LG kicks off major Thai expansion

The move, which will create 400-500 jobs, is part of the company's 2008 business plan released yesterday by Hyun Woo-lee, who has just taken over as managing director of LG Electronics (Thailand).

The relocation means LG Electronics has promoted its Thai operation to supply commercial air-conditioners to markets within Asean, where they will benefit from privileges under the Asean Free Trade Area. Import duties among member countries are to be reduced to between zero and 5 per cent.

LG Electronics' Rayong plant is located on 190 rai of land and currently consists of five major factories for the production of television sets, home air-conditioners, washing machines, microwave ovens and vacuum cleaners. It employs more than 2,000 people.

The company will build two new factories on the site to make commercial air-conditioners, including its Multi V, Multi V Space and MPS (Multi-Purpose System) models.

Lee said the company would allocate 3 per cent of its sales, or about US$30 million (Bt992 million), for investments in Thailand, covering both marketing activities and factory expansion.

Although the company has other factories in Indonesia, Vietnam and India, "Thailand is a key country for LG Electronics and our headquarters has a policy of focusing on growing the business in Thailand and allocating huge, continuous investments to this market", he said.

LG Electronics plans to shift its commercial air-conditioner manufacturing from South Korea to Rayong year by year.

"We [LG Electronics] have very positive hopes for the

new government and are quite confident that it will do everything to support the development of Thailand's economy," he said.

Lee said a special team, consisting of 40 engineers and technicians, would be recruited to look after the commercial air-conditioner unit, particularly its sales and service functions.

LG Electronics (Thailand) deputy managing director Alongkorn Chujit said about $20 million of the investment would be spent on setting up two production facilities for commercial air-conditioners at the Rayong plant. The other $10 million will be spent on technology transfer and marketing activities.

"We have seen great po-

tential for expanding our

commercial air-conditioner

business in Thailand because of many residential projects such as condominiums, being developed in Bangkok and major cities," he said.

LG Electronics (Thailand)'s product marketing manager for air-conditioners, Sinamet Im-aim, said the Thai market for commercial air-conditioners was expected to have strong growth of 15 per cent this year, with demand for 400,000 units.

"We expect to increase our share of the commercial air-conditioner market from only 1 per cent or 2 per cent at present to about 5 per cent by the end of the year," Sinamet said.

LG Electronics launched its home air-conditioners here six years ago and its commercial air-conditioners just last year. Carrier, Trane, York and Daikin currently hold a combined share of about 80 per cent of the Thai commercial air-conditioner market.

LG Electronics (Thailand) last year achieved Bt13 billion in domestic sales of all its appliances and another Bt23 billion from exports. The company has set the optimistic target of expanding its domestic sales by 30 per cent this year, and achieving 20-per-cent growth in exports.

Total demand for wall-type air-conditioners for home use is expected to reach 850,000 units this year, with a sales value of about Bt13 billion, up 8 per cent from last year, Sinamet said. LG Electronics expects its market share for home air-conditioners to grow from 18 per cent to about 20 per cent this year.

"We want to sell about 170,000 home air-conditioners this year, with a sales value of Bt2.6 million, which is up 35 per cent over last year. We will focus more on premium air-conditioner products in 2008, hoping to capture different segments of customers, including those who prefer design and technology, as well as smart customers and those who are concerned about value for money," he said.

The company will also focus on experimental marketing activities in communicating with individual clients as well as achieving a better relationship with its dealers.

Kwanchai Rungfapaisarn

The Nation