Reports coming out of sources in China indicate that LG is planning to pull its LG Mobile division out of the Chinese market, effectively abandoning one of the largest global markets for smartphones. If reports are accurate, the move comes against the backdrop of LG’s mobile division’s financial struggles.
LG has not been a big player in the Chinese market as it is, which is curious given their position with the global smartphone market. The last time LG even bothered to officially launch one of their devices in China was the LG G5 in 2016, skipping both the LG G6 and LG V30 last year. For 2016, LG reportedly only sold a paltry 160,000 units in China.
Sources say one of the big factors in the decision is the aggressive work of local smartphone manufacturers. They point specifically to companies like Xiaomi, Oppo and Huawei, which dominate the Chinese market. Outside companies like LG or even Samsung struggle to gain a foothold and build market share.
The bad news for LG is the impact of Chinese brands is spreading throughout global markets and that competition is one of the factors LG cited in recently released financial results to explain the Mobile Division’s poor results.
With MWC 2018 and the spring flagship season coming up, LG has already put the brakes on plans to release the LG G7. Earlier reports indicated LG was struggling to establish a solid unique selling point for the next iteration of their flagship smartphone.
LG is a large company with many lines of business and for 2017, most divisions and product lines were successful and helped generate healthy revenue and profits for the company. Which means they do have the luxury of either taking time to make it work by using cash from other divisions or deciding to cut the division loose and stop the bleeding. With this move to exit the Chinese market, it looks like the latter was the option chosen. We will have to watch to see if LG makes similar moves in other markets.