LG to make phones in India when it gains 10% share

NEW DELHI: Consumer electronics company LG India may consider manufacturing smartphones in the country when it captures 10% share of the 35,900-crore Indian handset market, managing director Soon Kwon told ET.

"There is a possibility that we open production for phones whenever we deem it necessary. It all depends on how quickly we can grow this business," Kwon said.

The company has set itself the target of attaining a 10th of the market by 2014 end. At present, LG's mobile phone market share lags at a mere 3%. More than 95% of its sales by value will come from smartphones going forward. Smartphones are by far the fastest growing handset segment in India, growing over 50% a year.

The move to set up a manufacturing facility in the country would be music to the ears of the Indian government, which is desperate to boost the manufacturing sector in the country and give a boost to electronics manufacturing.

Handset makers such as Nokia and Samsung manufacture feature phones in India while local brands including Micromax Informatics and Karbonn Mobiles import complete handsets from China or import parts and assemble them locally.

On Monday, the Korean behemoth launched a 5.2-inch G2 Android smartphone priced at 41,500 and has set a target of garnering 150 crore from the model by next year-end.

Globally, LG has sold more than 1 million G2 smartphones since its launch in August.

Kwon said the company will launch five new smartphones by December, marking the brand's aggressive pitch in India after several quarters of dormant existence. LG India will leverage its brand strength in consumer goods segment, where it leads with more than 35% share, to improve sales in the mobile phone business.

Despite its new found vigour, the company faces a number of challenges including aggressive competition from top players like Samsung, Apple and Sony and local handset makers such as Micromax and Karbonn, wild currency fluctuations and near absence of word of mouth among consumers.

"Competition will not hinge on the leading brand or the price alone in the future, particularly in smartphones. The product and its features can break it (market leadership of any brand)," Kwon said.