LG CEO lays out strategy to keep China at bay in home appliances

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LG CEO lays out strategy to keep China at bay in home appliances

Published: 09 Sep. 2024, 18:13 Updated: 09 Sep. 2024, 19:25

KIM JU-YEON
kim.juyeon2@joongang.co.kr

LG Electronics CEO William Cho speaks to reporters at IFA, Europe's largest home appliances trade show, in Berlin on Sept. 6. [LG ELECTRONICS]

Chinese home appliance firms have shown impressive growth to be on par with Korea in quality and design, LG Electronics CEO William Cho said at IFA Berlin, while outlining the company’s strategies to secure its global standing as China’s presence in the appliance market grows.

“They have caught up immensely with [Korean companies] in terms of design, energy optimization and product diversification. Chinese companies are now to be feared, and we must watch out,” the CEO said in a press conference at Europe’s largest appliance trade show on Friday.

Cho’s remarks came after he visited the booths of major Chinese appliance firms TCL Technology and Hisense that day. TCL showcased its rollable 163-inch micro-LED TV while Hisense demonstrated an air conditioner equipped with AI-generated algorithms that reduce energy consumption.

The CEO in turn highlighted LG Electronics’ success with its business-to-business (B2B) strategy, which he said he would reiterate to global investors at his first-ever non-deal roadshow hosted for European investors in London on Monday as part of an initiative to promote the company’s corporate value.

“The company in recent years has recorded over 10 percent growth in the home appliance sector, which is widely thought to be a mature industry, and almost 10 percent in operating profit margins,” Cho said.

“Our business structure is excellently balanced [in revenue streams], with B2B sales making up 35 percent of our total revenue, but this has not been exposed much to the public. I plan to address this in detail when I meet with investors in Britain.”

LG Electronics CEO William Cho, right, looks around booths at IFA in Berlin on Sept. 6. [LG ELECTRONICS]

The CEO said the firm’s chief financial officer will also soon be meeting with investors in Singapore to describe LG’s business ideas and technology. Primary businesses that will be discussed are chiller systems, which are needed to regulate heating in AI data centers, and in which LG has seen average growth of 15 percent annually over the last three years; the company’s heating, ventilation and air conditioning services; and the television sector, which is changing in line with shifts in content and media platforms.

The company is also working on securing collaborative projects with global Big Tech firms, particularly in emerging AI technology.

Cho relayed his meeting with Microsoft CEO Satya Nadella following the U.S. tech company’s CEO summit in May. They discussed the areas in which LG Electronics could successfully incorporate AI, as well as the company’s potential.

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The executive had also met up with Qualcomm CEO Cristiano Amon when he visited Korea in July.

“It’s not widely known in the market, but we are Qualcomm’s biggest customer in the auto industry,” Cho said. “LG Electronics places first globally in telematics and is also the biggest among auto equipment companies that use Qualcomm chips. We will discuss with Qualcomm how to incorporate evolved AI in cars.”

The CEO also said LG Electronics will expand its premium products to meet demand from multiple income levels, while emphasizing that the company “will not repeat” Japanese firms’ mistake of aggressively focusing on their premium strategy without releasing budget devices, which ultimately led the country to cede dominance in the appliance market to Korea.

“For premium [products], the customers themselves must view them as premium. If we increase coverage of our premium strategy [in our product lineup] it will become an engine for growth,” he said.

IFA visitors look at LG Electronics' AI-powered smart home hub, named ThinQ ON, which made its debut at the IFA 2024 tech show in Berlin on Friday. [LG ELECTRONICS]

LG Electronics, meanwhile, demonstrated its smart home hub powered with a large language model that allows users to control their appliances by issuing spoken commands, instead of launching a new flagship product at the IFA.

Cho pointed out how LG differentiated their technology and services from their Chinese competitors at the fair by “focusing on AI” instead of hardware, and operated a space separate from the exhibition to discuss practical business needs.

LG Electronics ranked first in the global home appliances market in revenue and operating profit for the second consecutive year in January.

BY PARK HAE-LEE, KIM JU-YEON [kim.juyeon2@joongang.co.kr]