Expanding B2B Business... The 'This Field' Chosen by Samsung and LG

Samsung and LG Strengthen HVAC Business
Growth Following Stricter Carbon Emission Regulations

President Jo Joo-wan Leads Drive
LG Electronics Establishes R&D Lab in Alaska
Samsung Electronics Launched New EHS Products Last Month

LG and Samsung Still Lack Presence
Not Listed Among Top 15 Global HVAC Companies

As the global economic downturn freezes the business-to-consumer (B2C) market, Samsung Electronics and LG Electronics are turning their attention to the business-to-business (B2B) market. Among them, they are accelerating the expansion of their business areas into the HVAC (heating, ventilation, & air conditioning) sector to survive in the already red ocean of the home appliance market. Both companies are focusing on heating and cooling systems that emit less carbon to respond to the tightening carbon emission regulations in Europe, the United States, and other regions.

On the 7th, major domestic companies such as LG Electronics and Samsung Electronics began to actively enter the HVAC market. HVAC covers the overall management of heating, cooling, humidity, and air quality. Composed of system air conditioners, heat pumps (devices that generate heat using electrical energy), and energy storage systems (ESS), HVAC is designed to emit less carbon and is rapidly growing in markets that prioritize eco-friendliness and high efficiency.

LG Electronics President Cho Joo-wan has directly identified HVAC as one of the future businesses and is driving the business forward. At a company vision declaration event last July, President Cho expressed his ambition, stating, "We will more than double the sales of residential and commercial heating and cooling businesses by 2030 and leap forward as a global top-tier comprehensive HVAC company." The company aims to focus on North America and Europe, which account for 37% of the global HVAC market, and increase the HVAC business to more than 20% of this year’s home appliance sales.

LG Electronics’ flagship product is the heat pump heating and cooling system called 'Therma V,' which does not use fossil fuels. This product uses a heat exchanger to compress outside air and heat it based on the same principle as cooling. Compared to conventional boilers that burn fossil fuels for heating, it is more environmentally friendly and energy-efficient.

Recently, LG Electronics established a research and development (R&D) center for HVAC products in Alaska, USA. Named the 'LG Alaska Heat Pump Research Institute,' the consortium aims to develop heat pump technology that delivers top-level heating performance in any environment by setting up a laboratory in Alaska, the company explained. As the HVAC business accounts for the largest share of sales within the H&A division, which handles home appliances, the company is increasing its investment.

LG Electronics’ subsidiary, HiEM Solutech, which is responsible for HVAC maintenance, is steadily expanding its overseas branches. Until 2020, it operated branches in the Philippines, Vietnam, and the United Arab Emirates, and in the following year, it established new branches in Poland and Egypt. Last year, it also set up new overseas bases in Hungary, Mexico, and Indonesia.

Jo Joo-wan, President of LG Electronics.
Photo by Yonhap News

Samsung Electronics does not yet have overseas subsidiaries specializing in HVAC maintenance, but it is actively pursuing the heat pump business in Europe. Samsung offers the 'EHS' product, a heating and cooling system using heat pumps. EHS is an air conditioning system where refrigerant and water exchange heat inside the indoor unit, enabling floor heating and hot water supply. Last year, Samsung increased its European EHS sales by 118% compared to the previous year. Last month, the company strengthened its European market presence by launching a new EHS model equipped with the eco-friendly refrigerant R290, which has a lower global warming potential than the existing refrigerant (R410).

The presence of LG Electronics and Samsung Electronics in the global HVAC market is still minimal. According to market research firm DealLab, as of 2021, the top global HVAC market share holder is Japan’s Daikin Industries (12.3%). Chinese companies Midea Group (11.3%) and Gree (10.5%) rank second and third, respectively, followed by Ireland’s Trane Technologies (7.1%), Carrier (5.7%), Mitsubishi (3.5%), Johnson Controls (3.1%), and Panasonic (3%). No Korean companies are among the top 15.

The global HVAC market is expected to continue growing steadily. Market research firm MarketsandMarkets projected that the HVAC market, which was valued at $202 billion (approximately 285.78 trillion KRW) in 2020, will grow to $277 billion (approximately 359.82 trillion KRW) by 2025 and $358 billion (approximately 465.42 trillion KRW) by 2030, with an average annual growth rate of 4.8%.

Both companies plan to recreate demand in the stagnant home appliance market through various businesses based on their high-efficiency premium technologies. Due to the nature of B2B, which often involves long-term contracts, it has the advantage of securing stable profitability with lower sensitivity to economic fluctuations compared to B2C.

This content was produced with the assistance of AI translation services.