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Business leaders see lucrative market in India

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Oct 03,2004
NEW DELHI ― As President Roh Moo-hyun’s begins his visit to India today, Korean firms are quickening their pace to grab a piece of the huge market. Major corporate leaders and chief executive officers have joined the president’s entourage in pursuit of business expansion. Some of these companies include LG, Posco, Kumho Asiana and Hyundai Motor. LG Group chairman Koo Bon-moo is visiting India for six days, beginning yesterday. Mr. Koo will tour LG Electronics’ subsidiary located near New Delhi, hold a meeting for future management strategies and examine investment plans. Currently, LG Chemical operates a production facility in Vaizak, eastern India, for polystyrene, a kind of plastic. It is considering establishing a production subsidiary for ABS, an oil and chemical product. Within the LG Group, LG Electronics has the most active ongoing business. At the Ocean Plaza arcade in downtown Noida, KD Audio Visions sells only LG products. “LG products are so popular I just took out all other brands,” shop owner Mr. Koli said. According to U.S. market research firm ORG-GFK, LG holds top market share in household appliances, including color television sets, refrigerators, washing machines and air conditioners. Because of the high demand, LG Electronics has decided to build a second factory for household appliances in Poona, near western Mumbai. It is currently under construction. “Between January and July, which was the peak season, we operated the factory around the clock on two shifts but even so, it was hard to meet the demand. We desperately need another factory,” said director Kim In-ho. “By building our second factory in India, we are going to target not only the Indian market, but also markets in the Middle East and Africa,” said Kim Gwang-no, head of LG Electronics’ subsidiary in India. He said this year’s plans included strengthening the position of cell phones and desktop computers in addition to household appliances, to achieve sales of $1.2 billion this year. Last year, LG Electronics India saw $900 million in sales, a 30-fold increase in sales since the company first began business there seven years ago. The subsidiary prides itself on the fact that it never received financial support from its mother company after the initial investment. Workers are paid according to ability. Although the basic salary is similar to other companies, incentives can reach 1,400 percent. Workers are mostly Indians. Out of the 2,600 workers at its main factory, there are only 17 Korean employees. “LG Electronics is one of the companies that college graduates here want to go to most, since a lot of authority is given to local workers,” said Vijay Narayanan, director of brand management. Samsung Electronic also plans to expand in India. Currently, it stands at 2.6 percent of all its foreign sales, but the company hopes to raise that to 3.5 percent, a Samsung official said. Hyundai Motor, which holds more than 20 percent of the passenger car market in India, increased production capacity for this year from 200,000 units to 250,000 units. It has also raised its target sales bar from 190,000 units to 215,000 units. Since May, Doosan Heavy Industries has been building a coal power plant, worth $370 million, which, when completed, will be the largest in India. Other companies are working with the government. Ssangyong Engineering & Construction Co. is paving a national highway. Posco is negotiating with the local government of Orissa to build a steel mill. On his visit to India, President Roh is being accompanied by 27 business leaders. They include SK Telecom vice chairman Cho Jung-nam, Kumho Asiana chairman Park Sam-koo, Posco president Kang Chang-oh and Samsung Electronics president Choi Gee-sung. by Lee Hyun-sang, Wohn Dong-hee


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