LG sees ‘window of opportunity’ to come back into Indian smartphone market

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In an interview with ET, Advait Vaidya, business head – mobile communications at LG Electronics, said the brand has seen 10 times increased sales of smartphones in the past two months due to the anti-China sentiment.

By Himanshi Lohchab, ET Bureau|Last Updated: Jul 05, 2020, 06.26 PM IST0Comments

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The sub-Rs 15,000 segment will be LG’s focus for 2020 because of the reduction in consumer spending due to Covid, along with strong online presence and offline expansion in tier-2 and tier-3 cities.

NEW DELHI: South Korean electronics major LG is planning to use the “window of opportunity” provided by the anti-China mood in India currently to stage a comeback in smartphones, targeting the sub-Rs 15,000 segment to claw back its way back in an industry now dominated by brands from across the Great Wall.
The company is seeking to scale up local manufacturing by 15 times until Diwali and expand distribution.
In an interview with ET, Advait Vaidya, business head – mobile communications at LG Electronics, said the brand has seen 10 times increased sales of smartphones in the past two months due to the anti-China sentiment.
“The short-term window of opportunity is big enough for us to enter the space and achieve scale,” he said.
Diverging from its global portfolio, this year, LG is building an ‘India specific and India first’ product portfolio to cater to unique consumer demands here, Vaidya said.
“So, this year, starting August, we will be launching six phones across all segments – starting from the sub-Rs 10,000 category up to the flagship segment. We are ramping up distribution across channels, online and offline,” he said. The company is also targeting corporate sales and foraying into the tablet market by year end.
For local manufacturing, it is in talks to partner with an Indian contract manufacturer and will apply for the product-linked incentive (PLI) scheme under which the government offers 4%-6% incentive on incremental sales of smartphones by any company over the next five years.
“We are in advanced stages of discussions with one of the largest Indian contract manufacturers. Once we sign a formal agreement, we will make an announcement soon and shall apply for the scheme too,” Vaidya said.
The sub-Rs 15,000 segment will be LG’s focus for 2020 because of the reduction in consumer spending due to Covid, along with strong online presence and offline expansion in tier-2 and tier-3 cities, Vaidya said.
The company logged double-digit growth between 2009 and 2011, and had reached 7% market share – its highest – in 2011. Today, LG holds less than 0.5% share, having sold roughly 1 million units in 2019.
But LG’s successful resurgence will depend on aggressive marketing across channels, and the message of a credible non-China option should give it the initial push it needs to make a mark, say industry experts.
“Well, of course it is a great opportunity for a company like LG to be aggressive, but, consumer acceptability and awareness is the real issue,” said Faisal Kawoosa, founder and principal analyst at research firm TechArc.
“Manufacturing, design….supply side have never been problems for the global, omni-product brand that LG is, but the real issue is the demand side. LG must figure out how to excite the Indian customers about its smartphones in such a competitive environment,” he said.
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