LG to stop supplying regional OEMs

LG Electronics has announced that it is to cease supply of its products to OEMs in the Middle East and Africa (MEA). The company stated that keeping control over its brand name is the main reason behind the move.

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By  Guy Mathew Published  August 19, 2002

LG Electronics has announced that it is to cease the supply of its products to OEMs in the Middle East and Africa (MEA). The company stated that keeping control over its brand name is the main reason behind the move.

It is a major move for the company that has been establishing itself as a leading vendor of flat screen monitors and plasma screens in the Middle East. It aims to only allow products of the highest quality to be available to the market by focusing on its own marketing and positioning.

“To date we have been supplying OEMs in the region. We have decided to pull back from this business because we want to have total control over our valuable brand and to offer better support our regional distribution partners,” said B Shin, president of operations, MEA.

He pointed out that over the past year LG has seen a large shift in the source of most of its revenues from unbranded to LG branded products. In the first half of 2002 90% of revenue was from LG brand sales compared to 52% in the first half of 2001. “We have made our strategy to… transform our organisation from an equipment manufacturer to a brand supplier,” said Shin.

He went on to say that LG’s aim was to establish itself as the premium brand in the market “leaving others to be preoccupied with price-sensitivity and brand-diluting promotions”.

The company’s partners and distributors are fully prepared for the change in strategy with new showrooms being opened, Shin said. The company released results for the first half of the year that showed and overall increase of 19% in sales and an 11% increase in monitor sales. Plasma screens saw an increase of 266% in sales but Shin admitted that at present the products are not very affordable for most consumers.

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