LG tried to take the high road plans to get rid of the low-end market price war

LG is located in the economic and Technological Development Zone in the west coast of Zhushan under the small factories in Qingdao and Qingdao across the sea about 4 km away from the city. In the modern clean workshop, a black slide ultra-thin mobile phones are being produced on the production line day and night.

The nickname "chocolate" KG90 phone with LG high hopes. As of April this year launched in Chinese on the market "chocolate" has a favourite work, beautiful experience, has received two industrial design award in germany. At the end of last year, a local market in Korea is quite eye-catching, 3 months of sales of 300 thousand units, to February this year, the share of high-end mobile phone market in South Korea accounted for 1/3. So, imagine LG's expectations of the "chocolate" in the Chinese market.

"We hope to use shock of products to establish a high position on the market." LG electronics CEO Kim Ssang Su sowed in the hands of the "chocolate" said in Beijing. In his planning table, in 2007, LG Electronics will become the world's largest manufacturer of home appliances market, in 2010 to enter the global consumer electronics. This has been hovering in the second position in the past, the lack of distinctive features of LG electronics is tantamount to a reborn great leap forward.

Finally, LG choose at the beginning of this year released a stylish Blue Ocean Strategy Declaration -- give up in the low and low cost areas shopping through the unique technology, develop the global new "non competitive" market, so as to achieve the first mover advantage and high profit growth, open up a new road of nobility.

The first month in the second quarter of this year, following the "chocolate" mobile phone, LG and electronic market in China breath released including 71 inch gold-plated PDP, more than 40 LG of high-end home appliances, popular actress Lee Young-Ae LG known to every family spokesperson, Korean drama "Dae Jang Geum" also to join.

"They've never been so modern and popular in the past." From Shandong, a representative of the LG home appliance dealers surprise evaluation. Indeed, the determination of LG electronics is not unusual. They are in urgent need of a complete reversal of the image and market position in China, in response to LG's global beat.

Publicity transformation

In fact, LG electronics high-end strategy does not start today, two years ago, LG electronics began to plan to increase investment in R & D areas, focusing on its best in the world of high-end home appliances and mobile technology. Now, some results have emerged.

The second half of last year, LG electronics in the global launch of the first built-in high-definition digital video recorder (HD-DVR) high-definition plasma TV (HDRV) soon get a good response in the market, LG electronics in 2005 accounted for half the proportion of total sales of plasma tv. Last year, LG global high-end products has accounted for the entire product line of 30%~40%, which makes the LG electronics high-end appliances profit rate reached 9.1%, more than the world's top appliance manufacturers Whirlpool and Electrolux for the first time, become the first in the world.

In the first quarter of this year, LG Lg Digital Appliance Company's operating profit was $164 million, an increase of 215.8% compared with the previous quarter. In addition to the cost reduction of the LG home appliance business, its unique technology in high-end products in North America and South Korea, the market is the most significant reason for selling. This is a good sign for the future of LG electronics, which is based on high-end flat-panel TVs and mobile phones.

Research Report of Japan analyst Nomura Securities recently released, flat screen TV in the future will replace the apple iPod, digital cameras and other mobile devices, as to the consumer electronics market leading the development of power.

Obviously, this strategy must be LG up results as soon as possible to copy China.

Over the past 13 years, LG electronics is known for its popularity in china. Although this makes LG become the most like a local brand affinity of foreign brands, but with Chinese traditional home appliances and consumer products market saturation, the average profit of the home appliance industry was declining, LG has increasingly caught in a price war with the local enterprises in the morass, brand influence is more and more weak, growth weak. Reflected in the results, LG electronics in China has been growing for 2 consecutive years less than expected. 2004 only achieved an annual growth rate of 5%, LG electronics is the world's worst growing regional market. Last year, LG Chinese began to high-end product line at the end of the tilt, high-end products to enhance the performance of the 15%, but failed to create a miracle, $10 billion in annual sales in 2005 from China is accounted for LG electronic $44 billion 600 million global sales revenue of 20% last year, but the LG and look forward to the electronic China 30% market is still far away.

In addition, LG electronics officially entered the Chinese mobile phone market in 2002, even as the world's largest CDMA mobile phone manufacturers, its share in the China CDMA market at the top, but in the larger market occupy China Mobile GSM mobile phone field, LG electronics has been lackluster.

Objectively speaking, LG mobile phone in the shape design and function and its South Korean Samsung fellow not much difference, but the lack of a strong brand advantage, at the same time, the last step of Samsung mobile phone product launch and pricing models have no strategy at all clear, and therefore did not get market recognition. Until now, LG electronics in China GSM mobile phone market position has been embarrassed to be listed in 10. This is obviously not the last year with LG electronics among the world's fourth largest mobile phone manufacturers do not match.

In the eyes of many people, in China, which is not only the world's manufacturing base of electronic products is the most potential multinational companies