LG smart machine lost four years in glory

When Samsung's mobile phone is in China, LG, the same Korean brother, is immersed in the rumors of its withdrawal from the Chinese market.

A few days ago, some media reported that employees in 26 offices of LG Electronics in China have received notices of separation and planned to cut thousands of sales personnel. In response, the LG official denied the rumors on December 19, 2012. The official said to the "Investor" reporter that the official has released news that the LG mobile phone will not withdraw from China and said that the company is optimizing. Reorganization.

It was not too much to describe LG's days with an eventful autumn. In addition to the deep downsizing of layoffs, the leaders of the Chinese region also changed their positions. Recently, Shin Wenfan, the new president of LG Electronics Greater China, has taken office and is responsible for sales, marketing and services of the company in Mainland China and Hong Kong. According to Analysys International, LG's sales in China in the third quarter of 2011 It was 530,000 units, and by the fourth quarter of the year, LG's sales volume had plunged to 320,000 units, and sales had dropped 39.6%. Since then, it has fallen to 260,000 units in the second quarter of 2012. Even if it warms up in the third quarter, sales volume will only reach 319,000 units.

“LG has gone further and narrower in the smart phone market, and now has only 1% of the market share in the Chinese market.” Zhang Yi, CEO of AMC Media, told Investor that “The pace of smart phones is missing, products, channels Brand failures have led to today’s results.”

From "Beloved" to "Outcast"

"Intelligent machine is LG can not wipe the pain." Zhang Yi described LG's regret for the era of smart phones.

In the era of feature phones, LG cast its most brilliant moment. In 2008, LG became the world’s fourth-largest mobile phone manufacturer. In 2009, LG still maintained strong growth. Each quarter was refreshed in sales and operating profit records, and it was successfully promoted to become the third largest mobile phone manufacturer in the world.

According to Sino's statistics, LG's average global mobile phone market share in 2008 was 2.2%, and in 2009 it was an average of 3.4%, an increase of 1.2%, an increase of more than 50%.

“LG is the best time in China, which means it has less than 5% of the market share. It is still the main function machine in the global market. The business support point in China also comes from the feature phone. The function function has some profit, but the smart phone There is no trace," said Zhang Yi.

This tendency to let LG quickly fall out of favor with dealers. "In the second half of 2011, we have not cooperated with LG." The person in China Post's report to the "Investor" reporter said, "The reason for not cooperating is simple. The market does not recognize that brands and products lack a competitive advantage." China Post, LG and large distributors Tianyin are no longer cooperating.

In November 2010, LG's first smart phone, the LGPanther, went on the market, but it was too late. Compared to Samsung, LG was "late" for a year.

Difficult to get operators to favor 4G dreams or fail

The departure of traditional dealers is not the worst thing. What's worse is that they have not kept pace with the operators.

"LG's problem is very obvious, both in the world and in China are gambling wrong prospects for smart machines." Zhang Yi believes that when the smart phone transition, LG decision-making mechanism is too slow, resulting in the entire strategic level of error.

“In the Chinese market, it is an operator-led market, and now the market share of China Unicom can account for more than 40%, mainly through the advantages of operator channels and price subsidies.” Analyst Analyst Li Yanyan told Investors The reporter said: "LG has no competitive advantage compared with domestic manufacturers, and its market share in China has also been declining."

What is the cost of missing an operator? Take, for example, a Lenovo mobile phone that relies on carrier shipments to dominate the Chinese market. In 2006, Lenovo began to develop smart phones. At the end of 2010, Lenovo's music phone sales were only 500,000. With the popularity of operators, in 2011, the cumulative sales volume of Lenovo smartphones reached 6.5 million units, and the market share under the operator's bundled sales hit record highs. In December of the same year, the market share exceeded 10%. At the financial report meeting for the first half of 2012-2013, Lenovo stated that smartphone sales exceeded 7 million units in the quarter, an increase of more than 18 times year-on-year.

In contrast, in 2010, LG’s market share in China was only 2.39%, and its net loss for the year was approximately US$568 million. In 2011, LG’s net loss for the entire year was US$247 million.

Zhang Yi said that LG's failure is mainly three points, the first is the product, LG mobile phone UI design can not keep up with the trend, product features are not much difference; followed by the channel, the smart machine era is mainly rely on operator channels, but LG Did not do a good job; once again the brand's mistakes, unlike Samsung's huge amounts of money in major sports events to do marketing, LG in the spread of basic aphasia. "Operators can't get in and there is basically no chance," he said.

Missing 3G era, 4G is another opportunity for manufacturers. Moreover, LG is the company with the largest number of 4G patented technologies globally, and has a good market share in the global 4G network market. 4G is an opportunity that LG cannot afford to give up.

However, the 4G opportunity is not easy to grasp. Li Yanyan said that in the 4G era, cooperation with operators is also costly. On the one hand, operators need to provide channel and price subsidies. On the other hand, operators expand their own traffic advantage by controlling terminals. That is, more terminals can bring more traffic. Based on this, LG mobile phone market share is less than 1%, and it is very difficult for operators to use it as a partner.