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LG gets bullish on handsets market

29-July-2005
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LG gets bullish on handsets market

Kwang-Ro Kim, the LG Electronics India CEO, who might leave early next year, has an unfinished agenda, to make the company number one in GSM handsets in India.

"I want LG to be number one in three years," Kim, who will get to know in December this year whether he will continue with the South Korean multinational's Indian arm, told Business Standard.

At present, the target appears not only ambitious but also fanciful. The company has a minuscule share of the GSM handsets market, against market leader Nokia's 70 per cent (in value terms).

"We were told the same thing when we entered the consumer durables and electronics market," said Kim. LG claims to be the runaway number one in the CDMA handset market with about 60 per cent share of the market.

To begin with, LG's assault on the GSM handset market will be routed through the rural areas. Says Salil Kapoor, its marketing head, "We will focus on areas outside the metros where LG is a better known brand than Nokia.

Here, its network will come in handy. LG's outlets in India, dealers and sub-dealers put together, number about 9,000.

'No single brand can hold on to such an overwhelming share of the market for long. Sooner or later, somebody will break its stranglehold. Why not us?' reasons Kapoor.

As it is, LG has started pilot production at its mobile handset manufacturing plant in Ranjengaon, near Pune.

The plant will eventually have a capacity of 20 million sets a year, a large part of which could be exported.

In this respect, it has stolen a march over Nokia, which has just announced its intention to set up its first manufacturing plant in India in Tamil Nadu.

LG could also be counting on an boom in third generation mobile services in India. Earlier this year, it launched the country's first 3G handsets. It claims to have a market share of 54.5 per cent in Europe, Middle East and Africa in the third quarter of year 2004, ahead of NEC's 22 per cent and Nokia's 9.7 per cent. The company expects that, gradually, 10 per cent of the total handset market will migrate to 3G service. Globally, LG this year moved one spot up to become the fourth largest mobile phone company globally.

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