LG leader takes R&D initiatives as top priority

By Kim Yoo-chul

In only a few months since LG Group brought about a much-anticipated change in management structure at LG Electronics, Chairman Koo Bon-moo is taking the conglomerate to the next stage for sustainability.

Koo's efforts are focused on boosting research and development (R&D) personnel and facilities.

LG said it will increase its R&D staff by 5,000 to number some 31,000 by the end of this year. Koo has also approved a 1 trillion won investment plan to pursue next earnings drivers such as green energy and healthcare.

"We will invest more, if it is deemed necessary," said an LG spokesman Jeong Jung-wook, referring to Koo's initiatives.

"R&D personnel will account for 30 percent of the total 110,000 employees," said a company spokesman.

LG has LG Electronics, LG Display, LG Innotek, LG Chem and LG Uplus under its wing.

LG Electronics trails Samsung Electronics in the global flat-screen TV market, and is behind Nokia and Samsung in handsets.

LG Display competes with Samsung in flat panels and is under pressure to invest more in next-generation businesses such as flexible displays and OLEDs.

LG Chem and Innotek are attempting to widen the gap with rivals in rechargeable batteries and components respectively, said a high-ranking LG executive, asking not to be identified.

Behind Koo's endeavors to concentrate on R&D is a strategy aimed at dropping its decades-long "fast follower" schemes restrained within a conservative corporate culture.

LG's 1 trillion won R&D budget will be used to advance solar-cells, rechargeable batteries, smart-grid, LED/OLED light-bulbs, water treatment and healthcare, Jeong said.

Separately, LG has confirmed plans to allot 4.7 trillion won in R&D budget this year, up from last year’s 3.7 trillion. In 2003, LG invested just 1.6 trillion won for R&D.

Chairman Koo views R&D as his top priority this year and has been asking executives to concentrate on an improved quality of growth, not quantity.

Despite some market concerns, LG’s R&D drives have begun taking off as noted in its latest 3D technology based on film patterned retarder (FPR).

LG Electronics CEO Koo Bon-joon, the younger brother, recently briefed the chairman of Hewlett-Packard (HP) in Seoul about FPR’s strengths, accessibility and affordability according to LG sources, though LG declined to confirm this.

``The focus on R&D personnel and investments does make sense for LG, considering it needs to regain lost confidence to better compete with key competitors in critical markets,’’ said an unnamed fund manager from a European bank based in Seoul over the phone.

``Overall, LG is moving in the right direction. What they need is execution and competitive products,’’ said the manager, asking not to be identified because he is not authorized to speak to the media.