LG establishes an air conditioning joint venture in Riyadh

Mr. H.Y. NHO, the head of LG Electronics Air Conditioning Division said, "Saudi Arabia is the biggest market in the Middle East. And LG will build the complete local business system from product development to sales.

We plan to further strengthen our global network of Air Conditioning business by utilizing all the regional production facilities including the plant we will build in the country. With the construction of this new air conditioner production facility in Saudi Arabia, LG now has eight air conditioner production facilities in local markets around the world."

The joint venture will invest USD30 million (SAR112.5 million) in two phases within 5 years, and will start with the first stage/phase with about USD20 million (SAR75 million) within the first 2 years with LG holding a 51% stake and H.G. Ibrahim Shaker Company 49%.

The new air conditioner production facility is being constructed in 2nd Industrial City located in Riyadh, the capital city of Saudi Arabia. It is set to open in the first half of 2007.The plant is expected to have a production capacity of 250,000 units by 2008 and it will reach 750000 units in 5 years.

LG Electronics plans to utilize the new facility as a stronghold to move forward into the G.C.C. & neighbouring countries by developing localized products at competitive prices.

The Saudi Arabian air conditioner market is growing at an average rate of 7% annually, The size of the market was USD 400 million last year, and is expected to be USD 450 million this year, The market size is further expected to grow to approximately USD 700 million in 2011. said Mr. Nho.

H. G. Ibrahim Shaker Company. Ltd., Sole distributor of LG Air Conditioners, is the biggest partner for LG's business in Saudi Arabia and targeting to sell accumulatively US$ 1.4 billion by 2011 starting from the year 2007 onwards in domestic market.

Mr. Hussein Shaker, President of H. G. Ibrahim Shaker Company, highlighted the superb after-sales service and support that the company extends to its dealers and end users through 14 Shaker service centers, 250 highly qualified technicians and 80 mobile units> This is in addition to 10 authorized service centers. He praised LG for its dedication to bring the finest quality products to Saudi Arabia.

Last year LG's market share was 19% in the country. The company aims to account for 22% of the market in 2006 and 30% in 2011, solidifying its No. 1 position in Saudi Arabian market.

LG is currently operating air conditioner plants in Korea, China, Thailand, India, Turkey, Brazil, Vietnam and under construction in Iran (Technical Alliance).

With the eighth plant in Saudi Arabia added to the global network, LG plans to secure its market leadership in the Air Conditioning business.

Mr. Nho also announced that new models and features of LG Air Conditioners will be introduced in Saudi Arabia market during the year 2006. The new plasma models will be equipped with more advanced and sophisticated features. He said, "We shall bring to our customers the advanced technology of "11-stage Neo Plasma plus filter", which ensures the best sterilization and decomposition of bacteria and thus will help the user to lead healthier and cleaner life.

The New high capacity Convertible line up will be introduced with capacities ranging from 36K to 60K BTU. In addition, the LG Gold Window type air conditioner will have the "Nano Gold Filter".