LG's latest budget smartphone Q6. [Courtesy of LG]
South Korean smartphone makers led by Samsung and LG are rewriting their global market strategies, prompted by sluggish sales and tough competition in China, or an unexpected consumer response to low-end products in North America.
In the first half of this year, Samsung fared well in the global smartphone market, particularly in the United States, with its flagship Galaxy S8 series, but its pride was broken in China due to poor sales, while LG's smartphone business was in crisis.
The world's largest smartphone maker has simplified the bloated structure of Chinese operations from seven branches and 30 regional offices to 22 regional headquarters which were put under direct control by vice president Kwon Kye-Hyun in charge of Samsung's business in China.
The change was designed to strengthen sales and marketing through quick decision making. "The structural change was intended to do business in accordance with regional characteristics," a Samsung official said.
According to market researcher Strategy Analytics, Samsung's second-quarter smartphone sales in North America stood at 14 million units, cornering 33.3 percent of total sales in the region to regain its top post taken by Apple a year ago. In China, however, Samsung's market share has plunged from 19 percent in 2013 to 3.0 percent in the first quarter of this year.
"There have been constant suggestions that Samsung needs a tailored strategy to cope with massive investments and low-cost marketing by Chinese companies such as Huawei," an industrial official said, adding the recent release of SM-G9298, a new flip phone, in China, underlines Samsung's new strategy.
LG's situation is more pressing. The company's operating loss was reduced from 467 billion won (415 million US dollars) in the fourth quarter of last year to 200 million won in the first quarter of this year, raising market expectations of a turnaround in its troubled smartphone business, but LG saw its operating loss surging again to 130 billion won in the second quarter of this year due to high marketing expenses.
There was a positive signal as LG's low-end smartphones gained popularity. Data from Strategy Analytics showed that in the first half of this year, LG stood third in the US smartphone market, behind Samsung and Apple.
As its hard-earned point in North America was attributable to low-end products, LG is strengthening a lineup of cheap models. Industry observers said both Samsung and LG regard smartphones as their core business because they will serve as platforms for the integration of home appliances through IoT.
reporter
Lim Chang-won
cwlim34@ajunews.com
