Global and regional digital leader LG Electronics, along with the LG-Shaker Air-Conditioning Company – a joint venture between LG and Saudi Arabian firm HG Ibrahim Shaker, recently celebrated the groundbreaking of their new air-conditioner production facility in Riyadh, Saudi Arabia.

The new air-conditioner production facility is being constructed in Al Tatweer Industrial City, south of the Second Industrial City in Riyadh. It is expected to start operations in the last quarter of this year with an initial annual production capacity of 250,000 units, which will reach 500,000 units in five years.
Attending the ceremony at the end of March were Young-Ju Kim, Korea’s Minister of Commerce, Industry and Energy, H Y Nho, president of LG Electronics’ air-conditioning division, K W Kim, president of LG Electronics’ Middle East and Africa Region Operations, Hashem Yamani, Saudi Minister of Commerce and Industry; and Hussein Shaker, president of HG Ibrahim Shaker.
“Saudi Arabia is the biggest market in the Middle East,” says Nho. “LG will build a complete local business system from the ground up, from product development to sales. We plan to further strengthen our global network of air-conditioning businesses by utilising 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 $35 million in two phases within five years, starting with $15 million for the first phase of the project in which LG holds a 49 per cent stake and HG Ibrahim Shaker Company, 51 per cent.
The new facility will help LG to move forward into the GCC and neighbouring countries by developing localised products at competitive prices. This apart, LG-Shaker factory will meet the Saudization ratio according to Saudi law and utilise its facility to train Saudi youth to improve their employment opportunity.
“The Saudi Arabian air-conditioner market is growing at an average rate of 7 per cent annually. The size of the market was $693 million last year, and is expected to be $748 million this year. The market size is expected to grow further to approximately $1.01 billion in 2011,” says Nho.
HG Ibrahim Shaker Company, the sole distributor of LG air-conditioners, is the biggest partner for LG’s business in Saudi Arabia and is targeting sales totalling $1.4 billion by 2011 starting from this year onwards in the domestic market.
Shaker highlights the superb after-sales service and support that the company extends to its dealers and end-users through 17 Shaker service centres, 250 highly-qualified technicians and 100 mobile units, This is in addition to 10 authorised service centres. He praises LG for its dedication to bring the finest quality products to Saudi Arabia.
LG, whose market share in Saudi Arabia was 22 per cent last year, aims to increase it to 25 per cent this year and 34 per cent in 2011, consolidating its leading position in Saudi Arabian market.
According to a recent announcement from Fuji-Keizai, a frontrunning market research companies in Japan, LG recorded total sales of more than 12 million units in 2006, taking about 19.5 per cent of the world’s air-conditioner market share (2006 World Market: 6,297 million units, source: JRAIA – Japan Refrigeration and Air conditioning Industry Association). These sales figure enabled it to retain the No.1 world ranking for seven consecutive years since 2000, having sold more than 10 million units in the global market for three consecutive years from 2004.
LG currently operates air-conditioner plants in Korea, China, Thailand, India, Turkey, Brazil, Vietnam and Iran (Technical Alliance). With the eighth plant in Saudi Arabia added to the global network, LG Electronics plans to secure its market leadership in the air-conditioning business.
According to Nho, new models and features of LG air-conditioners will be introduced in Saudi Arabia market during the year. The new models will be equipped with more advanced and sophisticated features.
“We shall bring to our customers the advanced technology of ‘11-stage Neo Plasma plus filter’ with the concept of healthcare products, which ensures the best sterilisation and decomposition of bacteria, thus helping the user to lead a healthier and cleaner life,” he says. “LG also plans to launch the latest, fully-tropicalised Multi V product, which features a technically advanced and economical system that maximises cooling load and efficiency. Multi V was developed to focus on large buildings and high-rises. Its technology allows the installation of pipes up to 150 m long, at an altitude of 50 m. Multi V product offers lower installation fees and reduced operating costs.”
LG’s Multi Power System (MPS), considered to be a world’s first, combines multiple compressors in a single air-conditioning system, and reduces energy consumption by up to 70 per cent compared to conventional one-compressor air conditioners, he adds. MPS also reduces noise and vibration by adopting multiple small-capacity compressors, which enables the system to run more quietly than air-conditioners with one large compressor, even when both compressors are operating.
Its optimised piping design and low noise fans also help minimise noise and vibration. “Commercial air-conditioner products are other examples of LG’s commitment to providing our customers with the most energy-efficient air-conditioners possible. These technologies are not only better for the environment, but also easier on our customers’ pocketbooks,” he points out.
LG will double the size of its air-conditioning research and development (R&D) team by 2008, and increase R&D investment to 10 per cent of total sales, he concludes.
LG Electronics is a global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 82,000 people in over 120 operations including 80 subsidiaries around the world. It comprises four business units – Mobile Communications, Digital Appliance, Digital Display and Digital Media with 2006 global sales of $38.6 billion.