LG Australia, to coin a phrase is in deep shit, and it is not the first time that the Korean Company has found itself defending their shocking marketing practises in the Australian Federal Court.
Now some observers are asking whether LG needs to urgently appointed an Australian CEO, who understands Australian consumer laws and can reassure their staff that they are actually working for a credible Company.
Right now the Company that is run by Korean management who it appears are quite happy to flaunt Australian consumer laws despite being fined millions in the past.
People who have quit this Company during the past 12 months and that includes the head of marketing, the head of sales and personnel from various LG divisions claim the Company is a mess, with head hunters desperate to find senior management that actually want to work for LG Australia.
Senior management don’t want to work in what has been described as a hostile environment, actions taken by Korean management relating to ACCC undertakings appear to have been ignored despite LG putting in place a legal vetting process that has quite clearly failed.
Recently, when the Australian Competition and Consumer Commission, the Federal Government body empowered to protect consumers from dodgy manufacturers, came knocking on LG Australia’s door recently they knew exactly where to go.
For the simple reason that over the past 10 years they have taken action against this Korean Company on numerous occasions for questionable consumer marketing practises resulting in the Korean Company being fined millions by the Federal watchdog.
Now it’s warranties relating to LG TV’s including their brand spanking new OLED TV’s that have caught the attention of ACCC investigators.
This time round the ACCC allege that LG misrepresented to consumers with defective televisions that any remedies available were only limited to the LG manufacturer’s warranty.
If the LG warranty had expired, consumers were told they would have to pay the costs of assessing the failure, that the company had no further obligations, and any further step taken in relation to the television was an act of goodwill.
They were also told they were only entitled to have the television repaired, and not be entitled to a refund or replacement, and that the consumer was liable for the labour costs of the repair.
LG’s home entertainment marketing manager Grant Vandenberg is not commenting despite home entertainment being one of LG’s main categories.
This is not the first time that LG has fallen foul of the ACCC.
Between May 2004 and August 2004, LG Australia sold washing machines claiming that they were approved “4A Rated” by Water Services Association of Australia (WSAA) when in fact, at the time they were not.
LG also released a brochure in June 2004 which represented that the machines were 4A certified and posted information to this effect on the LG Australia website.
Western Australian consumers who bought these machines and approached the Water Corporation for a $150 Waterwise Rebate had their claims rejected, as certification was not complete until 28 August 2004.
The ACCC at the time came to the conclusion that LG’s conduct in making these representations contravenes sections 52 and 53(c) of the Act.
Back in 2010 LG Electronics agreed to compensate thousands of consumers after two of its fridges – models L197NFS and P197WFS – were found to contain an illegal device that activates an energy-saving mode when it detects room conditions similar to those in a test laboratory.
The so-called circumvention device was discovered by consumer advocacy group Choice.
The device similar to what Volkswagen used in their cars to deceive consumers detected test conditions and activated a mode, creating the impression of lower running costs and energy usage.
The devices have been banned in Australia since 2007.
In reality the fridge, which had a 3.5-star energy rating, costs an extra $250 to run over 10 years, it also severely affects food quality because it could shut off when the fridge was opened.
The electronics giant at the time agreed to “conduct additional testing on a selection of refrigerators, televisions, clothes washers, clothes dryers and dishwashers prior to release into the Australian market.”
In 2006 LG agreed to provide consumers with up to $3.1 million in compensation after mislabelling 15,000 air conditioners which did not meet promised energy efficiency levels.
Also in 2006, the Federal Court declared LG had made false and misleading statements about the existence and duration of statutory conditions and warranties.
This real issue at LG is a management issue.
Back in 2010 LG parachuted in William Cho, the former President and CEO of LG Canada, as the new Chief Executive of LG Australia, his job was to clean up yet another LG scandal.
He replaces Daniel Shin who is now working in global sales as a marketing executive.
Cho, immediately initiated change. Senior management were sacked and new processes were put into place.
Five years on and under the management of LG Australia, Managing Director, Mr. Youngik Lee LG Australia has again come to the attention of the ACCC.
Philip Anderson LG Australia’s PR Manager who has a reputation for putting out LG press releases only after they have been vetted by local in-house lawyers is today not returning calls.
The irony is that it appears that press releases are okay to be vetted by in-house lawyers but not warranty claims affecting tens of thousands of Australians consumers.
A former LG manager said “I would love to read the exit interviews of at least 50 senior management” who have quit LG over the past decade,, I doubt whether there is any praise for current or past management”.
They added “For this to happen again especially inside a Company the size of LG is unforgivable”.
“something has gone very wrong and heads need to roll starting right at the top”.
It is the opinion of ChannelNews that both Samsung and LG need local Australian management. People who understand how Australians think, buy and live.
This is not Korean and like Australian management would not fit in running a Korean Company, Korean management do not have the skills necessary to run organisations that sell consumer products that are a key part of almost every Australians life.
They don’t have respect for Australian lifestyle or our business practises. What they want is the Korean way to be adhered to here in Australia and that means that everyone has to be workaholic.
Panasonic bit the bullet six years ago with the appointment of Steve Rust as CEO now Paul Reid the former head of consumer AV products at Panasonic is running the Company after a CEO stint in Europe.
If LG whose products are excellent is to get back any credibility, they need to appoint a local CEO who is empowered to make key decisions.
His first task is to win over current employees, restructure the marketing and sales of the Company and above all become a key evangelist for LG.
Currently LG Australia’s PR is hopeless, they churn our motherhood press releases that are often days if not weeks old.
They fail to talk about the brand or innovation. Their idea of PR is like going back to the dark ages for the simple reason they employ “yes” people who bow down to their Korean masters rather than stand up for what actually works in Australia.
When was the last time anyone saw a major brand campaign from LG similar to what Samsung delivers to the market?
It was back in 1999 to 2000, when Paul Reeves, the then marketing director at LG Australia had to go in boots and all to get dollars to spend on marketing.
What he delivered included washing machines on pedestals and cut through consumer entertainment marketing that went on to establish LG as the ‘Life Is Good” brand in Australia.
At a retail level LG started to get traction because they invested in brand marketing, at a consumer level the advertising Reeves dished up cut through and got attention.
In the end Reeves like a lot of other LG marketing directors after him, simply quit LG for new pastures, today he is COO at Betta Electrical.
LG TV marketing today is nothing but Korean generated content, just take a look at those bloody awful pair of panther eyes staring at you from an OLED TV?
Is that really going to convince you that LG is a serious brand when it comes to cutting edge technology.
At least Samsung has their curved screen gladiator which up against the LG panther sees my money on the gladiator.
What LG is dishing up is penny pinching marketing that no Australian is going to take seriously.
Now is the time for both LG and Samsung to bite the bullet and appoint local management, the results could be seriously impressive.
I could name the two most suitable candidates for both organisations, they have both worked together and the competition between the two would not only grow sales, and result in great marketing but it would deliver respected individual at the top of each Company that both the industry and the staff of each Company would respect.