Global digital leader LG Electronics has established a large complex of production facilities in Ruza, near Moscow, as part of its efforts to consolidate its production capabilities in Europe and the CIS countries.
Russian Prime Minister Fradkov Mikhail Efimovich, LG Chairman and CEO Bon-Moo Koo and LG Electronics Vice Chairman and CEO S. S. Kim attended the opening ceremony recently. Approximately 600 Russian and Korean dignitaries were also in attendance, including German Gref, Russian Minister of Economic Development and Trade, Boris Gromov, Governor of Moscow Province, and Jaesop Kim, Korea’s Ambassador to Russia.
LG Electronics and its suppliers invested a total of US$150 million in the 49.5-hectare complex. The facility has an annual production capability of 500,000 digital TVs, 700,000 washing machines, 200,000 refrigerators, and 260,000 home theatre systems. LG plans to increase the capacity in each category to 1 million units annually by 2008.
LG is strategically increasing its production capacity in Russia as the country is expected to join the World Trade Organisation (WTO) later this year. The company already commands the top market share in Russia for TVs, audio equipment, vacuum cleaners, microwave ovens, video components, DVDs and optical storage.
S. S. Kim, Vice Chairman and CEO of LG Electronics, said: “LG will use this plant as a springboard to become the undisputed number one electronics brand in Russia. This facility is the result of successful collaboration between us and our dedicated suppliers. It also would not have been possible without the support we have received from Russia and her people.”
The company chose Russia as the location for this plant to better serve customers in the region. By setting up the facility, LG can pass-on savings on distribution costs and tariffs directly to its customers, while taking advantage of the region’s highly-skilled workforce.
The new facility will complement LG’s production facilities in Europe, where it already has a digital TV plant in Mlawa, Poland, and a LCD TV and side-by-side refrigerator plant in Wroclaw, Poland. These plants together will make up a production triangle that allows the company to lead the European and Russia/CIS markets.
LG has been actively supporting the development of the business opportunities in Russia. The company’s Chairman and CEO Bon-Moo Koo expressed his gratitude to the Russian government for its help in expediting construction of the plant.
Koo described Russia as an emerging market with potential opportunities for LG, not only in the electronics business but also in other key areas. “I am confident that the establishment of the LG Electronics complex in Russia will provide momentum for other LG companies to enter the region. In the years to come, we are confident that LG will emerge as Russia’s top brand.”
LG also has chemical business and natural resource exploration activities in Russia. LG Chem, which has been in Russia since 2004, saw sales revenues touching USD 63 million in 2005, a 70 per cent increase over the previous year.
The projection for 2006 is over USD 100 million. Another subsidiary of LG Corp., LG International, has been exploring natural resources in Russia. In 2005, the company signed a MOU with ElgaUgol for exclusive rights to a coal mine with an estimated USD 2 billion yield.
In July, LG International found an estimated 20 million barrels of oil after probing ADA mining area in Kazakhstan. The company took another concession in the Bloc 8 mining area in August and plans to further develop its resource exploration business in Russia.
About LG Electronics, Inc.
LG Electronics, Inc. (KSE: 06657.KS) is the global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 72,000 people working in over 120 operations including 80 subsidiaries around the world. Comprised of four business units: Mobile Communications, Digital Appliance, Digital Display and Digital Media with global sales at USD 34.7 billion (consolidated USD 43.4 billion) as of 2005, LG Electronics is the world’s leading provider of CDMA handsets, residential air conditioners, plasma panels, optical storage products, DVD players and home theatre system.
For more information, please visit www.lge.com
