Electronics major LG India, the 100 per cent subsidiary of South Korean multinational LG Electronics Inc., is betting big on India, one of its important markets globally, considering the growth potential here. In an interview with The Hindu, LG India Managing Director Soon Kwon said that India has huge potential to take business away from China and turn into a major exports hub but it needs to ramp up its infrastructure and develop the right ecosystem to help businesses to grow faster. Excerpts:

Contrary to expectations the Indian corporate sector is still reeling under slowdown. In fact, corporate profits declined 10 per cent in the last quarter as demand is yet to pick up. What is the experience at LG India?

This is a good subject to talk. I think we have done well compared to our competitors. How much we have done better, I cannot tell you. But the performance of the last five months is up to our original anticipation. Business was very dynamic and we are very happy over our performance.

Does that mean demand is picking up in the country and people are buying?

I would say we have outgrown the industry. How much better I cannot tell you. Overall, we have a better business today.

The Indian government has started the ‘Make in India’ initiative and our PM recently went to South Korea seeking investment and inviting Korean businessmen to set up manufacturing bases here under this scheme . How will LG contribute to this initiative? Do you have any major plans for manufacturing in India?

I think LG may be the first (MNC) company or probably among the first companies who have invested most in India. We have huge amount of investment in manufacturing, Research & Development (R&D) in India and this is probably by far more than other countries, even more than local companies. Our set-up includes manufacturing backed by robust R&D. LG India you can say is a 100 per cent Indianised company considering our manufacturing set-up, and our people. Now it all depends on how quickly the Indian economy develops. We are ready to expand our manufacturing set-up and increase our investment here in India in line with the growth of the Indian economy. For LG, India is very important, one of the most important strategic markets. We have to have a good brand, good manufacturing and R&D set-up here. This is one of the primary agendas of our global CEO.

That is fine, but Mr Modi wants companies like you to manufacture here and export to your global markets. This is his overall game plan under the ‘Make in India’ scheme.

Yes, today LG India is the largest exporter in consumer durables. None of the companies are exporting more than LG today. We have already started this activity about 10 years ago. We are exporting the products to several counties. Every year as the volumes get higher, I believe, there is huge potential that India can take business away from China and export products to other countries. For that the Government needs to speed up infrastructure development. It must develop the right ecosystem for business to grow.

The Government is stressing on ease of doing business to attract foreign investment in manufacturing and other sectors. Ease of doing business is still a work in progress and it would take time. What is your experience?

How easy it is to run business in India is a tough question to answer. But I would like to mention about the requirement of overall development of infrastructure. For example transportation which is not only about the condition of roads and road construction. It includes the trucks and warehouses. Certainly, I think, it needs to be levelled up, big time. Probably, this is the most important and particular part of infrastructure which we need to see a quicker and bigger improvement, that too in a focused time frame.

Has the attitude of foreign investors changed on India since the new Government took over last year or they need more changes on the ground before making up their mind?

I can only say that the overall sentiment of the people, may be outside India, has gotten better. But what scale, may be it depends on how much interest they do have in investing in India. I am very sure that there is more positive sentiment towards India today.

How much investment LG India is likely to make?

LG’s investment plan for this year is roughly about Rs 1,000 crore, which includes about Rs 500 crore in R&D and manufacturing and another Rs 500 crore in the marketing area.

How is LG doing in different segments of business in India?

We are into the business of mobile devices, TVs, air-conditioners and we have a good presence in the home appliances (HA) business in India. We have done well in all these business segments. We have seen good growth and overall we are targeting impressive growth this year. Mobile devices are the first growing business in LG India.

What is the contribution of mobile devices to your revenue and what is the expected growth in this segment?

The current contribution of mobile devices is approximately 10 per cent to LG India’s revenue. We aim to take it to 15 per cent. In volume terms we are aiming to double our market share from five to six per cent to 10 per cent. We have just introduced the LG G4 smartphone device in India at a price of Rs 51,000 and I think leveraging on this phone, we want to double our market share in the smartphone market here.

Does it make sense to p l ay in the premium range of smartphones?

Of course, as a brand we stand for high aspirations in this business. We must play in different ranges, high-end, mid-end and the entry-level segment. We must have presence in all the categories. This is our most sophisticated phone so far.

Do you have any plans for local manufacturing of mobile devices and by when?

This is too early to comment.

(This article first appeared in The Hindu dated July 20, 2015)

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