SEOUL, Sept. 25 (Korea Bizwire) — LG Group is trying to chart a new course in its second year under the leadership of a 40-something chairman who is adding a dose of “do whatever it takes” to the old “don’t overdo it” mindset.
South Korea’s fourth-largest conglomerate, whose businesses range from electronics and telecom to chemicals and cosmetics is not typically known for its aggressive marketing strategy.
But its major subsidiaries have recently generated media attention with a series of legal battles and negative campaigns against their rivals.
Behind the tricky gear change is Koo Kwang-mo, the 41-year-old chairman who inherited the family-run conglomerate from late chairman Koo Bon-moo in June 2018.
Under his leadership, LG has sold its non-core assets, increased investment in new businesses and simplified its corporate structure to speed up the decision-making process.
On Tuesday, Koo held a meeting with the group’s top 30 executives to discuss ways to foster new growth drivers and innovate the corporate structure to fend off rising business challenges at home and abroad.
“The next few years will be a critical time for our survival as we are faced with different types of crises,” Koo said during the workshop held at the LG academy in Icheon, southeast of Seoul.
“We have to promptly secure our competitiveness and completely change the way we do business and structure ourselves to overcome the crises.”
The workshop was attended by LG Corp. Vice Chairman Kwon Young-soo, LG Electronics Vice President Jo Seong-jin and LG Chem Vice Chairman Shin Hak-cheol, as well as other CEOs of LG affiliates.
They discussed ways to accelerate the group’s “digital transformation” by combining the latest technologies, including artificial intelligence, big data and smart factories, in various sectors to create synergy between affiliates.
In addition to efforts to spur technological innovation, Koo urged the CEOs to take a leading role to promptly bring “fundamental, new changes” to LG.
His call came at a time when Korea Inc. has been facing headwinds such as global trade tension and tougher competition with fast-moving Chinese brands in the tech sector.
LG Electronics Inc., the group’s crown jewel, has started an uphill battle against its nemesis Samsung Electronics Co. in the premium TV market amid falling profits from the low-end liquid crystal display (LCD) TV segment.
In an unusually strong tone, LG attacked Samsung’s 8K QLED TV as “not a real 8K TV” because its screen fails to fit the standard of a trusted international agency.
It even ran a TV ad to claim that Samsung’s QLED TV is merely an LCD TV with a backlight panel that has an additional quantum dot sheet in an effort to highlight its organic light-emitting diode (OLED) technology.
Last week, LG filed a complaint with the Fair Trade Commission (FTC), saying Samsung’s “exaggerated, misleading” ad should be placed under “necessary measures” to protect consumer rights.
The bitter attack showed how LG is desperate to narrow the gap in the premium TV market with Samsung, which has expanded its stake with its QLED lineup.
Samsung’s share of the TV market accounted for 31.5 percent in terms of value in the second quarter, nearly twice that of LG’s 16.5 percent, according to market researcher IHS Markit.
Another major subsidiary, LG Chem Ltd., has been locking horns with the country’s top oil refiner, SK Innovation Co., in recent months over electric vehicle (EV) battery-related patent lawsuits.
In April, LG Chem filed a pair of lawsuits with the U.S. International Trade Commission (USITC) and the U.S. District Court for the District of Delaware, requesting an embargo on importing EV battery-related products from SK Innovation, while demanding compensation for the piracy of trade secrets.
In response, SK Innovation, a latecomer to the EV battery field, filed a suit with the USITC this month, claiming that LG Chem infringed on its lithium-ion battery patents.
SK Innovation also lodged a damage suit against LG Chem with a South Korean court in June, saying the latter’s suit is hurting its EV battery business.
LG Chem has been moving actively in recent years to boost its battery business as it aims to achieve 31.6 trillion won (US$26 billion) in sales in the sector by 2024, sharply up from last year’s 6.5 trillion won.
For January and February 2019, LG Chem ranked fourth in the global EV battery market with a 10.4 percent market share, while SK was in tenth place with a 1.7 percent market share, according to industry tracker SNE Research.
In the telecom segment, LG Uplus Corp. has doubled its efforts to break out of its position as the nation’s smallest mobile carrier by expanding its share in the early stages of the 5G market.
LG Uplus has seen the 5G network as a chance to narrow the market share gap with its bigger rivals SK Telecom Co. and KT Corp. by promoting 5G related services.
In July, LG Uplus filed a complaint with the Korea Communications Commission (KCC) against its two competitors, claiming they offered illegal subsidies to attract new subscribers when 5G smartphones were launched.
While the noisy marketing and legal battles have not yet produced a visible outcome, some market watchers have given a positive evaluation of the young chairman’s new management style, which is different from that of the previous leadership.
“From outside, LG has been considered a stable corporation. Now, it is enhancing its competitiveness with a prompt decision-making process based on stability,” Kim Jang-won, an analyst at IBK Securities, said.
“The new cash flow from the restructuring could lead to new business opportunities and potentially improve shareholder value.”