Apple adds LG Elec to iPhone vendor list in Korea

LG Electronics Inc. will begin to sell Apple Inc.'s iPhone at its retail stores across South Korea from mid-August, as the Korean home appliance maker is pulling out of its mobile phone business at the end of this week.

While adding LG Best Shop's 408 stores to its vendor list, Apple is preparing to open its third offline outlet Apple Store in South Korea in Seoul and the fourth one in Busan, a southeastern port city, according to the industry sources on Thursday.

Apple, which reported a 50% surge in iPhone sales in the April-June quarter from a year earlier, is gearing up for its penetration into the country where Samsung Electronics Co. controls more than half of the smartphone market.

Since last month, LG has sought to use LG Best Shop, the operator of its retail outlets, as a vendor of iPhone and other Apple products to avoid rendering its 600 employees of mobile phone sales redundant.

But the unit of the country's fourth-largest business group faced strong resistance from small smartphone retailers who worried about a possible decline in their sales in the wake of the conglomerate's advance into the iPhone retail market.

After month-long negotiations mediated by the Korea Commission for Corporate Partnership (KCCP), KCCP said on Wednesday that LG's plan to sell iPhone has won support from the representative body of mom and pop retail stores of smartphones. 

KCCP is a privately-run council that mediates conflicts between large business groups and small-sized companies.

In return, LG agreed to gradually increase the number of its iPhone-selling stores from 100 in the first few months to minimize the impact on other smartphone sellers.

In April of this year, LG announced its exit from the loss-making mobile phone business in 26 years. The company expects iPhone users' visits to its offline stores to lead to sales growth in its home appliance goods.

In the global 5G smartphone market, Apple took a 53% share in the first quarter of this year, trailed by Samsung at 14%. In South Korea, however, Samsung commands 63%, followed by Apple at 27% and LG at 5.8% as of the end of last month, according to Statcounter, a market tracker.

Earlier this week, the US Big Tech company has posted new jobs for several positions based in Seoul, South Korea. The new jobs include store managers, technical specialists and business experts mostly in relation to managing Apple Store.

Apple's third offline store in South Korea is said to be located in the new headquarters building of Kookmin Bank under construction in Myeongdong, central Seoul. 

According to the industry sources, the new store will likely open early next year.  Apple is also understood to open its fourth store in Busan.  

On Tuesday, Apple posted the biggest quarterly earnings in its history, led by a 50% surge in iPhone sales. In October 2020, Apple launched the iPhone 12 models capable of connecting to a much faster 5G mobile network.

Samsung Electronics, running about 440 retail outlets nationwide, is set to release the next Galaxy foldable phone lineup next month.

"We don't care much about other companies' sales strategy," a Samsung Electronics official told The Korea Economic Daily, when asked about LG Electronics' decision to sell iPhone next month. "We will focus on our sales strategy, including the next Galaxy foldable phone launch next month."

Write to Min-jun Suh and Sung-soo Bae at morandol@hankyung.com
Yeonhee Kim edited this article.