LG Starts Mak­ing Phones Here, Plans Coun­try-Spe­cific Mod­els

Op­tiemus Group firm be­gins trial pro­duc­tion for South Korean co

The Economic Times - - Busi­ness Of Brands - Wri­tankar.Mukher­jee @times­group.com

Kolkata: LG Elec­tron­ics has started man­u­fac­tur­ing smart­phones in In­dia, and will for the first time, launch In­dia-spe­cific mod­els in its quest to get back to the high­growth tra­jec­tory in the coun­try. The South Korean par­ent com­pany has al­ready inked an agree­ment with GDN En­ter­prises, a part of New Delhi-based Op­tiemus Group, for man­u­fac­tur­ing and has started trial pro­duc­tion with two mod­els. The lines have been im­ported from South Korea and will be ex­panded to in­clude more mod­els, three se­nior in­dus­try ex­ec­u­tives said.

Op­tiemus cur­rently man­u­fac­tures for HTC and Oppo and has inked a joint venture with Taiwan’s lead­ing con­tract man­u­fac­turer Wistron for set­ting up a new plant, which will even­tu­ally un­der­take pro­duc­tion for these smart­phone brands.

Lo­cal man­u­fac­tur­ing will give a price edge to LG since the du­ties and taxes will come down by more than 10%, the ex­ec­u­tives said. LG In­dia man­ag­ing di­rec­tor Ki Wan Kim said while the com­pany has been eval­u­at­ing the fea­si­bil­ity of mak­ing smart­phones in In­dia, there has been no con­crete de­vel­op­ment yet. Op­tiemus Group man­ag­ing di­rec­tor Ravin­der Zut­shi, too, de­clined to comment. But LG’s Kim said the com­pany will launch 6-7 mod­els which are cus­tomised for In­dia to re­vive the smart­phone busi­ness. “The busi­ness has been a poor per­former due to poor prod­uct port­fo­lio. We will re­vamp the port­fo­lio from this month. Our prod­ucts are su­pe­rior to com­pe­ti­tion which we will fo­cus through ex­pe­ri­en­tial mar­ket­ing,” he said.

LG’s growth rate in In­dia had been im­pacted in last few years due to poor con­sumer sen­ti­ments im­pact­ing sales of white goods. In 2014-15, the com­pany grew by 12% af­ter three years of no growth. Re­sults for last year are yet to be de­clared.

While LG has for long been a leader in re­frig­er­a­tors, wash­ing ma­chines and mi­crowave ovens, it has branched into flat panel tele­vi­sions to over­come its de­pen­dence on the home ap­pli­ances seg­ment. Since last De­cem­ber LG over­took Sony to sec­ond spot in the In­dian flat panel tele­vi­sion mar­ket, where the mar­ket leader is Sam­sung.

Now it wants to rebuild the smart­phone busi­ness where it had failed to gain share and be­come a sig­nif­i­cant player de­spite sev­eral at­tempts. Kim said he would re­vamp mar­ket­ing ef­forts in In­dia since the prod­ucts are tech­no­log­i­cally su­pe­rior as com­pared to com­pe­ti­tion, which is not com­mu­ni­cated clearly. “We will pur­sue to make LG a pre­mium brand in In­dia. The ef­fort is to de­velop prod­ucts based on con­sumer in­sights. While for ex­ist­ing cat­e­gories we will fo­cus on en­ergy ef­fi­cient prod­ucts, we are also eval­u­at­ing air and wa­ter pu­ri­fiers as next growth ar­eas,” he said.

Co sees smart­phones as a route to growth in a stag­nant ap­pli­ance mar­ket

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