LG dreams of a crore handsets’ sale by 2009

NEW DELHI : The Thai baht meltdown this month couldn’t have come at a worse time for KR Kim — the outgoing chief of consumer durable major LG India who is relocating to Bangkok in his new position as the boss of South East Asia and Australia. However, this is not the first time Kim would face an economic crisis like this one. The man who led the creation of a $2-billion organisation from scratch in ten years flat, often recalls how he faced a similar situation exactly a decade ago.

The year was 1997 and LG was entering India the second time round after a failed attempt. It was the same year when the Asian financial crisis broke out. “It’s not as bad this time and the situation has improved I hear,“ he told ET in one of his last interviews in India. He is most comfortable talking about the success story of LG in India.

And the reason, he says, is because, “We were very aggressive in localisation in manufacturing, in R&D, in setting up a sales network and in the employees. We invested a huge amount and I would call these the key for our success in India.”

But wait-a-minute, isn’t the company way short of its sales targets? Not too long ago, the target for India by 2010 was pegged at an eye-popping $10 billion. He admits there’s a problem there. “We expected the rapid domestic growth to continue which didn’t happen,” he says, adding, “the exports didn’t pick up as much as we wanted. We didn’t receive as much support from the government as other countries. In fact, India is 10% less competitive in terms of exports as of now.”

But there’s another side to the story and not all of it can be blamed on over-optimism. Indeed, there are a few segments where LG has not been able to duplicate its durables success. Case in point: the GSM mobile handset market where Mr Kim cannot blame slow growth for the fact that LG is way behind the market leader. His explanation: “We entered very late.” Yet, in all other product categories LG came from behind to snatch significant market share in a short time. Kim counters that saying, “

Now we are clocking good sales. This year we did 1 million and I am sure by 2009 we would the touch 10 million handsets in India, though I agree by that time the market itself might have grown to 100 million.” Then he goes on to quip in his characteristic nonchalant manner, “You know, for Nokia, LG is enemy no:1. We have a very wide sales network and nobody can match it.”

While even his strongest critics admire him for his hands-on management and tough, no-nonsense style on the shop floor, they also point to the high ‘top management mortality’ rate in LG India. Referring to the frequent change of marketing heads in LG, Kim explains the ‘creative destruction’ as an effort to change mindsets. “We never wanted to change people. What we wanted was a change in the way of thinking and if one individual couldn’t bring that change we made some changes,” he says.

In his new role, Mr Kim would actually be competing with his own creation LG India, in shipping products to other markets. The overall market under him would be twice the size of India and if there is one take-away from his stint here, he says, it would be to attack the hinterland markets aggressively.

And what is the one thing he would like his successor to keep in mind? The man who loves seekh kebabs and has spent one third of his professional life building LG India says: “The next five years are going to be very critical for LG in India. There’s so much happening with retail and SEZs and this period would determine how LG grows in India in the future.”