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How Kim scripted LG's success story
Bhupesh Bhandari |
May 24, 2005
"I must tell you a secret. We make nuclear bombs in South Korea." Not a muscle twitched on his face, as Kwang-Ro Kim spoke these words with dead seriousness at a party in a five-star hotel in Delhi eight years ago. After two failed attempts (the last one in a joint venture with Chandra Kant Birla), LG Electronics had set up a 100 per cent subsidiary in India.
The Chaebol had undergone an image makeover from Lucky Goldstar to LG and the party was to familiarise journalists with the key functionaries of the new company.
Rajeev Karwal, the newly-appointed fast-talking marketing head of LG Electronics India, was the centre of attention. The party was loud but his talk on product innovation and honest pricing could be heard above the din by one and all. Till Kim, in his melancholic voice, dropped the bombshell.
I felt no shock wave running through me. In fact, I was elated -- LG Electronics had relocated this harmless looking man from Latin America to India, and he was giving away headline grabbing state secrets without even being asked. Before I could steer him to a corner for more details, he called a waiter, mixed a shot of whiskey with beer and handed it over to me: "Enjoy your nuclear bomb."
"Do you still make nuclear bombs?," I ask Kim as soon as we settled down for lunch at the restaurant at Jaypee Greens, a golf resort in Greater Noida. My original plan was to take him to a Korean restaurant (Kimchi with Kim, the headline for this piece would have read). But Kim preferred Jaypee Greens as it was just 3 km from his office. Never mind if I had to drive 33 km to get there.
Freak rains had cooled the weather and golfers were teeing off early in the afternoon at the Greg Norman course. The property was originally being developed by Sterling Resorts. But it turned into a bad asset and Jaiprakash Gaur acquired it from ICICI Bank, the creditor. It has since blossomed into a fashionable destination for the capital's golfing elite.
"If I have a nuclear bomb now, I will go off to sleep. I have to get back to office and work," Kim said. So, a lite cola it was for both of us -- without fizz, taste and calories. Since 1997, Kim has actually been working very hard.
Three days a week, he travels to every remote corner of the country, meeting his staff and dealers. He has sold televisions at Gulmarg and fridges at Silchar. When he is in town, he leaves home for work at 6 am sharp. Kim has built the $2 billion business from a scratch, in eight years flat.
His company is the leading player in the Indian consumer electronics market, leaving its more illustrious Japanese competitors way behind. Back home in Seoul, Kim's success has been well recognized -- he is counted amongst the top five people in the conglomerate today.
That is a little surprising. India is still a small market for the Korean company -- it accounts for only 5 per cent of the global turnover and profits of LG Electronics. Going forward it could be higher, as Kim is targeting a $10 billion turnover by 2010.
Kim's success lies elsewhere -- he prised open an extremely complex market. Kim's colleagues will tell you that he has tremendous insights into the mind of the Indian consumer.
Though he cannot speak Hindi, he spares no effort when it comes to understanding how the Indian psyche works. He has even stood in a queue for four hours to get a darshan at Tirupati. It is an open secret that it was Kim who first saw the opportunity in associating LG with cricket. The results have been spectacular, to say the least.
"India is the toughest market in the world. Not only are the people very demanding about prices, each state needs to be treated as a different market," Kim said as waiters started hovering around us, deftly balancing overloaded platters of kebabs.
It took me little time to realise that Kim had not only booked a table for us at the golf club but had also instructed the staff to lay out a tandoori fare for us. Once I started cutting into the chicken tikka, mutton seekh and fried prawns, I lost some of my irritation at his unilateral decision. And once the waiters had served dal and crisp tandoori rotis, I started to appreciate his choice.
Still, I decided to fire some uncomfortable questions at Kim. Over the years, the Koreans have earned the reputation of being tough taskmasters and Kim is no exception. His detractors never fail to point out the high attrition rate at LG Electronics, especially in the sales and marketing department.
In fact, it is often said of Kim that he is admired more by people outside LG Electronics than inside the company. "These people learn so much with us and are, therefore, poached by others. But there are a lot of people who have been with us for such a long time," Kim said, and then rattled off several names. The reply did not surprise me.
But what he said next made me look up in surprise. "Whenever I have a headache in my office, I go for a walk in the factory. I feel better once I see all these people working there. I have a great respect for the Indian work culture," Kim said, adding that though LG Electronics employed thousands of people in India, there were only 20 Koreans on its rolls, almost all of them in research.
But what are the chances of an Indian succeeding him? In an earlier meeting, Kim had said that could happen except for a practical problem: the top job required a regular interface with the LG headquarters at Seoul and a Koean was best suited for that.
In fact, Seoul has sent a Korean, M B Shin, as LG Electronics India's new deputy managing director. Kim is now grooming Shin as his successor. "When will he take over from you?" I asked. "I don't know. It is for Seoul to decide," Kim replied.
In the meantime, what Seoul has certainly decided is to add to Kim's responsibilities. He is now responsible for the whole of south-west Asia, which includes markets like Nepal and Bangladesh, apart from India.
By now, we had finished the kebabs, dal and rotis. We were now served marshmallows, a little raw but perfectly chilled. In the past eight years, it is generally perceived that LG's brand equity in India has undergone a change. It started out as a hi-tech brand but today many think of it as a volumes-player, making money at the bottom of the value pyramid.
When I mentioned this to Kim, he said that he had overtaken several international brands that entered the country much before LG. "Where are they now?" he asked me, adding: "Wherever you go, people talk of only LG and Samsung."Having spent an hour, Kim now looked in a hurry to leave. "Okay?," he asked me, not once, but thrice. As we walked out of the restaurant, I asked him what car he drove as Koreans are known to have a weak spot for Korean machines. "I don't know. Where do you make Volvo?" Kim said as he sped off for his office close by.