LG Electronics Egypt targets to increase its revenues, including exports, in the local market by 20- 30% in 2020, while they are expected to reach $400m by the end of 2019, according to the company’s CEO Don Kwak.
The company is working to implement an expansion strategy in the Egyptian market by focusing on increasing production capacity and adding new production lines, Kwak mentioned.
“This is the best time to invest in Egypt, where there are great investment opportunities and offers a wide range of investment options,” he asserted, adding that LG Electronics Egypt will provide discounts to facilitate the purchase process for various social segments, especially on the White Friday, which will be the biggest sale in the history of the company.
Daily News Egypt interviewed Kwak to discuss the company’s expansion plans in the Egyptian market and its export strategy.
When did the company start business in Egypt?
The company has been strongly present in the Egyptian market since 1990, where the company established its first factory in Egypt to produce televisions. We established the second factory in 2014 in the 10th of Ramadan city, with a total investment of $170m to produce TVs and washing machines for the local market and export to African and Middle Eastern markets.
How do you assess your business experience in Egypt over the years?
We always believed in the potential of the Egyptian market. Egypt is strategically positioned in the heart of the Middle East which makes it a perfect hub to export our products across the Middle East and North Africa (MENA) region. Hence, LG Electronics Egypt inaugurated its new headquarters here, which includes the first brand shop in the Middle East with a dedicated LG ThinQ cutting-edge technology.
LG is working to implement an expansion strategy in the Egyptian market by focusing on increasing production capacity and adding new production lines. This is the best time to invest in Egypt, where there are great investment opportunities.
How do you assess the business climate in Egypt? Do you have any recommendations?
The economic reforms adopted by President Abdel Fattah Al-Sisi are showing signs of success and Egypt is moving on the right track for development and is being recognised as one of the world’s fastest growing economies.
Also, I want to emphasise that recent years have seen an array of government initiatives aimed at encouraging businesses to invest in their own growth. There is also a noticeable improvement in the country’s economic indicators, supported by higher GDP growth rates, increased investments and exports, and a pickup in tourism.
Did the hike of inflation affect your sales last year?
The high inflation continues to put pressure on the ordinary household budgets, which already affects sales in general, but we offer more discounts and provide a variety of products at affordable prices.
How do you assess the purchasing power of Egyptians in light of the economic reforms?
The Egyptian government has implemented a good and ambitious economic reform programme in cooperation with the International Monetary Fund. The Egyptian economy achieved a growth of 5.6% in the fiscal year (FY) 2018/19, the best in 10 years.
We always provide more offers and discounts to all our customers, so that we can facilitate the purchase process for various social segments. We will likely offer more discounts in the White Friday, which will be the biggest sale in the history of the company through which we cooperate with many different parties to reach as many Egyptians as possible. We also strive to provide a wide range of products at reasonable prices.
Do you think of releasing new products in the Egyptian market soon?
We’ve inaugurated the first brand shop in the Middle East with a dedicated LG ThinQ cutting-edge technology to showcase several LG smart products empowered with advanced artificial intelligence (AI) technologies.
We have launched our latest technology innovations in Egypt, especially OLED TVs, LG TWINWash washing machines, and AC Inverter, as well as the world’s first Arabic Supported AI TV by LG.
Not only that, we have created a new creative space that allows all visitors to experience the latest artificial intelligence technologies launched by LG, which represents a great opportunity for LG customers to see the technological developments in the world.
All these things confirm that the Egyptian market is important for us, and we will continue to launch our modern products in the local market. Actually, we will release a range of new products soon.
What much is the company’s total sales in Egypt in 2018, and expectations for 2019?
The company’s sales growth rate is 15% annually. I would also like to point out that the percentage of sales goes up whenever we are keen to provide a variety of products to suit different spectrums in Egypt, which we are keen to do always.
What about your exports in 2019? What are the company’s main markets? Do you aim at opening new ones?
The company’s exports reached about $100m last year, which represents 75% of the company’s production. We are targeting higher exports, so we expect to achieve $150m exports after releasing a new range of products.
The company aims to increase its export base by opening new markets in Africa, benefiting from Egypt’s presidency of the African Union this year.
What is the size of your investments in Egypt?
LG’s current investments in Egypt amount to approximately $280m.
Can you please elaborate on your new headquarters?
We’ve inaugurated a new headquarters which include the first brand shop in the Middle East with a dedicated LG ThinQ cutting-edge technology as I’ve just told you.
The new headquarters includes the company’s administrative offices and LG’s first training academy in the country. This unique headquarters is considered the first in the Middle East and Africa, with a new store offering the largest collection of revolutionary products empowered by LG’s technologies.
How many employees do you have in Egypt’s branch now?
The company employs 1,000 people in Egypt at 35 stores throughout the country.
What about the company’s efforts in terms of building capacities of its employees?
Our newly opened headquarters includes a training academy on the latest adaptation technologies, through which we will train all our employees and ensure they are qualified with the highest skills and capabilities.
Do you have any scheduled meetings with ministers or high-level officials in Egypt?
We always look forward to meeting with all Egyptian officials for the real progress we see in dealing with foreign companies. I believe the Egyptian government is ready to provide all support to companies operating in the Egyptian market to overcome any challenges that they may face here.
Do you have any CSR activities?
Of course, LG is a consumer first organisation, and we have an obligation to give back to society, so we have launched a unique corporate social responsibility initiative by partnering with Al Abakera (The Geniuses) game show, granting the winners a trip of a lifetime to Korea, for a chance to experience what the country has to offer and witness LG’s revolutionary technology.