LG Electronics Inc plans to triple its purchasing in Taiwan this year, but whether this level of spending will continue in the years to come would depend mainly on the future pricing competitiveness of Taiwanese suppliers, the company's chief executive said yesterday.
LG will increase its purchasing to US$1.4 billion this year, up from US$500 million last year, LG's chief executive officer Kim Ssang-soo told a press conference in Taipei yesterday.
Its purchases will include thin-film-transistor liquid-crystal display (TFT-LCD) panels, IT products and electronics components.
"However, it would be difficult for us to place more orders if [the pricing in] Taiwan becomes less competitive in the future," Kim said.
He made the remarks during his first visit to Taiwan, which was also the first stop on a planned global road-show.
Kim, 60, took the company's helm in October 2003 after working for the company for 36 years.
LG has been buying flat panels from local manufacturers, including AU Optronics Corp (
In a bid to become the market leader in Taiwan, the Korean consumer electronics giant is reportedly seeking to clinch deals with local contract manufacturers to outsource low-end, 32-inch LCD TVs by the end of the current quarter. Shipment of between 10,000 and 20,000 units are expected in the first year.
With global sales rising 40 percent from US$30.9 billion last year, LG has vowed to become one of the top five consumer electronics brands worldwide this year. It hopes to be among the top three by 2010, with projected annual sales of US$100 billion.
The company plans to spend 6 percent of its annual revenue to strengthen its research and development as well as technology capabilities to achieve this goal, Kim said.
Meanwhile, the firm hoped to double its sales in Taiwan to around US$600 million this year, driven by an enhanced product lineup after introducing LG's notebooks and other IT products into the local market, LG Taiwan's chairman Steve Park said earlier this month.
Although Taiwan makes up only 1 percent of LG's global revenue, it is an important market for high-end electronics goods, Kim said.
LG expects markets in China, Hong Kong and Taiwan to absorb 30 percent of its annual sales in the future, Kim said, adding that the company is recruiting more and more Mandarin-speaking employees to facilitate this target.
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