LG Electronics moves smartphone output hub from Korea to Vietnam, Brazil
LG Electronics moves smartphone output hub from Korea to Vietnam, Brazil
  • Dan Yoo
  • 승인 2019.04.25 11:54
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LG Electronics has decided to stop producing smartphones in South Korea. It will transfer supplies from its Pyeongtaek plant in Gyeonggi Province to Vietnam and Brazil, while South Korean personnel will be reorganized. This is because cost reduction has become inevitable due to rapid growth of Chinese companies and a slowdown in global smartphone markets. 

According to the electronics industry on April 24, LG Electronics has decided to relocate its production base of smartphones, which had been made in Pyeongtaek, Gyeonggi Province, to its factories in Haiphong, Vietnam, and Sao Paulo, Brazil, starting from June. 

It is expected to reduce production in Pyeongtaek from the second half of this year and halt all production within this year.
In addition, it is heard that employees of Pyeongtaek facility will be given voluntary retirement. It plans to deploy the remaining manpower to other businesses in South Korea. LG Electronics also excluded MC Business Headquarters from the open recruitment of new employees in the first half of this year.

LG Electronics' decision is interpreted as a reduction in production cost. Vietnam's minimum wage is about 206,000 won. LG Electronics already operates production facilities for TVs, home appliances and mobile phones in Haiphong.

In the case of Brazil, it is seen as an intention to strengthen its efforts to tap into the Latin American markets. LG Electronics has a 6.3 percent market share in the Latin American smartphone market. Central and South America, in particular, are emerging markets with high growth potential, and LG Electronics has still strong influence over the region.

LG Electronics' MC Business Headquarters has been in the red for 15 quarters from the second quarter of 2015 to the fourth quarter of last year. It posted a loss of 790.1 billion won last year alone, with a cumulative deficit of 3 trillion won. The first quarter of this year is expected to see a deficit of around 200 billion won.

It is losing its competitive edge in premium phones due to Samsung Electronics and Apple, and even losing its market share in medium-priced phones amid low-priced attacks from Chinese companies such as Huawei and Xiaomi.

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