LG aims for a fresh start

Having struggled for a long time to make a dent in China, LG Electronics expects to seek a fresh start in the market with its recently released flagship smartphone.

The G3 smartphone was launched in China by the Seoul-headquartered consumer-electronics giant on Fridaytogether with South Korean actor Lee Min-ho, who enjoys huge popularity in China after playing leading roles in South Korean shows including Boys Over Flowers.

The sale of the handset started exclusively Monday via jd.com, China's second-largest online retailer by market share. PR representatives with JD.com Inc and LG refused to reveal the sales figures when contacted Tuesday.

The gadget appears to be something LG could bank on to fight its way to the top of China's fiercely competitive smartphone arena.

Indeed, the G3 has received a lot of praise from the media and tech experts. US tech news network The Verge reported on May 27 that LG sets "the new benchmark for overpowered smartphones" with its G3 by being the first big name to apply a Quad HD display, nearly twice the resolution of Full HD display, to smartphones.

However, analysts said that the G3 may suffer a cold market reception as China has become increasingly tough for foreign handset manufacturers, except Apple Inc.

　　Seeking a new start

"G3 is expected to make LG's products more popular among consumers, which is the most crucial step toward the company's revival in China's phone market," Shin Moon-bum, CEO of LG's China unit, told reporters during a group interview held in Beijing Friday.

Yet, even after years of hard work in the Chinese market, LG has always been a marginalized brand. As early as 2012, there were even market rumors of its retreat from the market.

According to a report issued by US-based market research firm IDC in late July, the company did not even crack the top 10 list in China in the second quarter, despite being the fifth-largest smartphone vendor worldwide over the same period.

"I believe the G3 would contribute a lot to the company in the market…although we had a late start [in China's smartphone market], we can make a difference in five years," said Shin.

To cater to Chinese consumers and meet the requirements of local telecom carriers, the company appears to have put more effort in customizing its G3, which entered China nearly three months later than its public release in other markets.

For instance, the G3 for Chinese users supports dual SIM cards and 4G cellular telecom networks as well as 2G and 3G networks, in response to China's ongoing transition from 2G or 3G telecommunication services to 4G.

Shin expected the sales of the G3 in China to more than triple that of its predecessor the G2, launched in the market on September 2013. He did not set a target date or reveal a specific figure but said that over 60,000 units of the G2 were shipped in China in its early stages.

Some analysts predicted that LG's global G3 shipments would hit 3 million in the third quarter, according to media reports. However, those numbers are small when compared with the 108.5 million smartphones that US-based market research firm Canalys said were shipped in China during the second quarter.

The gadget has reportedly taken on Samsung's Galaxy S5 at home, hitting sales of more than 100,000 units within five days after the phone's release in the country in late May, while sales of the Galaxy S5 in South Korea stood at only 7,000 to 8,000 a day in its first week.

Uphill challenges

The success achieved by the G3 in its home market would be unlikely in China's fiercely competitive smartphone battleground, Wang Yanhui, head of Shanghai-based Mobile China Alliance, told the Global Times Sunday.

LG's G3 seems to have no distinctive advantage over feature-rich phones offered by local players such as Beijing-based Xiaomi Technology.

"Higher resolution is one of the G3's major selling points, but it's not a necessity for me and would further shorten the device's battery life," said Li Yu, a 29-year-old Beijing resident, who prefers cheaper homegrown Android phones over global ones which he said have failed to offer appealing features worth their high costs.

While LG priced the G3 at 3,999 yuan ($649.8) for price-sensitive Chinese consumers, which is much cheaper than its launch price of 899,800 won ($869) at home, that is still more than twice as expensive as phones developed by Chinese companies.

The company's South Korean rival Samsung, No.1 global smartphone vendor in the second quarter, has already felt the squeeze in China.

Its share of the market by sales volumes reached 15.4 percent in the second quarter, down from 18.1 percent in the first quarter, while Xiaomi was second with 13.5 percent, Beijing-based market research firm Analysys International said on August 6.

Canalys even said in a report on August 4 that Xiaomi became China's top smartphone vendor by sales in the second quarter with 14 percent, outselling Samsung for the first time. Canalys ranked Samsung second in the report but without disclosing its share in China.

Boosting brand

In order to stand out, foreign companies like LG and Samsung need to ramp up efforts in brand enhancement, said Zhang Yi, CEO of Shenzhen-based iiMedia Research.

"Foreign brands barely have any chance to snatch a slice of the medium- and low-end phone market, which is already dominated by local peers," Zhang told the Global Times.

Zhang's opinion was shared by LG's senior executives, who believe the G3 can help the company build up a high-end image in the minds of Chinese consumers.

Both Zhang and Wang believe it is not easy for LG to stand out as a premium brand in the Chinese phone market, where its current brand strength is rather weak.

"For me and most people around me, LG is a global premium manufacturer of home appliances other than smartphones," Beijing's Li said. "Only Apple is a high-end phone brand."

In addition to brand enhancement, LG also needs to broaden its selling network in China, said Wang. "The tie-up with the three local telecom carriers is significant for its future performance, as they account for 40 percent to 50 percent of handset sales in China."

LG shows no intention of having local carriers sell the G3. While jd.com for now is LG's only sales partner to cut distribution costs, the company said they will provide off-line options for Chinese consumers later.