Korean digital manufacturer LG Electronics has announced a business shift in its Middle East and Africa (MEA) operations as the company posts record first-half regional sales. LG has revealed a 19 percent increase in its first-half MEA sales for this year, compared with the same period in 2001.
Regional sales turnover for the first six months of this year amounted to $581 million. LG has set a sales target of $1.3 billion by the end of this year. “Growth is coming from the digital products sector,” said M.B. Shin, LG Electronics' MEA Operations president.
Over the past six months, LG television, split AC, monitor and optical storage segments have made considerable gains, said Shin. “Regional sales of TVs rose 11 percent to stand at $143 million; sales of split air-conditioners and monitors both increased 29 percent. Split a/c turnover totaled $148 million, while that of monitors amounted to $66 million. In the optical storage sector, sales grew a whopping 69 percent to deliver turnover of $22 million.”
The first-half also saw LG achieve huge growth in the plasma display panel (PDP) sector. “Here regional sales soared by 266 percent with turnover amounting to $11 million,” said Shin. “We have a commanding regional hold on the PDP segment and a revitalized PDP strategy will see us strive to make this technologically-advanced product more affordable at the retail level.”
Geographically, first-half sales gains were across the Middle East and Africa with the exception of Turkey, where macro-economic troubles impacted results. “Our best-selling markets remain Iran, Saudi Arabia and the United Arab Emirates (UAE),” said Shin. “Though volumes for Tunisia and Morocco remain small in comparison to other markets, we have seen sales gains in these countries of 92 percent and 85 percent respectively, largely due to major investment in marketing in both.”
“Only Turkey, Pakistan and Egypt failed to reach their sales targets. However both Pakistan and Egypt have made gains on the same period last year. In the case of Pakistan, we view the minimal two percent increase in sales for the first half as a positive sign that the country is re-stabilizing after the impact of September 11.”
The Korean company has revealed it is to cease OEM (Original Equipment Manufacturer) product supplies to secondary manufacturers in a bid to boost its brand business. “To date we have been supplying OEMs in the region. We have decided to pull back from this business because we want to have total control over our valuable brand and better support our regional distribution partners,” said Shin. “LG will engage in OEM business only in certain closed markets.”
In the first six months of this year, 90 percent of LG's MEA turnover was from LG-branded products, an increase of 38 percent on the first half of 2001. “We have made our strategy shift away from OEM supply to transform our organization from an equipment manufacturer to a brand supplier,” explained Shin.
“This fundamental change in business direction underlines our brand strength in the market. This is a core value on which we will build. In future LG will concentrate on value-added, own-brand business. We will compete at the higher-end of the market, leaving others to be pre-occupied with price-sensitivity and brand-diluting promotions.”
“We are positioning LG as a premium brand for discerning customers with leading-edge quality products which will enrich our customers lives and in which they can place their complete trust.”
Shin also said that 2002 had seen increased activity within its distribution network. “Our partners are solidly committed to our premium brand vision and have clearly demonstrated this with substantial investment in new dedicated showrooms and service centers throughout the United Arab Emirates (UAE), Oman and Saudi Arabia,” said Shin.
“The first-half also saw the opening, in Dubai, of the region's only store dedicated to LG's Information Technology (IT) products, the launch, in Oman, of LG's first mobile service in the Middle East and the introduction, in Qatar, of an LG customer-loyalty privilege card. These initiatives are all in line with our ambition to take the number one slot on customer indices.”
LG's regional milestones for the first-half include the launch of new CD-rewrite drives, MP3s, Projection TVs, DVDs and VCR Combis, LCD TVs, 12 new monitor models taking the company into niche markets, the unique dual plasma air purifying split wall-mounted a/c and tele-control a/cs.
“Perhaps the most significant business advances, however, were our entry into the UAE and lower Gulf GSM market and the setting up of a dedicated division to further penetrate the Middle East's rapidly-growing commercial a/c industry.”
“Both initiatives are bearing fruit. We have achieved considerable success with our mobile phone business and plan now to be among the leading GSM mobile suppliers in the Middle East and Africa by the end of next year, with a regional sales target of one million phones in 2003.”
“Highlights within the newly-entered commercial air-conditioning sector include the securing of government agency approval for our product line from both Sharjah and Dubai and the clinching of various contracts for the supply of systems for prestigious projects like the residential Lakes community in Dubai.”
“The past six months have seen LG back music festivals in Oman, Morocco, the UAE and Lebanon. We have also staged the high-profile LG Cup soccer tournament in Casablanca and the next will be staged in Iran this September,” said Shin.
Going forward, Shin hinted at major LG infrastructure investment in the region before the end of this year. “We will see a number of important infrastructure developments,” said Shin. “These are needed because over the longer term, we are targeting a 30 percent year-on-year regional sales growth from the end of 2002 until 2005.” — (menareport.com)
© 2002 Mena Report (www.menareport.com)
