LG Group | LG Electronics (Korea)

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LG is one of Korea's largest business groups. Westerners know the company mainly as Korea's #2 electronics manufacturer behind the mighty Samsung. It suffered a dip in performance in the early 2010s as a result of its late entry into the smartphone sector. Yet LG is firmly established as the global #2 in televisions behind its country-mate and has a broad public profile in the domestic Korean market where - perhaps surprisingly - it is also the leading household and personal care marketer, and has a finger in numerous other pies including soft drinks (it is the local Coca-Cola licensee), telecoms, industrial manufacturing and property development. In fact, it is regarded by many as the model for modern Korean businesses, having undergone a painful restructuring from a labyrinthine "chaebol" to Western-style diversified conglomerate without the financial or political scandals which dogged several of its competitors, including Samsung. The group network now embraces more than 40 separate companies with offices and subsidiaries in over 120 countries. Like Samsung, it is still firmly controlled by its founding family, in this case the Koo brothers, grandsons of the man who launched the business in the late 1940s making face cream.

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Who are the competitors of LG Corp? See Consumer Electronics and Household Care and Personal Care

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LG Household & Healthcare LG Siltron
LG Electronics LG U+ Telecom
LG Chem GIIR Group

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 6th Oct 2016: Ads of the Week: "The Art of Essence". Here's a handsome global campaign for LG's electronics and home appliances products, developed by Korean shop HS Ad and now rolling out worldwide. There's no great underlying concept, but merely the juxtaposition between the clean lines of the LG range with spectacular architectural design from London, Paris, New York, Stuttgart. All captured in stunning razor-sharp monochrome. Lovely. 

Adbrands Weekly Update 7th April 2016: Ads of the Week "Being Jason Statham". Anyone who saw the Melissa McCarthy movie Spy knows that Jason Statham is a past-master at making fun of his own hardman image. Here's a splendid new ad from Energy BBDO for LG's G5 handset - though frankly you might never notice it because of the barrage of Jason Stathams on offer; the huge enjoyable result is something like the action movie remake of Being John Malkovich.

Adbrands Weekly Update 31st Jul 2014: Samsung's lead in the global smartphone market came under intense pressure during 2Q, according to new figures from IDC, as Chinese manufacturers Huawei and Lenovo gained share at the expense of the established market leaders. Samsung's global share suffered most, falling from 32.3% a year ago to 25.2% in the most recent quarter, as volumes slumped from 77.3m units to 74.3m. The quarter on quarter decline is even more dramatic, down from 88.5m units in the first three months of 2014, despite the launch of the Galaxy 5 handset. Samsung was the only one of the top five manufacturers to experience a decline in volumes. Apple's share also drifted back, to 11.9% from 13.0% a year ago, while 5th placed LG shed 0.1% to 4.9%. The big winner was Huawei, whose volumes doubled year on year to 20.3m devices, catapulting it into the #3 spot with 20.3% share. Lenovo held 4th place with 15.8m units and 5.4% share. Total smartphone volumes rose 23% year on year to a record high of 295.3m units.


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Background

Free for all users | see full profile for current activities: Group founder In Hoi Koo formed the Lak Hui Chemical Co in 1947 to develop a range of personal care products for the domestic Korean market as well as servicing Korea's growing requirement for industrial chemicals, based around a shared refining operation. Its first product was a face cream, initially marketed under the name Dong Dong Goo Ri Moo Cream. It quickly became known as Lucky, inspired by the company name Lak Hui. When the supplier producing jars for the cream encountered manufacturing problems, Koo set up his own packaging business, quickly becoming Korea's biggest manufacturer of plastics, later vinyl and other synthetic chemicals. As a result it began to manufacture small plastic items like the country's first combs and toothbrushes. At the same time, the company developed its own range of cosmetic products. The most important of these was Lak Hui dental cream. Launched in 1954, it was the first domestically produced toothpaste and proved enormously successful, outselling expensive US imports. This gave Lak Hui a strong foundation for further household and personal care products including Hai Tai soap, the country's first synthetic detergent Hi-Ti New Hit, and first non-imported shampoo.

At the same time, Koo established a sister company, Goldstar, to exploit Korea's growing demand for domestic household appliances. Cheap Korean labour also meant that the company was able to exploit the fast-growing export market established by Japanese appliance makers. Goldstar started by producing electric fans in the late 1950s, and quickly expanded to fridges, washing machines, radios and televisions during the course of the 1960s, selling both to domestic consumers and exporting to the United States and Europe. Other affiliated companies sprang up during the 1960s; one key development was the 1966 joint venture deal with US oil company Caltex to build the huge Honam Oil refinery in Korea. Financial services and insurance businesses joined the group early in the 1970s. The chemicals business officially changed its name to the Lucky Group in 1974, and moved into petrochemicals in the late 1970s. Following In-Hoi Koo's death in 1962, this expansion was overseen by his eldest son, Cha-Kyung Koo. 

Goldstar had also begun to produce semiconductors to satisfy its own consumer electronics requirements, but the company's cheap labour and manufacturing costs led to a number of joint venture deals with Western partners such as NEC and Siemens. Goldstar learned from the process and the quality of its own products improved significantly during the decade, as the company set out to supply all aspects of home and office automation. In 1995, the company formally changed its name from Lucky Goldstar to LG Group, and at the same time a new generation took over management of the business with the appointment of Cha-Kyung Koo's eldest son Bon-Moo Koo as chairman. 

Like all other Asian businesses, LG was hit hard by the region's economic turmoil in the second half of the 1990s, and it was forced by the Korean government to begin streamlining operations. At the tail-end of 1998, LG finally agreed to sell its semiconductor business LG Semicon to rival Hyundai. In 1999, LG sold a 50% stake in its liquid crystal display division to Philips Electronics for $1.6bn, what was then the biggest acquisition of equity in a Korean company by a foreign investor. It was followed by another joint venture with Philips, combining the two companies' television tube businesses. Less successful was an aggressive push into telecommunications services, just as the market was reaching its peak. While rival Samsung focused on the more glamorous side of the business - handsets - LG pushed into network systems and infrastructure, just in time to catch the downturn which eviscerated the likes of Ericsson.

The group underwent a complex restructuring process between 2000 and 2004, designed to streamline ownership of its the huge collection of assets. Various businesses were spun out and then recombined to create a single corporate structure. Several holdings were sold off altogether, including leading Korean advertising agency LG Ad, control of which was sold to WPP. What remained of LG Group was then carved in half in 2004 to form two largely separate entities. The more valuable businesses in electronics, telecoms, household products and chemicals were grouped together to form LG Corporation, controlled by the Koo family. Descendants of Joon-koo Huh, for many years the right-hand man to LG's founder, acquired control of various other businesses, hived off in 2004 into a separate group, GS Holdings Corporation. The GS name was chosen in honour of the group's former Goldstar brand.See full profile for current activities


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