In the Face of a Demand Cliff
South Korean home electronics companies are stepping up online marketing efforts in the face of a demand cliff.
Samsung Electronics and LG Electronics are expected to restart their overseas TV and home appliances factories in May. In India, they have not decided when to restart their plants yet as the Indian government has extended the blockade for another two weeks. But the two companies’ plants in the rest of the world including Russia and Mexico are expected to resume production in May at the latest.
The problem is that major consumer appliances such as TVs face a severe demand cliff. Samsung Electronics said during the first quarter earnings conference call on April 29 that its TV sales decreased by 20 percent from a year ago, with sales expected to shrink more than 10 percent in the second quarter.
"We will be able to resume operations of overseas plants in the near future," LG Electronics also forecast in a conference call on the same day.
Major distribution outlets in the United States and Europe are still closed, or have few visitors, and large-scale sports events such as the Tokyo Olympics and the Euro 2020 have been postponed to next year.
Home electronics producers are focusing on the rise of the “untact market” following the spread of COVID-19. They are stepping up online marketing efforts for appliances related to online education and healthcare. "Currently, the proportions of online sales in many countries are on the rise," Samsung Electronics said in a conference call. “We will highlight homeschooling and home office functions of smart TVs.”
"We will emphasize the theme of healthcare appliances and make endeavors to sell them online," LG Electronics said.