Ruble Rubble
In Russia, where concern is growing over the credit crunch due to a recent depreciation of the ruble, Samsung Electronics and LG Electronics are struggling to break through a crisis.
LG Electronics has been hosting road shows in Russia from the middle of last month to Sept. 20 to showcase its new strategic home appliances. The company has created tryout zones at large shopping centers in Moscow, such as Avia Park, Atrium, and Metropolis, to offer Russian customers an opportunity to experience its high-end products. It is a strategy to partially cancel out decreasing margin rates as well as the weak rubble by increasing the percentage of premium products. LG Electronics is leading the Russia’s washing machine, refrigerator, and other major product markets in sales.
Samsung Electronics is also strengthening its premium marketing campaigns in Russia, showing its intention to establish a foothold in the local market. Samsung Electronics Corporate Relations President Park Sang-jin said, “Samsung Electronics has been overcoming many difficulties in the last 25 years after advancing into the Russian market. We will be able to find a new opportunity amid Russia's rouble crisis.” The company has invested US$250 million (296 billion won) in its Kaluga plant alone, and employs 1,500 executives and employees.
Samsung Electronics is increasing the number of promotional events about its various high-end products, including its strategic SUHD TV model this year, a European refrigerator that maximizes the use of a space, its new “Bubble Shot Add Wash” washing machine, and the “PowerBot” robotic vacuum cleaner.
Amid the rapid devaluation of the ruble and the weak domestic demand in Russia, Samsung and LG will boost their brand status and secure profitability by increasing the sales of premium products.
The value of the ruble against the dollar has plunged more than 20 percent in four months from May to early this month, and inflation has dramatically shrunk consumer confidence. From Jan. to July this year, exports of wireless communication devices and home appliances to Russia decreased by 64.1 percent and 54.3 percent, respectively, to US$45 million (53.37 billion won) and US$165 million (195.69 billion won).