[Newsmaker] LG’s iPhone plan faces controversy

LG Electronics’ plan to start selling Apple’s iPhones at its stores is facing backlash from local phone distributors and a private consensus-based panel on shared growth on Thursday threw weight behind opponents, saying LG would be breaking its word if it pushes ahead with the plan.

The Korea Commission for Corporate Partnership cited the firm’s pact with the commission signed in 2018 in which LG pledged to strive for co-prosperity with small players in the industry.

LG, which is in the process of closing its money-losing smartphone manufacturing business next month, reportedly has been mulling a plan to sell iPhones at its offline shops for home appliances from the second half of this year.

The plan, however, has evoked criticism from the Korea Mobile Distributor Association, an organization representing interests of domestic phone distributors.

The association has sent a letter to the Korea Commission of Corporate Partnership, asking it to intervene.

In 2018, Samsung Electronics and LG Electronics agreed to limit the sale of phones at its stores to the ones of their own respective brand, in order not to compete with smaller phone distributors.

It is stipulated that the agreement, however, could change on certain conditions under different circumstances.

“LG’s withdrawal of the smartphone business has become an unexpected change to consider,” said an official from the commission. “Both sides will need to coordinate and come up with a new agreement on the issue.”

Smartphone distributors that receive commissions or subsidies from phone vendors are concerned about losing their volumes from Apple.

LG is currently reviewing the iPhone sale plan internally.

Apple Korea is rumored to be wanting to partner with LG to boost its sales in Korea. Apple’s Korea office declined to comment.

After LG announced the closure of its smartphone business, Apple launched a trade-in program for LG phone users, which seemed like a strategy to absorb LG customers.

If the two sides fail to reach an agreement, the commission will step in to iron out the differences in their stances.

Samsung Electronics, an archrival of Apple, is closely watching the issue to prepare measures to keep its share in the domestic smartphone market. 

Since launching its 5G-enabled iPhone 12 series, Apple has seen its share in the global market grow significantly. 

According to data by Strategy Analytics, Apple topped the 5G smartphone market with a 29.8 percent share in the first quarter. Samsung was fourth with 12.5 percent. 

Some forecast that Apple could occupy more than 30 percent of the Korean market after LG’s exit.

The Korea Commission for Corporate Partnership was established in 2010 under the office of former President Lee Myung-bak. It is now a private consensus-based organization, focused on creating a fair and transparent business environment for both big and small companies.

By Song Su-hyun (song@heraldcorp.com)