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LG Electronics has reaffirmed its plan to tackle growing market uncertainty by realigning its revenue stream focusing on a stable business-to-business (B2B) sector. We plan to make our B2B sectors take up half of our sales, LG Electronics'' home and appliance (H&A) division chief Cho Seong-jin said in a press conference, on the sidelines of this year''s IFA tradeshow in Germany, Friday (local time). B2B is a stable revenue source, compared to the volatile business-to-consumer (B2C) sector, he said. We are on a track to shift our business portfolio by offering not just components, but also systems. At the moment, some 20 percent of our sales come from the B2B sector. In particular, the parts business can become a long-term, stable revenue source, once we establish trustworthy relations with our clients. The B2B solutions include turnkey projects for its clients. The H&A chief cited a recent partnership with Incheon International Airport over deploying humanoid robots there. The move is in line with LG''s group-wide strategy to focus on the more stable yet profitable B2B sector. Earlier this year, LG Group Chairman Koo Bon-moo urged heads of its affiliates to push for what he calls a two-track expansion strategy into the B2B and premium sectors. As part of the new blueprint, the H&A division has sought to diversify its revenue streams into both areas. In March, the company launched its premium appliances brand ? LG Signature ? whose selection includes an organic light-emitting-diode (OLED) TV, a refrigerator with a touch-screen and a dual tub washer. At Europe''s most influential technology fair, the company also unveiled a concoction of Signature products tailor-made for European customers. During the press conference, the appliance chief of LG Electronics highlighted that the Signature brand will have an impact on its other lineups. We expect the LG Signature''s premium image to help drive up sales for our cheaper lineups, he said. Once LG Signature is acknowledged as a premium brand in the market, other products in the non-Signature lineup will also be regarded as near-premium items, due to Signature''s brand power. That is what we aim for, he said. The H&A division is LG Electronics'' most profitable unit, making up more than 80 percent of the company''s operating profit last year. Growing threat from Chinese rivals The H&A chief also called its Chinese rivals threatening, even if they still face a long road in establishing their own brand identity. Chinese manufacturers still leave much to be desired in terms of brand identity, but their price competitiveness in the mid- to low-end products is threatening, he said. The Chinese companies are shifting to overseas market, amid sluggish domestic demand, he said. As part of their globalization strategy, they are focusing on manufacturing cost-effective products, according to Cho. They are very threatening, as they are sparing no effort to keep track of technology trends, and continue to eye foreign markets. This is because of weak domestic demand, he said. |
