LG Electronics investing heavily in smartphones

WASHINGTON Tue Nov 3, 2009 2:13pm EST

WASHINGTON (Reuters) - LG Electronics Inc is investing heavily in developing its smartphone business as it faces increasing global competition, the chief executive of the South Korean company said on Tuesday.

LG CEO Yong Nam told an audience at the Woodrow Wilson International Center for Scholars that his company no longer sees Nokia Corp and Sony Ericsson as its main competition.

Instead, it now views the competition as Apple Inc, maker of the popular iPhone; Canada's Research In Motion Ltd, which makes the BlackBerry handsets; and Palm Inc, he said.

He declined to provide estimates of LG's smartphone sales for 2010.

But Nam, speaking in English without a translator, told the audience that "we are investing heavily" at the moment in smartphones. "We're not yet there but we'll get there."

In February, Microsoft Corp signed a deal with LG Electronics, under which the Korean company will use Windows software in most of its smartphones.

LG is the world's third-largest cellphone maker, but it is not among top vendors of smartphones.

The smartphone market has been one of the rare bright spots of the shrinking cellphone market this year, with volumes rising 4 percent from a year ago in the third quarter, according to research firm Canalys.

Nam said there is "fierce" global competition in the electronic products business and the company has been investing in training employees and hiring during the global economic downturn. He said about two-thirds of the company's employees work outside Korea.

He said he is keen on increasing the number of non-Korean managers throughout LG's operations and wants to make English the standard business language for the corporation.

"We are progressing," he said.

When asked several times about how the company is dealing with North Korea, Nam said LG has no direct relationship with North Korea and does not plan to build any factories there.

However, he said, the company has contingency plans in case the North Korean situation takes a dramatic turn, such as the death of its leader Kim Jong-il, but he did not provide details.

"I don't need a factory there," he said, adding that LG has plants throughout Asia. "There is too much risk there."

(Additional reporting by Tarmo Virki in Helsinki)

(Reporting by John Poirier; editing by Andre Grenon and Tim Dobbyn)

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