Wednesday, January 09, 2013

Can LG bounce back?

LG ruled the Indian consumer durables market for long. But since 2011, it has been struggling to play catch up with the new #1 Samsung. The road to regaining glory isn’t an easy one for LG

LG has no problem getting attention. Just that, it’s unpredictable. No one would have imagined the Korean to return to the Indian market, after its two previous efforts in the late 1980s and early 1900s failed to make any impact. But it did. The very first year (1997), it earned a topline of Rs.136 lakh. By that year, Samsung, Panasonic, Sony, Godrej and others were already busy surfing the high tide in the Indian consumer durables (CD) market. Given its poor track record in the Indian landscape, most didn’t give LG much chance of making it big amongst the Indian diaspora. Ten years later, by 2007, LG had become the largest entity in the CD arena, outrunning Samsung by a handsome margin (topline of LG in 2007 was Rs.8,000 crore, while that of Samsung stood at Rs.5,200 crore).

Then came the slowdown, but someone forgot to tell LG that. The three years that followed saw LG rise to the top of every segment in the CD market, and its revenues rose steadily – two steps at a time or maybe more, doubling within a span of just thirty-six months – from Rs.8,000 crore in 2007 to Rs.16000 crore in 2010. Suddenly, LG had become the new star in the Indian CD market. Samsung was being talked less about. Perhaps it enjoyed the lack of attention and in the process, rose as fast as LG did during the years, if not faster. Samsung’s topline trebled from Rs.5,200 crore to Rs.16,000 crore (Rs.15,935 to be precise). Truth was, no one in India had informed Samsung about the slowdown too!

This story of two canons blazing in the Indian CD market has resulted in an interesting outcome. Quickly back to 1997. Then it was the Samsung-talk-in-town. Post 2007, it was LG ruling. Today, suddenly there seems to be another power shift in progress. In 2011, Samsung outdid LG in the money-making game. Its revenues stood at Rs.20,005 crore (a y-o-y rise of 25.6%), while LG with Rs.16,200 crore (growth of 1.25%) was found floating in stagnant waters. This unsettled the LG India top management, and as per media reports, got the India MD and President Soon Kwon summoning the 30 senior-most folks in the company, to warn them of the road ahead of LG India. He had concerns to share about the manner in which competition was getting tougher. The previous year, there were others besides Samsung who grew at a brisk pace. This list especially included the Samurais – Panasonic, Hitachi and Daikin whose growth ranged anywhere between 20-65%. He also spoke on another issue – how the slowdown in the CD market was here to stay. Understandably so, for the growth in the Indian CD market had plummeted to 6% in CY2011 after growing by 13% in CY2010.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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