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Samsung, LG Battle Escalates in Vietnam
May 2, 2005
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Samsung and LG Electronics, the two biggest of 700 Korean companies present in the Vietnamese market, are set to battle over market share in Vietnam.

Samsung Electronics’ Vietnamese office is in Ho Chi Minh, southern Vietnam. LG Electronics’ head office is in Hanoi, Vietnam's capital city located in the north. Both companies are eyeing the regions occupied by the other, and recently started marketing to increase market share in the respective regions.

Samsung does not want to lose market opportunities in the capital city of Hanoi with its huge growth potential, and likewise, LG sees Ho Chi Minh, with 60-percent of the nation's purchasing power, as a slice of the pie not to be overlooked.

Samsung's key game plan for its northern move is a premium brand strategy. Although Vietnam's Gross Domestic Product (GDP) hovers around U.S. $500, Samsung took into account the nation's long-term economic growth and the expansion of the local market size before establishing its high-end brand strategy.

Samsung recently stopped selling lower-end products, such as conventional televisions with block-type screens and single door fridges. "Samsung is competing with Sony for the market lead," Oh Han-jin, production manager, said. "Our high-quality products in line with the Premium Brand Strategy have won Vietnamese customers over, and we are now getting ahead of Sony in many aspects," he added.

Samsung Electronics' manufacturing complex has three production lines capable of churning out 1,400,000 units of seven different types of electronics goods, including televisions, computer monitors, and refrigerators. Sales increased 28-fold from $9 million in 1996, when the company started operating its Ho Chi Minh production line, to $230 million in 2004.

In response to Samsung's move, LG electronics has taken an approach that appeals to the majority of Vietnam by turning out brands that match the needs of the current Vietnamese market. For example, LG manufactures several television models in Vietnam, including conventional block-type screen TVs, projection TVs, Plasma Display Panel (PDP) TVs, and Liquid Crystal Display (LCD) TVs.

Vietnamese consumers not living in the city still prefer cheaper, conventional televisions with the classic block-type screen. This preference strengthens LG Electronics' brand name. LG is also trying to cut production costs as the terms of the ASEAN Free Trade Area (AFTA) are to be implemented in Vietnam starting 2006.

"We've been focusing on northern and central Vietnam in our marketing efforts; however, we plan to include the south of the nation in our marketing agenda by expanding sales networks and events," said Ahn Byoung-gi, senior manager at LG Electronics' Vietnam office.

LG presently operates two manufacturing plants in outer Hanoi and Haiphong. They mainly produce televisions, air-conditioners, DVD players, and refrigerators. Including the sales from the switchboard manufacturing plant in Hanoi and the mobile communications business, LG electronics' sales jumped from $1.4 million in 1996 to $235 million in 2004.

Thanks to the two electronics giants' heated race for the market lead, Korean televisions, monitors, and air-conditioners now take up 43, 51, and 35 percent of Vietnam's electronics market, respectively. Likewise, DVD and CD-ROM brands have gained 34 percent and 65 percent of market share, respectively, and are ahead of Japan by a large margin. (The Korea Times)

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