Rinse or spin?

Bizarre Case of South Korean Economic Warfare in Berlin

How about if I bend this door back a bit more? Source: DPA
What happens if I bend this door back a bit more?
  • Why it matters

    Why it matters

    Samsung and LG have a fierce rivalry in South Korea, where both firms are under extreme pressure to increase sales.

  • Facts

    Facts

    • LG employees allegedly tampered with Samsung washing machines.
    • Samsung is now suing LG for vandalism.
    • Court case highlights intense rivalry between the electronics giants.
  • Audio

    Audio

  • Pdf

Berlin has always been a popular setting for thrillers and the dark arts, but nobody expected economic warfare to break out at a local electronics store.

Shortly before the start of the IFA consumer electronics trade fair in the German capital this month, Seong-jin Jo, head of LG’s household appliances division, and some of his employees walked through the aisles of a Saturn store.

They apparently did not like what they saw: rows of washing machines made by their South Korean archrival Samsung. So they allegedly leant on the machines’ doors until they would no longer close. That, at least, is how it looked to the Saturn employees, who called the police. The matter was resolved after the LG staff agreed to buy the damaged appliances.

But that was not the end of washing machine-gate. On Sunday, Samsung filed a complaint against LG in South Korea for several instances of vandalism in Berlin. The country’s most successful technology company claims that security footage from another store in Berlin shows Mr. Jo and his colleagues damaging other Samsung products there, too.

The LG employees allegedly leant on the machines’ doors until they would no longer close.

“We need to find out the truth to establish the fair rules of corporate competition,” a Samsung official told the news agency Yonhap. The message seems to be clear: Where else do you get such a good chance to put one over your most important competitor?

LG was quick to reply. “We hope that this is not an attempt to tarnish LG Electronics, which is No. 1 in the global market for laundry machines,” it said.

The company denied the allegations that the employees intentionally damaged the machines. They were in the store and did test the products, but the hinges on the Samsung products were weaker than those of competitors, an LG spokeswoman said.

The legal posturing shows just how intense the competition is among South Korea’s electronics companies. The pressure on both firms is high.

LG has been stuck in Samsung’s shadow for years, but is trying to challenge its larger rival with high-tech mobile phones and household appliances. Samsung is far more profitable, but is increasingly vulnerable as it sees its profits begin to slide. The company’s patriarch has also been hospitalized for months.

As the battle between the two intensifies, both countries will now have to air their dirty laundry in public.

This article was translated by Mary Beth Warner. The author, Martin Kölling, has been living in Tokyo since July 2000, where he has worked as an East Asian correspondent for several publications. His main focus is on political, economic and cultural trends in Japan, North and South Korea and occasionally China. He has worked for Handelsblatt since January 2012. To contact the author: koelling.martin@gmail.com

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