Late last month, Korean electronics giant LG Electronics held a launch event in Medellín for its “Signature” line of premium products. It markets these premium products as the latest in high-end innovations that have smart technology to capitalize on the growing Internet of Things market.
In light of the number of consumers and rising purchasing power in Colombia, the firm is increasingly seeing prime opportunities for growth in the country. From smartphones and advanced televisions to washing machines and refrigerators, LG is looking to educate consumers throughout the country on features and quality aspects that go beyond basic functionality.
Finance Colombia Executive Editor Loren Moss got the chance to learn about all this and more recently in a conversation with Jhon Fredy Giraldo, product manager in the washing machine line at LG Electronics.
Finance Colombia: Given that LG is a Korean company — and obviously a global company — what does the Colombian market mean for LG strategy?
Jhon Fredy Giraldo: In general terms, let’s say that the LG Colombia subsidiary for LG Global is extremely important — so much so that we have seriously taken on the task of bringing all the concepts of technology to the country, starting from the lines of the most basic top-loading washing machines.
As examples, we have the front-loading line and we have the entry line of refrigerators. In terms of importance of the country, Colombia is very important in comparison with the rest of South America. Let’s say we’re fighting with the likes of Peru, with Chile, and with very similar economies
Finance Colombia: Colombia is a country with almost 50 million consumers that is getting stronger and stronger all the time in terms of its purchasing power. Its pockets are getting deeper and deeper, but it doesn’t yet have a massive market of high-end consumers. What is the importance of Colombia as consumers, and what will the strategy be for LG Colombia to position itself and grow?
Jhon Fredy Giraldo: The Colombian market moves in a different way compared to the other countries because the Colombian market has consumers with very high hopes who want to have an entry product today. But tomorrow they hope to have a higher-end product.
So, the company has taken that job very seriously, not only in the big home appliance line, but also in the subject of technology, laptops, and monitors. The company has tried to bring the ideal product for every niche of the Colombian market.
Finance Colombia: The peso has been on a roller-coaster ride, so I imagine that affects the consumers’ purchasing power. Did that affect LG? How have you managed that over the last few years?
Jhon Fredy Giraldo: Yes, of course. Obviously, in the first quarter of 2016, we were clearly affected by the exchange rate. In an efficient and intelligent way, the LG Electronics company has worked to solve those problems by differentiating products.
We have been trying not to change the exchange rate for the final consumer, but rather for him to perceive that he is getting a privileged product. But, yes, for us, the market in 2016 was a difficult year.
Finance Colombia: What has it been like generally for LG Colombia over the last few years? Has LG’s market share grown?
Jhon Fredy Giraldo: In the washing machine segment, although it was a difficult year, we grew 2%. According to data from washing machine sales in Colombia, with a market share that varies between 27% and 30%, and in the front-loading segment, which is the prime segment, we are winning with 48% of the market share of front-loading washing machines.
So, we have definitely been able to solve the inconvenience of the exchange rate, and we’re betting on products which, in terms of characteristics and design, will be the ideal solutions for Colombians to prefer to have LG Electronics brand products.
Finance Colombia: So, over the next few years, how do you see the growth of the prime sector, like high-end products, not only in large white-line appliances but also in smartphones, electronics, audio, and computers?
Jhon Fredy Giraldo: The objectives have been marked out very aggressively by the company. This year, with the “Signature” line we have a plan to sell around $3 million USD to $6 million USD only in the premium segment.
We’re going to have the launching of our G6 smartphone, which is the product with which we’re going to win a great portion of the Colombian market. The smartphone is a very competitive line, and we want to come in very strongly with our G6 smartphone.
In our premium line of the other solutions for Colombian households — like LED, UHD, and 4K TV sets — let’s just say that some important bets are on the table. And in the refrigeration segment, we’re going to have a very key bet.
We have the complete portfolio. We have the most premium products, but we have products for the whole Colombian market. So we’re thinking about quite ambitious growth. I think we have all the tools — products and sales — to ensure that that growth can be sustainable.