LG Electronics Seeks Name Change and Streamlined Operations in China

South Korea’s LG Electronics Inc. will change its company name in China to New LGE China, sources from the firm told Caixin.

The company will also seek to take more direct control of its China business, with its local branches directly reporting to the headquarters in South Korea instead of the Beijing office, Caixin has learned.

The name change was first revealed by LG Electronics CEO Jo Seong-jin in a closed-door executive meeting last week, according to people familiar with the event.

On Wednesday, a representative from the company’s public relations department confirmed the plan to Caixin via e-mail.

“The current name ‘LG,’ which comprises two Latin letters and is hard (for Mandarin-speakers) to pronounce, is actually meaningless to our consumers in China,” the representative said, adding that the new Chinese name, “Xinaierji,” will make it a friendlier-sounding brand.

The name change was originally proposed by Mu Gang, the then-chief manager of company overview of LG Electronics (China) Co. Ltd., a source said. Mu insisted that the company’s lack of a Chinese name has been a hindrance for its expansion in the country — a situation unlike that of rival Samsung, whose Chinese name, “Sanxing,” is easily recognized by Chinese consumers.

Under the proposed restructuring, the company will reorganize its businesses in China by reducing its 30-plus offices to five, which unlike before will all have equal status and will report directly to the South Korean headquarters, according to employees from the company, who spoke on condition of anonymity.

The moves come as the company is experiencing setbacks in China, where its sales both in home appliances and cellphones increasingly are being encroached upon by local and other foreign competitors.

Last year, LG Electronics’ cellphones accounted for less than 0.1% of the market share in China, according to Strategy Analytics, a market statistics provider.

Contact reporter Mo Yelin (yelinmo@caixin.com)