LG Elec. slogs in Russian market due to the failing market

By Park Sae-jin Posted : November 18, 2015, 10:10 Updated : November 18, 2015, 10:12

[AJU NEWS DB]


LG Electronics is slogging in its path to conquer the Russian market. The market, affected by Russian ruble falls due to stock plunge and fall back in its economy.

According to an AJU NEWS CORP’s report on Tuesday, LGERA (the subsidiary company of LG Electronics in Russia) built a “warehouse” in Ruza, near Moscow, which is 2,6000㎡ wide, single storied building costing approximately U.S$ 30,000,000 (land prices excluded).

When the construction began in September 2014, the warehouse was planned to be the LGRA’s new factory site. The factory was to manufacture TVs, refrigerators and washing machines. But because of its falling profits, LG cannot bring in the manufacturing equipment.

LG claims the warehouse is built following it original plan as to fluidly control and respond to the Russian market. “The warehouse will do its role as a warehouse,” a person from LG Electronics said.

Against LG’s explanation, Yoon Tae-Gu and Han-Ah-ram, reporters of AJU NEWS CORP pointed out that too much money was invested into building a warehouse. According to the industry, less than $4,500,000 is needed to build a warehouse of similar size.

LGRA’s situation is at risk. It is not only suffering from decreased sales, but its annual liabilities have risen from last year’s $220 million (Approximate in numbers) to this year’s $315 million (Approximate in numbers). The liability has risen by 40 percent.

But to a contrary, LG Electronics’ consumer appliances are the hot items in Russia. LG is even considered as “the brand loved by the nation”. LG’s consumer appliances recording the top in market share.

According to LG Electronics, LG will seek to develop a premium brand image while meeting replacing demand of the market.

아주경제 박세진 기자 = swatchsjp@ajunews.com
 
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