Local media reported Monday, south Korean electronics giant LG had halted all shipments to Russia amid an economic crisis caused by the oil price collapse and Western sanctions over the Ukraine conflict. VB BLOG
LG Electronics Inc. and two other South Korean companies which export to Russia were told by the country’s Ministry of Trade, Industry, and Energy to stop their shipments, Yonhap news agency said.
The ministry said there is a significant possibility that Russian importers would refuse to pay for goods
already shipped because of financial troubles at home.
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“The ministry has asked the three firms to suspend new exports until the situation improves,” Yonhap quoted a ministry official.
“Russia is currently under financial difficulties due to low oil prices and sanctions from Western countries,” he added.
According to Yonhap, LG Electronics’ main product exported to Russia was its flagship handset G3, with less than 3,000 units delivered in January-November.
The year has not been kind to South Korean smartphone giant LG. In the wake of reports that its two most recent flagship devices were plagued with problems, the company has reportedly decided to cease all shipments to Russia.
The move comes after a dispute between the company and its Russian distributor, who reportedly claimed that LG had failed to pay back loans.
As The Wall Street Journal notes, LG’s decision to stop shipping smartphones to Moscow is mainly symbolic. The company only moved around 100,000 units in Russia last year, and it already faces stiff competition from local smartphone makers, who offer lower-priced alternatives. As far as mobile markets go, Russia is hardly a major player.
But the decision comes at a troubling time for LG. The company is set to report earnings later this week, and it’s expected that those results will show another loss for the company’s mobile division. Last year, LG had just shipped its popular G2 flagship device, which seemed like an early contender for the top spot in the Android market.
The G3 was supposed to continue that momentum when it launched this summer. Instead, it was met with mediocre reviews (including our own), and it failed to compete with Samsung’s Galaxy S5 and HTC’s One M8.