Is LG Electronics Australia looking to move on from the appliance and TV business, as they transition to being a “Smart Life Solutions Company,” wrapped around platform-based services.

According to senior management their future is not about paying expensive margins to Australian retailers, it’s all about, automotive components and air conditioning systems in B2B, and new businesses opportunities spanning electric vehicle charging and the metaverse as LG management describe it where margins are higher and the sell in process easier.

local LG Electronics marketing director Gemma Lemieux, right

In a statement issued recently by local marketing director Gemma Lemieux she said, “In the last eight months, we’ve gone through a global business transformation, setting our sights on becoming a smart life solution company”. The statement came as the business faces a tough 2024 following a 21% fall in revenues in 2023.

Also down were profits with questions being asked about the lack of profits, and the distribution of revenue to LG overseas entities which allows the business to minimise their tax at the expense of local Companies who have to pay higher taxes.

Recently ChannelNews revealed 34 LG entities that the local business purchased goods from including the likes of LG CNS which has a balance of $469M owed to it for services in Australia in 2023 Vs $430M in 2022.LG CNS describes itself as a ‘Digital Business Innovator who leads client DX excellence in cloud, AI/Big data, smart factory, smart logistics, smart city, blockchain, and other DX technologies.

As at December 2023 LG Electronics Australia only managed to deliver a $20.6 million profit on revenues of $947 million according to their latest financials, filed with the Australian Securities and Investment Commission.

So, what does a Smart Life Solutions Company look like?

According to Jo Seong-jin, the CEO of LG Electronics the South Korean business is seeking investment opportunities in adjacent industries, revealing plans for mergers and acquisitions outside of their appliance and TV business.

He admitted that the South Korean Company is currently increasing capital investments in joint ventures, equity investments, and M&As.

LG Electronics management claim, that Australia is one of the most expensive Countries in the world to do business with local retailers who according to former employees are demanding “Excessive” margins as retail sales come under pressure.

To counter these margin demands the business is moving to expand their digital online sales operation with the recent hiring of a new digital engagement manager who previously helped Samsung build out their local online operation.

Currently JB Hi Fi is selling the LG 32″ UltraGear™ 4K Dual-Mode OLED gaming monitor with Pixel Sound, for $2,399, LG is offering it today online in a ‘Specials Deal’ for $2,199.

The local LG site also has other direct sell deals on offer.

“Why is it that we have to give away 30 percent to Australian retailers when we only have margins of between 15 and 17 percent in markets such as the USA” a senior LG executive at CES once asked me.

Last year LG Australia invested an additional $2.14 million on retail promotions on top of the margins demanded by retailers.

The total investment of $8.25 million was up from $6.11 the year prior but despite the increased investment local subsidiary sales went backwards.

Most of this money was spent on trying to stimulate sales of their TVs, appliances and monitors.

Global CEO Jo claims platforms and business-to-business (B2B) transactions are the new growth engines for the company.

LG Electronics currently sells over 100 million smart devices annually, and considering a product life cycle of 7 years, approximately 700 million devices are in use worldwide.

The company plans to convert these into a platform, transitioning to intangible businesses such as content services and subscription solutions to generate revenue.

Beyond TVs, LG Electronics is expanding the application of its webOS to smart monitors and automobiles via third parties who sell motor cars and TV’s, in Australia they include the likes of Bauhn and Linsar TVs that run on LG’s webOS.

The vehicle component sector is planned to grow into a 20 trillion won business by 2030, with infotainment, electric vehicle power, and intelligent lamps as the three main pillars.

In the electric vehicle charging market, the company is preparing beyond charger distribution to total complex charging stations and robot-linked charging.

Moreover, based on the global customer base, network, and synergy with affiliates secured through its existing B2B business, LG Electronics plans to grow its electric vehicle charger business to the scale of tens of billions of won within five years.

In the extended reality (XR) and metaverse domains, LG claimed that they are exploring collaborations with global big tech companies, including Meta, this was before the collapse in sales of new generation headsets that consumers have tried and dumped.

CEO Jo claimed recently that by “Combining LG’s TV content capabilities with Meta’s platform completes the connection between platform, content, and device. We discussed securing leadership in future virtual spaces by exploring our synergies.” According to the company, besides Meta, several global big tech firms are seeking partnerships with LG Electronics to embed AI in their devices.

We have asked the local Company to comment on various issues relating to sales and the performance of the local entity, to date we have had no replies to our questions.