LG Electronics is making a significant strategic shift to expand its presence in the budget home appliance market, as it faces mounting pressure from rapidly growing Chinese competitors such as Midea, Haier, and Hisense. After years of prioritizing premium products, LG is now pursuing a dual-track strategy that balances its traditional high-end focus with an aggressive push into more affordable segments, aiming to recapture market share in regions where demand for budget appliances remains resilient.
To support this shift, LG has entered into Joint Development Manufacturing (JDM) partnerships with Chinese firms such as Skyworth and AUCMA. Under these deals, LG retains control over product design and development, while the Chinese partners handle manufacturing. This approach allows LG to offer competitively priced appliances while preserving its brand image and ensuring product quality—distinguishing JDM from conventional OEM models. The first fruits of this collaboration, including a washing machine and a top-freezer refrigerator, will debut under LG’s brand in Europe later this month, priced around $500.
In addition to leveraging Chinese production capabilities, LG is also investing in its own global manufacturing infrastructure to better serve the budget market. The company is currently building a 400 billion won plant in Paraná, Brazil, focused on producing mid- to low-end refrigerators. This new facility—LG’s second in Brazil—will help the company reduce shipping costs and tariffs that previously hindered its price competitiveness, enabling more localized, cost-efficient appliance offerings tailored to Latin American consumers.
This strategic realignment comes amid challenging market conditions. LG’s Home Appliance & Air Solution (HA) division has seen profits drop by more than 50% since 2021, while Chinese manufacturers have expanded rapidly by offering affordable, reliable appliances globally. For instance, Midea Group saw a 39% rise in operating profit, driven by strong sales not just in China, but also across Europe, Southeast Asia, Latin America, and Africa. LG's JDM approach is a direct response to this trend, aiming to match Chinese price points without diluting its premium brand positioning.
Europe has been selected as the launchpad for LG’s budget appliance push. The region’s low- to mid-range appliance market is currently dominated by Chinese and Turkish brands such as Hisense, Vestel, and Beko. Although LG has historically emphasized AI-powered premium appliances in Europe, the rising demand for affordable, high-quality machines—especially in Eastern Europe and among lower-income consumers in wealthier nations—has created an opportunity for LG to reposition itself with strong value-for-money products.
To enhance its appeal in the budget segment, LG will also provide after-sales service for its co-developed appliances, reinforcing brand trust. This will be crucial as it competes with products like Hisense’s $400 refrigerators, which already enjoy significant traction in Europe. If the European rollout succeeds, LG plans to expand the JDM model to additional markets including China, Southeast Asia, South America, and Africa, and is also considering applying it to other appliances such as air conditioners and dryers.
While expanding its budget line, LG remains committed to the premium appliance segment, particularly in its core markets of Korea and North America. However, this segment is also under threat as Chinese players push into high-end categories, using the same playbook LG and Samsung once employed to challenge Japanese brands: start with low prices, then climb upmarket. Brands like Haier (Casarte) and Midea (Colmo) are making strong inroads into Europe, the heart of the global premium appliance market, with Midea’s premium brand sales jumping 55% in the first quarter of 2025.
The rapid rise of Chinese appliance makers is powered by technological advancements, strategic acquisitions, and global expansion. Haier, for example, now holds 17% of the U.S. appliance market after acquiring GE Appliances in 2016 and Italy’s Candy in 2019. Hisense has similarly expanded its footprint by acquiring Gorenje, Central Europe’s top appliance maker. With Chinese electronics exports rising across all global regions, LG's strategy reflects both a defensive and offensive maneuver to stay competitive in a rapidly evolving global market.
Source: LG via Korea Economic Daily
