Beauty / Personal CareMulti-region
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JOURNEY · DETAIL
LG: A Case Study of Transformation from Daily Chemicals to Home Appliance Giant and New Energy Leader
Founded: Koo In-hwoi · LG Group
JOURNEY
Key Fields
FIELD STAMPSIndustryBeauty / Personal Care
RegionMulti-region
ScaleGiant
ChannelOther
Origin
In 1947, Koo In-hwoi founded Lak-Hui Chemical Industrial Sa, originally aiming to produce cosmetics to relieve South Korea's post-war material scarcity. Because bottle caps depended on imports and had inconsistent quality, the company was forced to expand into plastic injection molding. Subsequently discovering massive civilian markets in home appliances and wireless communications, it established Goldstar in 1958, laying the foundational gene for its transition from chemical materials to consumer electronics.
Milestones
1947
Startup PMF
Koo In-hwoi founded Lak-Hui Chemical Industrial Sa in Seoul, launching the first domestically produced cosmetic product, Lucky Cream, overcoming post-war material shortages. To solve the problem of reliance on imported packaging caps, he independently developed plastic technology, pioneering South Korea's cosmetics and plastics industries.
1958
Cross-sector Pivot Turning Point
Established Goldstar to enter the electronics industry, launching South Korea's first homegrown transistor radio, the A-501, the following year. This broke the monopoly of Japanese and US products, establishing the foundation for cross-over from chemical materials to consumer electronics hardware, which later evolved into today's LG Electronics.
1995
Comprehensive Restructuring Turning Point
The group officially renamed itself LG (Lucky-Goldstar) and launched a major overseas expansion. Koo Bon-moo took office as chairman, establishing a chaebol structure centered on three core industries: chemicals, electronics, and communications, completing debt restructuring and business divestments ahead of the Asian Financial Crisis.
2010
High-stakes Bet Failure
Heavily invested in OLED television panel R&D. Initial yields were extremely low and production costs were exorbitant, causing LG Display to suffer massive losses for five to six consecutive years. At the time, plasma and LCD technologies were still profitable, creating a huge divergence internally and in the market regarding the OLED strategy.
2017
Battery Expansion Inflection Point
LG Chemical's automotive battery business entered an explosive growth phase, becoming the exclusive supplier for the Chevrolet Bolt and building massive plants in Nanjing, China, and Wrocław, Poland. However, that same year, it suffered a GM battery thermal runaway recall defect, incurring tens of millions of dollars in compensation, and its technical roadmap faced temporary skepticism from the supply chain.
2021
Strategic Retreat Failure
Facing low-price onslaughts from Chinese smartphone manufacturers and consecutive years of losses, LG Electronics announced its complete withdrawal from the smartphone business, ending a 26-year history of mobile manufacturing with cumulative losses exceeding $4.5 billion, and shifting all resources to automotive components and home appliance AI IoT.
2023
Diversified Growth Growth
LG Energy Solution deeply bound itself with traditional automakers, reaching 25.6 trillion won in revenue and ranking among the top three globally in power battery installations. Meanwhile, LG Electronics' home appliance revenue exceeded 80 trillion won, and OLED panels led premium TV market share, completing a cross-over from daily chemicals to the hard-tech AI ecosystem.
Turning Points
- Being forced to cut into the plastics industry to solve the problem of reliance on imported cosmetics packaging bottle caps, unexpectedly unlocking vast prospects for home appliance casings and accessories.
- Changing the name from family business Lucky-Goldstar to the international brand LG in 1995, marking its leap from a domestic South Korean chaebol to a global multinational corporation.
- Decisively shutting down the smartphone business in 2021 to thoroughly halt losses, and heavily reallocating core resources into electric vehicle batteries and the AI smart home ecosystem.
Failures & Pitfalls
- Encountering a dead end of extremely low yields and high costs during the early R&D phase of OLED display panels, leading to consecutive years of massive losses for the display division.
- A thermal runaway defect in power batteries exclusively supplied to General Motors led to a massive recall, resulting in heavy compensation and a severe blow to market confidence.
- Lacking competitiveness against low-price encirclements by Chinese manufacturers, the smartphone business suffered consecutive years of cumulative losses exceeding $4.5 billion, ultimately forcing a complete liquidation and exit.
关键成功要素
- Cutting from fast-moving consumer goods and daily chemicals into polymer materials, then leveraging material advantages to expand into precision manufacturing and electronic hardware, forming underlying supply chain barriers.
- The joint venture partnership strategy played a miraculous role in the battery business, sharing extremely high heavy-asset investment risks by co-building factories with automakers like Hyundai and GM.
- Resolutely exiting the red ocean low-margin smartphone device racetrack to preserve cash flow for investment in R&D for AI home appliances and automotive components.
- Perseverance in OLED display panels outlasted competitors, ultimately achieving oligopolistic dominance and profitability in the high-end display market.
Lessons
- Cross-generational technology bets in heavy-asset manufacturing require extremely strong cash flow support; otherwise, companies easily collapse right before dawn.
- Core supply chain security is more important than short-term cost; the battery thermal runaway recall incident warned of the risks of prioritizing energy density above all else.
- In the cutthroat consumer electronics red ocean, if a company fails to enter the top tier, decisively cutting off limbs to stop losses is a required survival course for a chaebol.
- Chemicals and electronics are not disjointed; breakthroughs in foundational chemical materials are often the prerequisite condition for precision electronic hardware iteration.
Core Data
- 2023年集团总营收：Approx. 88 trillion won
- LG新能源2023年营收：Approx. 33.75 trillion won (LG Energy Solution 2023 consolidated financial statements basis)
- 电池全球装机量排名：Global third with approximately 13.6% market share
- 智能手机业务累计亏损：Over $4.5 billion
- OLED电视2023全球市占率：Exceeding 50%
Competitors / Peers
In the home appliance and electronics sector, LG's main rivals are Samsung Electronics and Panasonic. Samsung suppresses LG in semiconductors and display panels through its vertical integration across the entire supply chain, while Panasonic goes head-to-head with it in white goods and automotive batteries. In the power battery racetrack, LG Energy Solution faces strong encirclement from CATL and BYD, with Chinese companies significantly eroding its global share through extreme cost control and whole-industry-chain advantages. In OLED panels, LG must face Samsung Display one-on-one; each claims dominance in large-size and mid-to-small-size OLED respectively, but barriers are increasingly being breached.