Seung-tae Baek, head of LG Electronics HS Division, stated in a press conference that by the end of the year, they aim to become one of the top three in the B2B (business-to-business) home appliance market in the United States. Despite being a newcomer in the B2B market, LG Electronics has achieved an impressive annual growth rate of 45% over the past two years.
LG Electronics, already the leader in the B2C (business-to-consumer) sector in the U.S., entered the B2B market just three years ago and is on the verge of climbing to the third position in this competitive sector. In response to rising tariffs and labor and material costs, the company recorded a unique annual growth rate of 45%, positioning itself as a formidable contender against long-established competitors like GE and Whirlpool, which have dominated the market for over a century.
The B2B sector in the U.S. accounts for approximately 20% of the total home appliance market in the country, estimated to be worth around 7 billion USD annually. Even though the proportion appears small, the B2B market is less sensitive to economic fluctuations compared to B2C and often involves long-term contracts lasting 5 to 10 years, offering increased revenue stability and marking it as a critical area for qualitative growth. With the advancement of artificial intelligence, new demand in this sector is rapidly increasing.
To strengthen their position in the market, LG Electronics is investing heavily in a dedicated sales organization for builders, and plans to increase their direct delivery logistics hubs by 35% compared to 2024 to ensure timely product supply to construction sites across the nation. Furthermore, they are also considering partnerships and other non-organic growth strategies.
Additionally, LG Electronics is preparing to leverage its AI-based management software, ‘LG ThinQ Pro’, as a unique asset. This software allows real estate management companies to monitor thousands of built-in appliances installed across multiple homes from a single screen, detecting issues like washing machine leaks or dryer filter blockages to prevent accidents. Currently, there’s no dominant brand in this field in the U.S., giving LG an opportunity to offer both convenience and economic benefits.
The expansion potential of the B2B market is significant, as numerous investments are being funneled into AI data centers where companies are seeking HVAC solutions and precision engineering from appliance manufacturers. LG Electronics boasts technologies for both air-cooled chillers and liquid-cooling solutions essential for managing the intense heat generated by AI data centers. They are currently undergoing verification processes with Microsoft for their new liquid cooling technology and are discussing substantial multi-million-dollar contracts for cooling and piping systems for data centers with major companies in the U.S.
Concerning the uncertainties with tariffs during the Trump administration, Baek mentioned that LG Electronics already has a ‘swing production’ system in place allowing flexible responses to external changes by supplying products from various global production sites. They have also prepared scenarios involving local production expansion and collaborations with U.S. parts manufacturers to tackle potential challenges.