Korean and Korea, Inc: Past, Present and Future

November 3, 2009

Mr. Yong NamCEO LG Electronics, Inc.

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Korea and “Korea Inc.”, have come a long way in the past 30 years

We still face many challenges in reaching our goal to be world leaders

LGE is responding on several important fronts

We are optimistic and will continue to do the things required to create success for our companies and our people

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Several themes for today’s presentation

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From deeply impoverished in the 1960-70’s, Korea is now among the most successful developed markets in Asia

* Base year = 2005

Source: Global Market Insight

19,420

2,503

20081970

6.7 times6.7 times

GDP per capita (real*), USD

Korea: #2 fastest growing in Asia

4Source:BusinessWeek (2009)

Korean brands are now among of the world’s most respected and pervasive

Korean companies among the global top 100

Ranked #19

Ranked #69

....

Rank 2009

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Top 10 Korean companies now generate $200+ billion in global revenues and employ around 270,000 people outside of Korea

Source: Company website and annual reports, Bloomberg; Kisline

IN Korea OUTSIDE of Korea

$230+ billion

500,000+ employees

$200+billion

270,000+ employees

Outside of Korea, LGE now employs 56,000 people in 100+ countries around the world and over 85% of our sales occur outside of Korea

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And Korean companies are becoming increasingly innovative

Hyundai Assurance Program

US market share has

nearly doubled since program

launch

Innovative Products of LGE

• Red dot & iF design awards are among the world most renowned top 3 design awards.• EISA stands for European Imaging Sound Association

Allergy care

Wrinkle-free

Fast dry

570,000 units sold (~Sep ’09)

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To enhance global competitiveness, Korean companies need to overcome several significant issues

Competitive challenge: What do Korean companies need to do to stay ahead of Chinese and Indian companies?

• Management quality: overcoming the productivity challenge

• Services: Move from largely a manufacturing-oriented revenue base to a health mix of products and services revenues

• Engineering: quality and quantity in Korea is insufficient to fuel continuing growth

Of Korean companies with significant revenue outside of Korea, top management are dominated by Koreans

*Estimated by # of foreign executives in each company’s annual business report, company website

SOURCE: Company website; Kisline; BusinessWeek, Company annual reports

Company % foreign executives*

~3%

0

0

~10%

Total RevenuesUS$ billions

$90

$44

$50

$10

$22

$17

0

~1%

81%

87%

42%

78%

24%

77%

Overseas revenues (%)

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Korea is Heavily Dependent on Manufacturing “Products”, Which Creates Long-term Sustainability Challenges

(SILICON GRAPHICS)

Diversify, adding services. . . . . . or slowly die-off

Personal computers

Printers

Photography

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LGE is responding through several transformation initiatives

1.Business portfolio: enhancing the mix of services and solutions in our portfolio

2. Innovation: deepening our ability to form proprietary insights about consumers and customers

3.Globalization: highest quality functional and “local” talents (which enables innovation)

4.LG Way: Creating an atmosphere to attract best in class talents – locally and globally

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We’re developing new solutions that will allow us to turn our products into solutions (Example: in-room solution for hotel)

DevicesDevices SolutionsSolutions

Software

Contents

Services

• Hotel information

• Lights / Room

temperature control

• Entertainment

Program Guide

• Traffic / Weather

• Flight status

• Visitor identifying /

Door opening

• Bill view

• ….

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Insight driven innovation is the foundation for LGE’s contentand service solutions

Develop and collide insights

Set the Frame Rapid Learning Create Concepts

Consumer Tech

Business Model

• Consumer desires• Enabling technology• Business model

• Relevant brands, categories and opportunity spaces

• Core consumer value proposition

• Iterative prototyping• Validate business

proposition

Business context Solution Generation Development

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Globalization, including recruitment of global talents

Globalization

Global-levelCapability

Global Integration

LocalizationGlobal

Leadership

Standard organization / Process / system

Functional capability (led by CXO)

External recruiting*

Local COO (in 16 overseas subsidiaries as of Oct. ’09)

Future leader pool(~100)

Leadership training

* Non-Korean executives (VP-level) : 4 in ’07 to 41 in ’09

14* "Jeong-Do" is " The right way” in English.

- Work by principles- Provide equal opportunities and fair treatment.

- Pursue to be the best in its class

Vision

Code of Conduct

- Value individuality and diversity- Develop capabilities to the maximum

Management philosophy : The LG Way

Management Principles

- Place greatest importance on serving customers

- Create differentiated ideas

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Korea, Inc: Continuing to respond to our challenges and opportunities through creative investment

The Incheon-Songdo development project

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LGE has achieved significant success in recent years; I am optimistic about our future!

LGE Revenue Growth

1980

CAGR19.3%

CAGR19.3%

0.3

50

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1990 2000 2008

(US$billion)

http://www.lge.com