapid growth in sales and profits every year.
In 2003, at one of its three core divisions, sales and profits reached an all-time high. LG Digital Display and Media Company's optical storage devices took 24 per cent market share and DVD players 17 per cent, the largest in the world, while sales of monitors rose to second position and plasma display panels (PDP) to fourth.
The 76-inch PDP TV it launched in 2003 was the first of its kind in the world. In PC business, the company has diversified into slim and multifunctional Notebooks and developed a new-concept tablet.
It is now concentrating efforts to become the global leader in digital TV by cornering 13.2 per cent of the global market share by 2005 from 11 per cent at present. To accomplish this, the company is planning to spend more than $300 million in production facilities. In 2003, the company posted revenue of $12.087 billion.
LG Digital Appliance Company's residential air-conditioners took 18.6 per cent of the global market share last year, recording the largest share for four consecutive years.
Its microwave ovens garnered 23.3 per cent, maintaining the lead since 2002, while its canister vacuum cleaners cornered 15.8 per cent, the largest share. The company earned revenue of $7.4 billion in 2003 and expects $8.7 billion this year.
LG Electronics's third and rapidly growing Telec-ommunication Equipment and Handset Company came fifth in the world last year by supplying 27.5 million CDMA and GSM mobile handsets, a 5.3 per cent market share. Its revenue in 2003 was $5.6 billion.
It was the top CDMA handset manufacturer in the United States with 63.2 per cent growth and had a leading global share of 21.6 per cent in 2003. It is also the principal supplier for Verizon Wireless and Sprint.
LG aims to sell around 43 million sets this year and 60 to 70 million in the next in its goal to claim the third spot in 2006. To achieve this goal LGE will spend 10 to 15 per cent of its revenue on research and development to make premium products and demand higher margins compared to six to seven per cent at present.
LG has made some progress in this regard by selling three million sets of third-generation WCDMA dual-band mobile phones that are compatible with Europe's GSM/GPRS systems to Hutchison. It is also making a smooth entry into the GSM market in the US and Europe, jointly with Vodafone, Orange, Cingular and AT&T.
The company will launch two new models in the Middle East, most likely in Dubai, including the T5510, a high-end phone.
Gulf News
