By Lee Jae-chul and Choi Mira
The full-blown protectionist movement on the global trade front could deal a blow to LG companies’ businesses, LG Group Vice Chairman Koo Bon-joon raised concerns.
“The business environment has been seriously deteriorated both at home and abroad due to the strengthening trade protectionism and rising uncertainties in the global economy, which could have a negative impact on the companies’ first quarter earnings,” said Koo at an executive seminar held on Tuesday at Twin Tower in Yeouido, Seoul.
In particular, LG Electronics is expected to be hit hard by the U.S. government’s recent decision to impose hefty safeguard duties on Korean washing machines. Washington demanded remedial duties of 20 percent on 1.2 million imported washers in the first year and 50 percent on any number beyond that quota. The respective tariff rates are brought down to 18 percent and 45 percent in the second year and to 16 percent and 40 percent in the third year. LG Electronics and Samsung Electronics export a combined 3 million units of washing machines worth 1 trillion won ($929.7 million) annually to the U.S.
He urged more than 400 executives of LG firms who attended the meeting to identify opportunities and risk factors in the rapidly changing environment and reexamine business strategies in order to enhance competitiveness and achieve sustainable growth amid growing uncertainties.
Companies should not be complacent and continue to work hard to maintain the leading position, he added citing LG Electronics’ premium home appliance brand LG Signature and LG Household & Health Care’s cosmetics labels Sum and Whoo as good examples with brisk sales in the global market on fine-tuned business strategies.
As for poorly performing businesses, he demanded drastic changes in business models to meet the needs of customers to turn the businesses around. “We must not forget that business competitiveness lies in markets and customers,” he said urging executives to stick to the basics and control management more tightly.