LS focuses on China, green growth

By Kim Yoo-chul

LS Industrial Systems has been in talks with several Chinese companies for an acquisition deal to strengthen its presence in the world's biggest emerging market.

The LS plan comes after the firm has posted a drastic increase in revenue growth in China, helped by the rising demand for energy-efficient industrial components such as power plant parts.

The company, spun off from LG Group, manufactures industrial electrical and electric machinery, takes up some 70 percent of the market share in electric equipment production.

``LS has seen a substantial progress in mergers and acquisitions (M&As) in China to foster the so-called green business,’’ a top-ranking industry executive told The Korea Times, Sunday.

LS spokesman Kim Bong-kyu said his firm will review the possibility of acquiring a company in China.

LS hopes to post over $200 million in annual revenue in China next year from an estimated $120 million for this year.

``LS is planning to raise its revenue from high-end products that include high-voltage inverters and gas insulated switchgears or GIS, there,’’ according to the spokesman.

Earlier this year, LS launched its new research institute in Beijing, hoping to raise its profile in research and development (R&D) in China.

The institute is developing high-voltage direct current transmission or HVDC systems and GIS technologies, currently dominated by European industrial majors, according to market research firms.

Its presence in China dates back to 1997, when it launched the first company in Dalian to manufacture and produce distribution series, protection devices, and electric switches.

Company officials say China will account for the half of its total corporate revenue. It owns 13 subsidiaries in China with some 1,000 employees.

LS has also been in separate business deals with two or three European carmakers to supply its components used in electric vehicles (EVs), according to an industrial source.

“LS has been in separate talks with several European carmakers to provide some components used in eco-friendly cars, however, nothing has been decided yet,’’ said Kim of LS.

Its CEO Koo Ja-kyun has been fostering its next revenue sources. The markets for smart-grid and components for EVs are the two critical ones.

``LS targets to reap 1.2 trillion won in revenue from the EV component business by 2013 from 20 billion won this year. We will do more to find business chances outside the domestic market,’’ Koo said

LS plans to raise the portion of ``green business’’ to 47 percent by 2015 from 24 percent and 2012, said Kim Ji-san, a senior analyst at Kium Securities.