CEO SPECIAL Soon
Kwon, LG India "We Are 95%
Local"
LG
India’s managing director extols the virtues of localising product development
to meet the varied needs and budgets of different segments of people
How the unpopular ‘Lucky Goldstar’
of the early 90s re-entered India as ‘LG’ in 1997 and — together with
arch-rival Samsung — drove out most of the American and European brands as well
as wiped out some of the domestic brands from the Indian market is a story that
is told over and over at B-schools. But LG India managing director Soon Kwon
says there is more to the company than just its success as a brand in
India. In the seventeenth year of its India re-entry, the South Korean
multinational, which is present in over 80 countries, attempts to penetrate
deeper into the Indian market and use it as a springboard to other markets.
Edited excerpts from a conversation:
How does LG India marry global with local?
In India, the width of the segments is large. Rural areas need small single-door refrigerators. In urbanised areas, a lot of customers are looking for bigger, twin-door refrigerators. Your success depends on how you can include these insights into your product development and channel strategy. We have been working hard on this. In product categories such as TVs, cellphones, washing machines and air-conditioners, India may have the maximum variety as a country.
Localisation of manpower, manufacturing and research and development (R&D) are very important. We are 95 per cent local in all our products. We also develop products here. We sell about 400 different models of LG products. About 90 per cent of our refrigerators, washing machines and air-conditioners are designed here. In TVs, about 50 per cent is local. We also have a 100 per cent-owned lab that focuses on future product developments.
Tense relations with China have forced many Japanese and Korean companies to balance India with China. What’s LG’s strategy?
Our initial plan was to set up facilities wherever there is market potential. Of course, we try to balance between countries such as China, India, Russia and Brazil. We do have some strategic allocation of resources. India is one of those countries where we have decided to put in more resources. Recently, the Chinese government has put lots of restrictions on foreign companies. But India is a very attractive market for any foreign company.
How often do you have products designed and made in India going to international markets?
We export products such as refrigerators and washing machines, designed and manufactured in India, to Africa, the Middle East and other Asian countries. About 10 per cent of our revenue is from exports.
About two years ago, it appeared that LG was not interested in the mobile phone and computer business. What has changed now?
Everywhere in the world, LG is coming back in the mobile segment. In the computer and laptop segment, we are doing well in some countries, but in others, we have decided to exit. We do not do laptops in India, but (sell) computer peripherals such as monitors and CD-ROM drives. The laptop business is very competitive and not brand-centric. So, we do not think it is viable in India. LG’s biggest strength is not IT or laptops. We would like to focus on mobile phones and other consumer durables. In the mobile business, the lifecycle is short.
What’s the strategy most unique to LG India?
In the consumer durables segment, in some products, around 80 per cent of the business comes from rural and upcountry areas. We spend more time on product development than on designing marketing campaigns. This year, too, we have introduced a few India-specific products. We have an air-conditioner that repels mosquitoes through ultrasonic waves. It’s a very sophisticated product. Last year, we introduced a refrigerator — Power Cut Evercool. More than 50 per cent of Indian households have frequent power cuts. Tamil Nadu suffers for 12-13 hours a day. So, we designed a product that keeps food cool for a maximum of 10 hours.
Any India-specific distribution or marketing initiative?
Rural, upcountry distributors and small sub-dealers are big contributors to our business. To strengthen our reach in rural areas, we have put in extra resources. Providing customer service in those areas has always been a challenge. We are going to have franchisees in most rural areas of India. So, LG will be servicing those Indian customers.
Where do you draw the line between global standardisation and local customisation?
We import some global products here. We would like to introduce some global platform products to Indian customers, many of whom are very tech-savvy. We try a mixed strategy of Indian and global products. On the operations side, we try hard to run the Indian subsidiary with 99 per cent Indians. We have about 4,000 employees here, only about 40 of them are Korean expats.
How does LG India marry global with local?
In India, the width of the segments is large. Rural areas need small single-door refrigerators. In urbanised areas, a lot of customers are looking for bigger, twin-door refrigerators. Your success depends on how you can include these insights into your product development and channel strategy. We have been working hard on this. In product categories such as TVs, cellphones, washing machines and air-conditioners, India may have the maximum variety as a country.
Localisation of manpower, manufacturing and research and development (R&D) are very important. We are 95 per cent local in all our products. We also develop products here. We sell about 400 different models of LG products. About 90 per cent of our refrigerators, washing machines and air-conditioners are designed here. In TVs, about 50 per cent is local. We also have a 100 per cent-owned lab that focuses on future product developments.
Tense relations with China have forced many Japanese and Korean companies to balance India with China. What’s LG’s strategy?
Our initial plan was to set up facilities wherever there is market potential. Of course, we try to balance between countries such as China, India, Russia and Brazil. We do have some strategic allocation of resources. India is one of those countries where we have decided to put in more resources. Recently, the Chinese government has put lots of restrictions on foreign companies. But India is a very attractive market for any foreign company.
How often do you have products designed and made in India going to international markets?
We export products such as refrigerators and washing machines, designed and manufactured in India, to Africa, the Middle East and other Asian countries. About 10 per cent of our revenue is from exports.
About two years ago, it appeared that LG was not interested in the mobile phone and computer business. What has changed now?
Everywhere in the world, LG is coming back in the mobile segment. In the computer and laptop segment, we are doing well in some countries, but in others, we have decided to exit. We do not do laptops in India, but (sell) computer peripherals such as monitors and CD-ROM drives. The laptop business is very competitive and not brand-centric. So, we do not think it is viable in India. LG’s biggest strength is not IT or laptops. We would like to focus on mobile phones and other consumer durables. In the mobile business, the lifecycle is short.
What’s the strategy most unique to LG India?
In the consumer durables segment, in some products, around 80 per cent of the business comes from rural and upcountry areas. We spend more time on product development than on designing marketing campaigns. This year, too, we have introduced a few India-specific products. We have an air-conditioner that repels mosquitoes through ultrasonic waves. It’s a very sophisticated product. Last year, we introduced a refrigerator — Power Cut Evercool. More than 50 per cent of Indian households have frequent power cuts. Tamil Nadu suffers for 12-13 hours a day. So, we designed a product that keeps food cool for a maximum of 10 hours.
Any India-specific distribution or marketing initiative?
Rural, upcountry distributors and small sub-dealers are big contributors to our business. To strengthen our reach in rural areas, we have put in extra resources. Providing customer service in those areas has always been a challenge. We are going to have franchisees in most rural areas of India. So, LG will be servicing those Indian customers.
Where do you draw the line between global standardisation and local customisation?
We import some global products here. We would like to introduce some global platform products to Indian customers, many of whom are very tech-savvy. We try a mixed strategy of Indian and global products. On the operations side, we try hard to run the Indian subsidiary with 99 per cent Indians. We have about 4,000 employees here, only about 40 of them are Korean expats.
Rajeev
Dubey BW140407
No comments:
Post a Comment