South Korean company LG Electronics will shift its focus in China from price wars to premium sectors with a high added-value, according to senior executives.

 

The firm aims to achieve sales of US$10 billion in the country this year, said Ssang-su Kim, vice-chairman and chief executive officer of LG Electronics.

 

"In China, there is no future competing in 'red ocean' markets, so we must focus on the 'blue ocean' segment and penetrate high-end sectors," he said

 

"Red ocean" markets are those that are already well established, whereas "blue ocean" markets are those where new demand is created.

 

Kim added that the focuses will be put on high-end products, such as LCD TVs, plasma display panel TVs and side-by-side refrigerators, instead of more traditional products.

 

Price wars, especially with domestic makers, have been a challenge to many multinational electronics companies in China.

 

LG Electronics used to try to take local competitors on directly over price, but was not successful.

 

As part of its new strategy, the South Korean firm has chosen China as one place where it wants to create a "blue ocean" market.

 

It has become the first international launch area for the firm's new mobile phone, the KG90, which has been nicknamed "Chocolate." KG90 was launched yesterday in Beijing.

 

Mun-hwa Park, president and CEO of LG Mobile Communication Company, said this phone was different from other models on the market that emphasizes their functions.

 

The KG90 wants to lure consumers with a sense of value and fashion.

 

Since the phone was released in South Korea in November, more than 300,000 units have been sold and that single model has taken 7 percent of the total handset market in the country.

 

Park expects his company will sell 1 million units of the KG90 in China this year.

 

"This is going to be the beginning of our large-scale march into China's GSM (global system for mobile communication) market," said Kim.

 

According to the domestic consultancy Analysys International, among the 79 million phones sold last year, 72 million of them were based on GSM, the world's main mobile standard.

 

Only 6.8 million phones were based on the CDMA standard, mainly in use in the United States, South Korea and China.

 

Kyoung-hoon Byun, president of LG Mobile Communication's Chinese unit, said the investment in marketing for the phone will set a new record for a single model.

 

Nam K. Woo, president of LG Electronics China, said his company would release more "blue ocean" household appliances products next week.

 

LG Electronics' sales in China in 2004 were US$7 billion. The figures for 2005 were not available.

 

(China Daily April 14, 2006)