What happened to selling the Chinese headquarters building LG for 1.15 billion?
The LG Gemini Building on Chang’an Street in Beijing will soon not belong to LG.
According to The Korea Times, LG sold its China headquarters Gemini Tower to Singapore Reco Ziyang Pte Ltd, a wholly-owned subsidiary of Singapore Government Industrial Investment Co., Ltd., for 1.37 trillion won (about 1.15 billion U.S. dollars).
After all, LG Gemini Building has been in China for nearly 15 years. These 15 years are also the ups and downs of LG’s mobile phone business in China. Today, LG sold the Gemini Building after the mobile phone business withdrew from China. It is not difficult to see that LG has less and less contact with the Chinese market.
Selling the Chinese headquarters, is LG short of money?
LG Twin Towers, located in Beijing, are two Chinese headquarters buildings built by LG in 2002 at a cost of 400 million US dollars. The building has 30 floors above ground and 4 floors below ground, including two types of office buildings and shops.
In fact, as early as July 2019, there was news that LG was going to sell its own building, with an estimated price of 1.5 trillion won. At present, the sale price is about the same as expected. According to LG, the property transaction for the Gemini Tower will be completed no later than April.
Regarding the reason for the sale of the building, LG said that the sale aims to ensure liquidity in the context of global economic uncertainty and to fund its future growth engine. In this regard, some netizens joked, “LG is short of money.”
Lei Feng.com Note: Source rthk.hk
Judging from LG’s financial report data in the past five years, LG has been in a state of positive revenue since 2015-2019. However, it is worth noting that LG’s profit growth has slowed down from the latest financial report data. . According to the 2019 annual report, LG’s operating profit for the full year of 2019 was 2.44 trillion won (about 2.07 billion US dollars), down 10% from 2018.
From a specific business perspective, except for the mobile communication business, which showed a loss, all other businesses achieved positive revenue. According to financial report data, LG’s mobile communications division recorded a total operating loss of 1.01 trillion won (about 858 million U.S. dollars) in 2019.
In fact, LG’s mobile communications division has been losing money for a long time in recent years. As of January 2020, LG’s smartphone division has lost money for 19 consecutive quarters. According to public data, the LG Mobile Communications Division lost 1.25 trillion won (about 1.1 billion U.S. dollars) in 2016, 721 billion won in 2017, and 700 million U.S. dollars in 2018.
LG’s top-line growth has been under pressure due to long-term losses in its mobile business. However, LG has repeatedly said that it will not give up the mobile phone business. At CES in early 2019, Qiao Shengjin, the former CEO of LG Electronics, said that LG Electronics would not withdraw from the smartphone business. He said:
The company will continue to retain the loss-making smartphone business because it is so important to the company’s IoT ecosystem. LG’s business portfolio includes the automotive and home appliance divisions, which are all related to smartphones, so we’re not thinking about getting out of the smartphone business.
Qiao Shengjin also emphasized that 2019 is the second year that LG Electronics is trying to restructure its smartphone business, and relevant measures will continue into 2020. In LG’s latest financial report, LG also stated that it will improve its mobile business strategy in 2020, and is committed to the launch of mid-to-high-end 5G smartphones as well as cost reduction and efficiency enhancement.
LG’s development has not shown a loss, but the sale of the building is aimed at “financing future growth engines”, and in this “growth”, will there be a share of the mobile phone business?
LG Gemini Tower, witnessing 15 years of ups and downs
It is understood that the LG Building was built in 2002, at the time when China’s CDMA was in its infancy, and LG also began to enter the Chinese mobile phone market through CDMA.
While LG is developing CDMA in China, it is also quietly making efforts in the GSM market. However, under the siege of mobile phone manufacturers such as Nokia, Motorola and Samsung, LG has not been able to stand out in the Chinese GSM mobile phone market.
In 2005, the Gemini Tower was completed.
In November of the same year, LG launched its popular “chocolate” phone. Although it was launched at the end of the year, in February 2006, it already occupied 1/3 of the Korean high-end mobile phone market share. At the same time, LG began to formulate an international strategy for “chocolate”, and China was the first stop of the global strategy.
Within a year, the “chocolate” mobile phone sales in China reached 600,000 units, accounting for 20% of LG’s mobile phone sales in China that year, and sales accounted for 40%. In addition to sales, the “chocolate” mobile phone has also opened up LG’s popularity in the Chinese mobile phone market, especially the high-end market, and even triggered a “chocolate” fashion trend in the Chinese mobile phone market.
By February 2009, LG announced that it had sold 100.7 million mobile phones in 2008, surpassing Motorola and Sony Ericsson, and ranking third in the world after Nokia and Samsung.
In the year that LG became the world’s third-largest mobile phone maker, the mobile phone industry was quietly embarking on a major revolution—smartphones featuring touch interaction and mobility were gradually replacing feature phones.
However, at the time, LG did not seem to be clearly aware of this trend.
Between 2009 and 2011, most of the new products launched by LG were still feature phones. Not only that, LG also made frequent mistakes in the choice of operating system.
In 2009, LG mainly adopted Microsoft’s Windows Mobile 6.5 and China Mobile-led OMS. Later, with OMS dead in name only in the second half of 2010, LG also became a victim. As for the Windows Mobile system, LG didn’t get rid of it until 2011.
However, by 2011, LG’s development in China has begun to decline. In January 2011, Ren Weiguang, the head of LG’s mobile phone business in China, resigned due to declining performance and continued losses in the Chinese market. In September, LG China’s mobile phone business began to be reported to dismiss employees and merge R&D centers.
By the second half of 2012, LG’s product line in the Chinese market was nearly exhausted.
However, after all, China is the largest smartphone market in the world, and LG will not give up easily. With the arrival of 4G LTE, LG once again sees an opportunity in the Chinese market.
On September 23, 2013, LG returned to the Chinese market with the newly released product G2, and even made a bold statement that it would regain its leading position in the Chinese market with 4G mobile phones. However, at that time, the Chinese smartphone market was already a red sea, and LG’s rhetoric was difficult to achieve.
Later, LG continued to release a number of new products, including G3, G4, V10, etc., but it still failed to attract Chinese users. With the rise of domestic brands, LG was gradually marginalized.
On February 2, 2018, LG announced the withdrawal of its mobile phone business from China.
On February 25, 2019, LG’s first 5G mobile phone V50 ThinQ was released, but it has nothing to do with the Chinese market. And just two years after LG withdrew from the Chinese market, the Gemini Building was sold, and LG’s tentacles in China stretched back a bit.
It can be said that the Gemini Building, which witnessed the glorious moment of LG’s mobile phone business, also left with its loneliness.Lei Feng Network
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