RIYADH, 26 March 2007 — The foundation stone for the first Saudi-Korean joint venture in building air conditioners was laid here yesterday by Saudi and Korean officials.
The new joint venture by LG-Shaker Co. Ltd will pave the way for building of a plant located in the third industrial city in Riyadh. The venture is a merger between electronic giant LG Electronics and Shaker Group, LG air conditioner in the Kingdom. The plant’s production capacity will be 250,000 air conditioner units in its first stage and is expected to rise to 500,000 in the next five years. It is set expected to begin production by the end of this year.
Attending the ceremony was Korean Minister of Commerce, Industry and Energy Young Ju Kim, Hwan-yong Nho, president of A/C division in LG, as well as other Korean officials. Also attending was Khaled Al-Sulaiman, deputy minister of commerce and trade in industrial affairs, Hussein Shaker, CEO of LG-Shaker Co. Ltd, as well as other board members of Shaker Group.
“Saudi Arabia is the biggest market in the Middle East, and LG will build the complete local business system from product development to sales,” Nho said.
He said the A/C market in Saudi Arabia is growing at an average of 7 percent a year. “The size of the market was $693 million last year and expected to grow to $748 this year,” he added.
Last year LG’s share in the Saudi market was 22 percent, he further said, and LG plans on boosting the share to 25 percent this year and 34 percent by 2011.
“LG plans to utilize the new facility as a stronghold to move forward into the GCC market and neighboring countries by developing localized products at competitive prices,” he added.
Nho said the plant will provide training for Saudi youth and would adhere to Saudization according to the laws of the Saudi Labor Ministry.
He announced that new models and features for LG A/Cs would be introduced in the Kingdom this year. The new models, he said, would be equipped with advanced and sophisticated features.
“We shall bring to our customers the advanced technology of ‘11-stage Neo Plasma plus filter’ with the concept of health products which ensures the best sterilization and decomposition of bacteria,” he said. Kim said the new plant “was a new chapter in joint ventures between Saudi Arabia and Korea,” noting that “this venture will open doors for many other opportunities.”
The minister said his country was keen on investing in the Kingdom as well as taking part in the development phase of the country.
Shaker told Arab News that the new venture’s capital was SR120 million. “Of that, 51 percent is owned by Shaker Group,” he said. He also said that Saudization rate would be 30 percent in the new plant, according to the Saudi law.
Shaker ruled out that other plants would be built in Jeddah or the Eastern Province. He said the aim of the plant in Riyadh was to produce 500,000 units in the next five years for export to GCC and Arab countries.
LG is currently operating A/C plants in seven countries: Korea, China, Thailand, India, Turkey, Brazil, and Vietnam. With the eighth plant in Saudi Arabia, the company plans to secure its market in the region.