 |
| Visitors to this year's Consumer Electronics Show (CES) Asia pack a Huawei booth, at Shanghai New International Expo Center in China, Thursday. More than 370 global companies participated in the regional technology tradeshow this year. / Korea Times photo by Lee Min-hyung |
By Lee Min-hyung
SHANGHAI, China ― LG Electronics' modular handset ― the G5 ― has reached an impasse in the Chinese market, as its "vague" positioning strategy adds to an already gloomy picture for the firm's mobile business here, according to local industry insiders.
The Korea's No. 2 electronics giant launched the new smartphone in Asia's largest market, last month. Lee Hye-woong, the firm's China business chief, expressed confidence that the device would be a "mega-hit," playing a crucial role to end years-long underperformance of its mobile unit.
But experts and market insiders here remain skeptical over its potential rebound unless the firm shifts its positioning strategies and diversifies its products lineups, rather than focusing on a few premium devices including the G5.
"Some premium handset makers, including LG, have had a tough time in the Chinese market, as they have failed to catch up with local trends and needs," Steven Lee, a marketing expert at Alibaba Group, the operator of China's largest online retail service, Tmall, told The Korea Times, on the sidelines of this year's Consumer Electronics Show (CES) Asia 2016, Thursday.
The remark reflects that LG's bet for a modular device ecosystem came as no surprise to Chinese customers offering options that include products from more than 200 local handset manufacturers.
"It is true that the handset market fluctuates at all times, but smartphones without localized functionalities cannot succeed here," he said.
LG Electronics was ranked 16th in the Chinese smartphone market share during the fourth quarter of last year, according to U.S.-based market researcher IHS. Xiaomi was the first with 16.7 percent, followed by Huawei with a slim margin during the same period.
Samsung came in sixth with 9.4 percent of share, with LG holding only 0.02 percent.
This is a stark difference from LG's global profile where the company was No. 5 with 13.5 percent of smartphone market share in the first quarter this year, according to recent data by Counterpoint Technology Market Research.
IHS analyst Jusy Hong said, "Chinese handset makers have achieved technological leaps forward from economies of scale in recent years."
"Their technological standard has reached a global level. On top of that, they have expertise in cost reductions, making them highly competitive in their hometown," said the expert.
He also cited smartphone distribution channels in China as another key factor leaving premium handset makers in a tough time in the Chinese market.
"In China, only some 30 percent of smartphones are distributed by mobile carriers, with the rest selling on retail channels online and offline. This means most customers cannot benefit from carriers' subsidies, leaving people less motivated to buy expensive premium devices," he said.
This is why high-end devices are less popular than budget or mid-end ones in China, according to the analyst. The G5 sells at $734 in China at the same price of its Samsung counterpart Galaxy S7.
Another industry source in China, asking not to be named, said: "LG does not have diverse handset lineups, leaving the company less competitive than its Chinese counterparts including Huawei and Xiaomi."
For example, Xiaomi unveiled on Tuesday its new handset Mi Max in a bid to expand its footprint in the mid-end market. The 6.44-inch handset sells from $230 (269,000 won) here. Huawei, the bitter rival of Xiaomi, also introduced diverse products, ranging from low-end to high-end ones, at its booth at the CES Asia.
A Huawei official said, "Huawei has technological expertise and can manufacture our devices on our own, which is the biggest difference from most other Chinese handset makers which outsource some manufacturing processes. due to a lack of technology."
Local media also expressed concerns over LG's positioning strategies.
Wealthy Chinese people tend to prefer Apple or Samsung smartphones, but most of the public buy "Made-in-China" handsets, due to their low price and relatively decent functions, according to Beijing Business Today. But LG's G5 cannot compete with its Apple or Samsung counterparts, in terms of brand power. But LG sticks to the premium device market, leading the firm to lose more ground to local handset makers, the daily added.
![[INTERVIEW] Disney+ 'Big Bet' director on portraying greed and desire](https://img.koreatimes.co.kr/upload/thumbnailV2/af0ee9846e3f45a7b59c1a5b449291c6.jpg/dims/resize/178/optimize)
