Samsung Electronics and LG Electronics are launching large-scale discount campaigns ahead of the year-end holiday season. Attention is now turning to whether they can translate expanded sales volumes into tangible improvements in profitability. In particular, with Chinese brands intensifying their push into the premium market, success or failure hinges on how much they can boost profit margins while absorbing the burden of promotional costs.
According to industry sources on Monday, Samsung Electronics and LG Electronics are running discount events for TVs and home appliances through major retailers ahead of Black Friday in the United States. In fact, a 65-inch S90H OLED (organic light-emitting diode) TV from Samsung Electronics is being sold at a 48% discount for $1,398 (approximately 1.88 million won), while a 65-inch C6 OLED TV from LG Electronics is available at a 50% discount for $1,350 (approximately 1.81 million won).
Year-end promotional campaigns are also expanding in the domestic market. The two companies are offering major home appliance purchase benefits through the end of this month in connection with the government-led “Korea Grand Festival.”
Samsung Electronics is discounting 11 categories of home appliances, including TVs, refrigerators, and washing machines, as well as five categories of mobile and IT products. LG Electronics is providing benefits worth up to 7 million won to customers who purchase multiple items or subscribe to services.
In addition to the year-end discount rush, attention is also focused on the possibility of additional promotions through sports marketing, following the Samsung Lions’ return to the top of the Korea Series after 12 years. Samsung Electronics had previously run large-scale discount events, such as the “1111 Grand Festival,” when it won the championship in 2014, making it highly likely that the company will operate additional promotions to commemorate this year’s victory.
The pursuit by Chinese manufacturers is also cited as one of the factors behind Samsung and LG’s expanded domestic and overseas promotions. According to market research firm TrendForce, global TV shipments in the first half of this year reached 17.6 million units for Samsung Electronics, a 6.3% increase from the same period last year.
TCL recorded 15.08 million units over the same period, up 7.1%, posting the highest growth rate among the top four brands. Hisense reported 14.23 million units (a 3.0% increase), while LG Electronics recorded 11.3 million units (a 3.9% increase).
TCL is also demonstrating the benefits of expanding its premium product lineup in its financial results. Its cumulative revenue for the first three quarters of this year (preliminary) is expected to increase by up to 18% from the same period last year. Earlier, in the first half of the year, TCL’s gross profit margin for its TV business rose by 3.4 percentage points to 19.3%. As TCL improves profitability while increasing shipments, it is putting pressure on Samsung and LG.
As competition intensifies, managing year-end profitability has become increasingly important for Samsung Electronics and LG Electronics. Samsung Electronics’ Visual Display (VD) and Digital Appliance (DA) divisions posted an operating loss of 200 billion won, while LG Electronics’ MS Business Division and HS Business Division, which handle TVs and home appliances, generated an operating profit of 405.9 billion won. This is why narrowing Samsung Electronics’ losses and maintaining LG Electronics’ profitability have emerged as key tasks for the year-end peak season.
However, industry insiders are concerned that even if discount events help clear inventory and boost revenue, increased sales do not necessarily translate directly into improved profits.
Component costs and promotional expenses affect profitability, and retailers’ discount rates do not always align with manufacturers’ actual cost burdens. Ultimately, year-end peak season results are expected to be determined by the share of premium product sales and the ability to manage promotional costs.
An industry official said, “While inventory clearance and revenue expansion are possible, substantial profit improvement may be limited due to China’s aggressive pricing in the premium segment and the burden of promotional costs,” adding, “Ultimately, the outcome hinges not on top-line growth but on defending premium margins.”
in INDUSTRY
