India, LG’s land of promise with young, rich population

NOIDA, India -- LG Electronics Inc., the leading global home appliance maker, plans to build a new electronics plant in India to cement its dominant position in the world’s most populous country.

The South Korean tech giant has already established a new compressor production line at its plant in New Okhla Industrial Development Authority (NOIDA), a planned city in India’s northern state of Uttar Pradesh, recently, while expanding lines for French door refrigerators at its factory in Pune, a city in the western Indian state of Maharashtra.

LG plans to set up another manufacturing facility in a new location to increase the production of popular items in an aim to ramp up sales of premium products.

“India has hundreds of millions of high-income earners and a trendy younger generation,” said an LG official. “It is the country with the strongest demand for premium electronics than any other market.”

LG is already the top producer of certain home appliances. The company dominates the country’s organic light-emitting diode TV sector with a market share of more than 70%.

It ranked No. 1 in the washing machine, microwave and compressor segments in India in July, taking market shares of 34.8%, 46.7% and 26.9%, respectively, according to LG. In the refrigerator and TV segments, it was the second-largest player.

PREMIUM PRODUCTS

The company’s sales in India continued to grow. The unit in the South Asian country reported revenue of 3.2 trillion won ($2.4 billion) last year, topping the 3 trillion won mark for the first time as it jacked up online sales targeting younger people in the nation that has an average age of 29. Its online sales currently make up 12% of the total.

LG aims to increase sales of premium products. It has decided to introduce home appliances with high price tags such as the Styler, its popular steam closet, which has yet to be available in the country.

“Old-fashioned electronics still sell well in India as the average income remains low,” said another LG official in India. “But we will lead the era of premium home appliances in the country in the future.”

An LG store in Delhi, India’s capital territory, showcased high-end models such as the Signature Rollable OLED TV R and the smart laundry machine WashTower when The Korea Economic Daily visited the branch on Aug. 18. The operations of those gadgets were jaw-dropping for the visitors.

LOCALIZATION

LG has had success in the Indian market with its comprehensive localization strategy. The company’s unit in the nation currently manages all the business processes including production planning, manufacturing, sales, marketing strategies, research and development, as well as after-sales service.

The subsidiary developed refrigerators with a shelf for spices, essential for Indian cooking, air conditioners running at even unstable power and TVs expelling pests with ultrasonic waves.

Such products with good quality at lower prices are helping LG beat out competitors in India with its population of more than 1.4 billion.

LG made inroads into the country in 1997 by expanding the NOIDA plant, which currently concentrates on smaller products such as air conditioners, washing machines and microwaves.

The company established another factory in Pune in 2006 to meet surging demand. The facility is focusing on premium products including TVs and French door fridges while exporting about 15% of its products to other countries to increase profitability.

Write to Sungsu Bae at baebae@hankyung.com
 
Jongwoo Cheon edited this article.