LG is being criticized for withdrawing from China. What is the problem?

Since the beginning of this year, LG Electronics, one of the two Korean home appliance giants that was once winning step by step in the Chinese home appliance market, has fallen into the maze of being widely criticized by the market and public opinion and is about to withdraw from China. What has happened to this company in the Chinese market in recent years? Why did it fall from a leading position to a passive position of following or even marginalization?

For many home appliance dealers in the Chinese market, don't place high hopes on LG Electronics. Although this company seems to have everything in terms of brand, technology, and products, it actually lacks everything in terms of marketing channels, logistics channels, and market services. Its original main businesses of color TVs, mobile phones, air conditioners, refrigerators, and washing machines have all declined, and it has completely become a follower in the Chinese market.

More importantly, after more than a decade of turmoil and adjustments without any new developments, LG Electronics' mentality towards the Chinese market has quietly changed: it is no longer a continuous investment in developing and nurturing the market, but hopes to seize the current consumption upgrade in China and make a fortune by hyping up some so-called high-end craftsmanship and design new products, thereby making up for the losses and pain of the previous years.

However, for a market as huge as China, although it can accommodate miscellaneous brands, knockoffs and small brands, it is not easy for dealers and consumers to accept a commercial speculative brand like LG. They cannot accept and understand why LG went from being a leader to a marginal player.

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Because, just over 10 years ago, LG Electronics, which blindly and recklessly adopted the strategy of "selling foreign brands at local prices", not only hurt the trust and confidence of a large number of home appliance dealers in the Chinese market, but also overdrew the emotions and recognition of a large number of Chinese consumers.

This is why, in recent years, foreign brands such as Samsung, Sony, and even Panasonic and Sharp have been able to "turn around" in the Chinese market, while LG has found it difficult to return to the core of the mainstream market, whether it is mobile phones, televisions, or air conditioners, refrigerators, and washing machines.

Yes, since 2017, LG Electronics, a foreign brand that has been developing in the Chinese market for more than 20 years, has been "drooling" at the trend of high-end and quality consumption that is quietly opening up in the Chinese market: it has launched a large number of LG seals that are carefully designed and positioned in the high-end market. Just looking at the name, you can see that this is a "masterpiece" that integrates thousands of years of Chinese traditional culture and is specifically designed to please Chinese family users.

The cool design and appearance alone will attract and make many Chinese families love LG's high-end home appliances. However, this is not the lifeline for LG to reverse its decline in the Chinese market.

On the one hand, without voice, no matter how good the show is, it will not work. LG Electronics has been in a state of retreat and contraction in the Chinese market for more than 10 years. It has been lacking a set of marketing, logistics and after-sales service systems that can be quickly detonated. Only products without marketing and services are obviously "castles in the air".

On the other hand, the high-end home appliance consumer market is not a market where you can get rich overnight, nor is it a "vegetable market" where you can come and go as you please. Especially for China's high-end groups, it is more diverse and changeable. Whether it is LG, other foreign brands, or local brands, they all need a process of cultivation and training, and even a unique competitiveness based on brand culture and integrity genes. LG cannot "hunt rabbits by raking grass" and launch high-end products today and get returns tomorrow.

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Looking back at LG Electronics' current operations and competition in the Chinese market, the original "three pillars" of mobile communications, black appliances such as televisions, and white appliances such as refrigerators, washing machines and air conditioners have long been defeated by the frequent challenges and competition from Chinese local companies.

Although its mobile phone business, which was expected to achieve great results, had an innovative modular design, it was completely rejected by consumers. Its betting on the next generation of OLED TVs has suffered two or three years of market stagnation in the Chinese market. Not only did it fail to reap the benefits of the new technology, but it also dragged down its competition in the LCD TV market. Its once strong market share in the air-conditioner, refrigerator and washing machine markets can now only have a certain share in the washing machine market, and it is on the edge or even in the gap in other areas.

Judging from its current market position and industrial layout, LG Electronics has fallen into a "vicious cycle". On the surface, the series of home appliances launched by LG have good designs, new functions and stylish styles. It seems that they can get whatever they want, but this is just a "dream".

After all, in addition to having good products, the high-end market also requires a more complete marketing network, supporting logistics and after-sales services, and even a strong upstream supply chain system. These are resources and platforms that LG did not have in the past and had no control over, so it had to start from scratch.

It is obviously impossible to rely solely on the existing revenue, scale and profits in the Chinese market to promote innovation, R&D in the Chinese market and increase investment in high-end markets and high-end people. Strategic resources and financial investment from the headquarters are necessary to break the deadlock.

However, it is not just China, LG Electronics has also had a hard time in other countries and markets around the world in recent years. The shipment volume of LG's main business, TV, has been declining for three consecutive years, and now it has become the target of two major Chinese companies, Hisense and TCL, and the gap has shrunk to about one million units. Similarly, LG's mobile phone business has become a "brother in distress" with Samsung's mobile phone business. There is no new product that can be used to detonate the global market, and innovation has gone astray.

In fact, a company's performance loss and market decline are always the result of the company's business strategy layout and business strategy errors. In other words, for LG Electronics, the high-end market is no longer a strategic outlet, and more problems and difficulties were buried three or four years ago. In particular, the scars of failure in China, the world's largest home appliance market, seem difficult to make up in the short and medium term!

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.