LG's expansion into Russia and China involved a strategy focused on local customization and brand visibility through cultural events and partnerships, with significant investments in assembly plants and corporate entities. In Russia, the company introduced localized products and received government endorsement, while in China, it established multiple operations mirroring its strategies in other markets. Despite challenges from local competitors, LG aimed for growth amidst a competitive landscape dominated by rivals like Samsung and Sony.

1. Russia: An Early Foray
GainingmomentumintheearlyyearswasaveryslowprocesssinceRussianconsumerswerenotyet
familiarwiththebrand. Drawingonitssuccesses inothersimilarmarkets, LGlaunched acharm
offensive thatincludedopeningLGbrandshops, dedicatedretailchannelsthatcarriedtheLGbrand
portfolio,culturemarketingeventssuchastheLGFestivalsandcookingevents.Italsosetuparegional
officeinSt.PetersburgtooverseeitsoperationsintheCIScountries.
.LG investedheavilyinthemarketbysupportingitschannels,focusingevenmoreonlocalcustomization
of itsproductrange andby enhancingitsvisibilitythrougheventsponsorships. By2004, the
companyhad introducedseverallocalizedofferingsrangingfromahotand coldair- conditioning
unitthat couldbe usedyear-round,toa karaoke machine thatcame witha libraryof popularRussian
folksongs,andamicrowaveovendesignedtomatchthespecificneedsoftheRussiankitchen.
In2005, thecompanyreceivedpermissionfromtheGovernmentallowingittousetheNarodnaya Marka
logoonitsproducts, implyingthatthe products were considered tobe national brands.
.LGhadleasedlandclosetoMoscowtobuildanassemblyplantforthe manufacture of refrigerators,
washingmachines,andvideoequipment.The plantwassupposedtocommence operationsin2006,
andan investmentof $150 million hadbeenearmarkedforthe pur- pose.
Across the Sea to China
Chinahad provedtobe a beaconof opportunityforsome time,givenitsgeographicproximityto
Korea.LGhadsoughttotapthismarketthroughthe establishmentofasalessubsidiaryinHongKongas
earlyas1988.
Much of the initial period was spent in understanding local market conditions and assessing
the feasibility for ramping up LG’s exposure in China. By 2006, LG had built 16 corpo- rate
entities in the country,manyofwhichwere focusedonsizable productlines suchasmanufacture
of plasma televisions, white goods, and significant research and development as well.
LG’sapproach toChinahadbeenbuiltonthevery samefoundations thatithadusedinentering
marketssuchasBrazil andIndia. However,giventhe uniquenature ofgovernmental regulations and
geographicproximity tothe homemarket, ithadusedsome variationsinoverallstrategy.
By2002, tenyearsafterithadenteredChina, the companyhad12production subsidiar- iesandsales
centersspanningcitiessuchasGuangzhou,Shenyang,Wuhan,andNanjing.Ithadestab- lishedacentral
Chinaoffice inBeijingtoorchestratethe implementation of itsChinastrategy.
Cloudsonthe Horizon
InIndia, Samsung,LG’shometownrival,wasinsecondplaceinmanyoftheproductcategories
dominated byLG.ItwaswidelybelievedthatSamsungwasgearinguptomakearunforthe topspot.
OtherssuchasVideocon, Onida, andWhirlpool were nippingatLG’sheelsaswell. InChina,therewere
many more local playersinadditiontotheusual global giantssuchasSamsungandSony. Local firms
suchasKonkaandKelonhadtraveledthewell-wornpathofusinglowlaborcostscombinedwith
relativelysmall investmentsinproductR&Dto compete onprice.

2. While LGwasbusycapturingtheemergingmarkets,itsJapaneserivalsalongwithEuropeanand
U.S.companieshadcontinuedtodominatethedeveloped-countrymarkets.The U.S.,forexample,was
seeinganinflux of Europeandesigninthewhitegoodssector.Sony,Matsushita,andToshibawerestill
dominantpowerstoreckonwithinconsumerelectronics.Byearly2005,inareturntothe lime-light,
U.S.companiessuchasApple,palmOne,andTreowereatthe forefrontof anew wave ofportable
electronicdevicestoshare andstore music,manage e-mails,andsurftheInternet.
ThecompanyhadsuccessfullysheditsGoldstarheritageintheU.S.,abrandnamethatwasviewedmore
as a commodity. In2005, the companyhad introducedarange of high-endtelevisions inthe U.S., a
launchthatwaswidely believedtohave beensuccessful.