Mr. Park, officially LG Electronics was established in Mexico in 1998, although LG was already present on the market since the acquisition of Zenith. What was the reason for LG Electronics to start its activities in Mexico?
Originally, we established LGEMS in 1994. We changed our brand name in September of 1998 to LG. The main reason we started our business in Mexico is the fact, that we looked for a base for our trade activities in NAFTA. We established our plant in Mexicali to produce TV's and monitors. We took over Zenith in the USA in 1995 and presently we produce this brand in Reynosa. Currently, we are breaking ground in Monterrey for home appliances. We'll be producing refrigerators around Mar 2001. Mexico is economically fast growing and big potential Market. That's why we invest a lot here in Mexico.
How much of your Monterrey and Mexicali production is aimed at the Mexican markets and how much for the export?
In Monterrey, next year the total refrigerator production capacity will be 400,000 (11 cubic to 15 cubic feet). Starting from 2002, we'll produce air conditioners for the Mexican market with a 12,000 BTU, 18,000 BTU, 24,000 BTU, around 200,000 production capacity.. Home appliances are mainly for the Mexican market and maybe we are going to export to Latin America.
Your worldwide results established you as one of the main players in the electronics market. What results did you achieve here in Mexico and where do those results place LGE in comparison to your main competitors, such as Samsung and Daewoo?
We started to do business in 1994, we had 30 million USD in revenue. And, in 1997, we made 100 million UDS, and we changed our brand name in 1998 and achieved 200 million USD
In 1999. This year, we expect 270 million USD. So, we have kept growing at an incredible growth rate. After launching our brand, our customers rely on our product. First of all, we differentiate ourselves by our product leadership. We have a very good quality product. For example, for TVs, we have the flat model, 21", 25", 29", and there's a 33" coming. These are manufactured in Reynosa.. For refrigerators, we have 26 cubic feet side by side refrigerators. No one in the home appliance industry manufactures these big models, so they are importing the largest refrigerators from the USA. Also, we have the biggest capacity fully-automatic washing machine, 12.5 Cubic, it's a very innovative product with turbo direct drive. We are leading the industry with these innovative product. We also have the air conditioning area, which uses our own plasma technology.
Can we expect any further developments in this sector? Are you going to introduce any new products?
At this moment we are focusing on electronics and home appliances but the next step will be the cellular phone business.
Do you foresee any extension of your production facilities to produce, for instance, cell phones in Mexico?
We have no projects to establish any new plants for the cell phones, we build them in the Mexicali factory.
What do you expect is going to be the position of LG Electronics on the telecommunications market a few years from now?
I'm just beginning to learn the telecommunications market. It's a very "choosy" emerging market here in Mexico. | It is a well known fact, that for worldwide operating companies it is essential nowadays to use the Internet in order to increase efficiency and profitability. What are LGE's steps towards B2B or B2C here in Mexico?
As far as I know, the Internet population in Mexico is only 2 million but at the end of the year 2004, it will be 12 million or so. Every year, multi-digit percentages are applied in this area's growth. I expect growth in Mexico but as far as B2B is concerned here, it's premature. Maybe not right now but we'll have to prepare for B2C. I think I want to start in that area here.
In the USA ,these business is losing money. But in the future it should be successful.
In your opinion, what are the main advantages in Mexico. What does Mexico have to offer to Asian companies?
The government is willing to support the investor by lowering the taxes for a certain period of time. The environment is very good for foreigners to invest here. The most critical issue is the exchange rate.. Just before the elections in July 4, the peso used to be down up to 10.1,. We expect that the exchange rate by the end of this year to be 9.8, very stable and next year we expect more or less 10.1. It's good for investors if currency exchange rate is stable..
Mexico should offer more benefits to induce more investors from Asian companies,
The Mexican electronics market is offering a huge potential, that is still waiting to be exploited. Where do you see this company in a few years from now in comparison to your competitors and what will the biggest changes be for LGE in the future?
In electronics and home appliances I think we have more market share than Daewoo and Samsung. I will try to keep this position. Our goal is to be the number one company in this branch of approximately 500 billion dollars, in two or three years. We have to introduce very innovative products, what our customers need, a user-friendly product. We are also looking for DVD production and HD TV and ACDR. Our company's motto is "Digitally yours". We emphasize on a digital product in the future.
Talking to several Korean businessmen, I understood that they expect the conclusion of a free trade agreement with Mexico. Taking into consideration the obvious obstacles to establish such an agreement, would you share this point of view?
Yes I do. Right now, we pay 23 to 30 percent of duty. It will be very helpful for us to have a free trade agreement. I expect a closer relationship with Mexico.
Finally, Mr. Park, if you had the chance to advise a person who is about to buy a new TV, what would you tell him, why should he choose a LGE product?
First of all, LG is a qualified and reliable brand. It's the right product at the right price. We offer a longer warranty than our competitors. The design is very nice and our product has more features than others do. We have a 300 authorized service centers and we also service within 24 hours. If the customer calls, we go to their homes. The service is good, the price is good, the product is good, so, why not? |
