LG, which used to be a Korean duo with Samsung, has begun to enter a downward path in recent years. At present, almost all electronics and electrical appliances businesses under LG Electronics have been squeezed out of the mainstream Chinese market. Although some businesses are still emerging in some markets, they are basically at a stage where no one cares about them.
The author believes that LG, once known as the "best selling foreign brand", has gradually been marginalized by the market. Under this circumstance, LG can only exert its strength in its TV business, which has the most competitive advantage in the entire industry chain, and let it go, hoping to rely on its TV business to recover from the decline and return to the glory moment of the brand. And will the facts be as LG expected?
Turning losses into profit, LG wants to reshape its brand highsFacts have proved that this strategic adjustment of LG has indeed achieved initial results. The data shows that as its current core business of the TV business, LG achieved a turnaround in the company's operations in the second half of 2017. According to LG’s 2017 third quarter report, LG’s operating profit reached 516 billion won (approximately US$454 million) in the quarter, a year-on-year increase of 82.2%. This is after LG’s loss in 2016 was exposed. The highest point of profit growth. As the world's second-largest TV manufacturer after Samsung Electronics, LG Electronics has turned a profit this time, and the industry has seen the hope of the revival of the LG brand.
The industry also agrees that LG's outstanding performance is largely due to the strong sales of the TV business. Having tasted the sweetness brought by the TV business, LG strategically continued to maintain the strong sales momentum of the TV business and continued to benefit from it.
According to LG’s official data, in 2017, LG achieved revenue of 61.4 trillion won (approximately US$57.45 billion), an increase of 10.9% year-on-year, and operating profit of 2.47 trillion won (approximately). US$2.31 billion), a year-on-year increase of 85%, the highest profit since 2009. Although in the performance report, the revenue of each business is not broken down, in the case of unsatisfactory sales or even losses in other businesses, we can be sure that the surge in LG's performance is closely related to its TV business.
In fact, as far as LG is concerned, the benefits brought by the TV business continue to this day. Data show that in the first quarter of 2018, LG's operating profit increased by 20.2% year-on-year to 1.1078 trillion won (about 6.5 billion yuan), a surge of 202.0% from the previous month, which was even said by the securities industry. For the "profit surprise."
According to industry forecasts, LG’s TV division is expected to continue to improve its performance thanks to a series of large-scale sports events already on the agenda this year, such as the World Cup in Russia. It can be said that many positive factors in 2018 have also brought the market's "dongfeng" to LG's TV business.
In a very good situation, LG continues to increase its TV business. With the TV business as its business focus, LG sees the hope of reshaping the brand's high point.
LG's TV business advantage has been overtaken?Although LG's performance is good, the author has found in-depth research that the overall market situation of LG's TV business is not optimistic. It can be seen from the chart of "LG Electronics Official Report" that although LG's operating income is slowly increasing, its operating profit fluctuates greatly. The main factor for this phenomenon is that LG has shifted the focus of its TV business to the OLED sector, and its profit mostly depends on the market conditions of OLED panels, while the advantages of the traditional LCD TV business are being overtaken, and the market share is not rising but falling.
We know that the LG TV business is currently divided into two major sections: LCD and OLED TV. At the beginning of this year, LG also updated its two TV product lines, OLED and Super UHD LCD. LG officially stated that it will further strengthen its high-end TV business. It is expected that in 2018, LG's OLED TVs will account for about 20% of the company's overall TV sales. We see that although LG has made OLED TVs the focus of its TV business development, liquid crystal TVs (LCDs) account for more than 80% of its business and are still the main force of LG's TV business. In other words, LG is still relying on liquid crystal televisions (LCD) to support the scene.
According to data released by IDC, as early as the fourth quarter of 2016, the Chinese brand BOE surpassed LG to become the number one in the large-size LCD panel market. Affected by this, LG's TV panel shipments declined and showed negative growth. Similarly, LG's TV market share has also shown negative growth. In 2016, LG's TV shipments dropped by 4.1%, making it the brand with the largest decline among the top 5 global color TV brands.
According to statistics from Zhongyikang, in January 2017, LG TV retail sales have faded out of the top ten. In addition, according to the color TV monitoring data of the 25th week of 2018 (6.18-6.24) by Zhongyikang, the offline retail sales of LG TVs dropped by 26.5% year-on-year, while online retail sales of LG TVs ranked the bottom, becoming all brands. The "weak" in the camp.
In the Chinese market, LG TV is also being marginalized. The sales volume is not only far lower than that of local brands such as Hisense and Skyworth, but even compared with Samsung, Sharp, and Sony, which are also foreign brands, they have also lost their advantages. It can be seen from the monitoring data on the Zhongyikang 618 color cable that the share of LG TV is even not as good as that of the Internet TV brands Coocaa and KKTV, which have accelerated their shrinking.
Is it really wise to develop the OLED business?In the TV business structure, LG has been adding to the OLED TV business. LG's brand "LG Display" is the world's only mass-produced OLED TV panel manufacturer, and it also announced its decision to increase the production capacity of OLED TV panels in May this year. With the mass production of LG Display’s Paju G10.5 and Guangzhou G8.5 OLED production lines, it is expected that by 2020, the proportion of its OLED business sales is expected to expand to 40%.
According to the data, in the overall global sales of OLED TVs in the first quarter of 2018, although LG topped the list with a huge market share of 70%, in the author’s opinion, LG’s focus on high-end home appliances OLED TVs in the future is not A wise move.
First of all, the price of OLED TVs is still relatively high. The cost of OLED TV panels is 3 to 4 times that of LCD TV panels, which makes the overall price of OLED TVs much higher than traditional LCD TVs. At present, the higher positioning limits the consumer group of OLED TVs.
For example, the price of 55-inch OLED TV is about 10,000 yuan, and the price of 65-inch is about 20,000 to 30,000 yuan. Although the quality is excellent, the high price makes the popularization of OLED TV difficult. According to the color TV monitoring data of the 25th week of 2018 by Zhongyikang, although the retail volume of OLED TVs increased by more than 4 times during the 618 period, the overall sales of OLED TVs accounted for only 0.2%, which also shows that OLED TVs cannot be immediately Let the public accept.
Secondly, at present, the OLED TV market is not big. According to the latest survey, the sales of OLED TVs in the global market account for only about 1%. Although OLED is widely regarded as an ideal technology for next-generation displays, it will take some time to become popular. This determines that LG cannot rely on OLED TV business to hit the market high in the short term. At least in 2 to 3 years, it is unrealistic for OLED TVs to be fully popularized, and it is still unknown whether LG is fully committed to OLED TVs at the moment.
Finally, OLED TVs are high-end products that cannot be fully paid attention to by the mass consumer market in the short term. From the perspective of development strategy, major TV manufacturers have not regarded it as the focus of their TV business. Even Samsung Electronics is currently not optimistic about OLED, believing that OLED technology is not yet mature and cannot be mass-produced, bypassing the OLED TV business; while Japanese brands such as Sony and Sharp have taken active marketing measures to occupy positions in advance. In contrast, LG has not only made OLED its business focus and invested heavily, it has even lost the advantage of traditional LCD TVs (LCD), which is very radical.
Write at the endThe author believes that OLED TVs still belong to a niche market. Although the prospects are promising, from the current point of view, its low cost performance is the industry's shortcomings, which determines that OLED TVs will not become the trump card in the TV industry in the short term.
In fact, LG's TV business has been struggling with profit and loss in recent years: In the third quarter of 2016, because consumers were not enthusiastic about ultra-thin OLED TVs, LG lost 60 billion won ($53 million). Although it achieved positive growth in 2017, it also shows to a certain extent that LG currently enjoys the dividends released by the positive prospects of OLED TVs, and this is not necessarily sustainable. Now, LG is desperate, once the OLED market changes, LG TV may completely withdraw from the stage of history.
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