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LG Exits China Smartphone Market Because It Just Can't Compete With Local Brands

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LG officially confirmed its exit from the Chinese smartphone market, where it faced tough competition from local smartphone brands such as Huawei, Xiaomi, and Oppo.

LG will not pull out its consumer electronics business in China, but the major losses of the smartphone division led to the company's decision to withdraw from the country's mobile phone market.

LG Pulls Out Of China's Smartphone Market

"LG mobile phone business has quit China," said the company's representative at its office in Beijing, a statement that could not get any clearer.

LG did not release any smartphones in China for 2017, including its latest flagships, the LG G6 and LG V30. In fact, the last model that LG added to its Chinese website is the LG G5 SE, which was launched way back in 2016.

LG's smartphone business in China was still selling certain models, but it is now set to cease operations in the coming weeks.

According to LG, the main reason for the decision to withdraw from the Chinese smartphone market is the increasingly tough competition that the company has faced, mostly from local brands. To illustrate the company's struggles, LG's smartphones only held a market share in China of less than 1 percent.

It likely did not help LG that it was charged with a class action lawsuit in April 2017 regarding bootloop issues that persisted on several of its smartphones, including the V10, V20, G4, G5, and Google Nexus 5X. The company has reached a settlement with customers affected by the problem, but the damage to LG's image has already been done.

LG Smartphones In Trouble

LG may have exited China's smartphone market, but it is not only in the Asian country where the division is in trouble. While the business generated $10.52 billion in sales for full-year 2017, the losses have been piling up.

LG's smartphone business booked a small profit in the first quarter of 2017, but that was the only exception as the division has posted losses in the last 11 quarters. The unit ended the fourth quarter of 2017 with losses of over $200 million.

Further signaling the division's struggles, a previous report added that the LG G7 release date will be delayed from March to April. The company's CEO Jo Seong-jin ordered his employees to "start over" with the next flagship LG smartphone.

The LG G7, or whatever it ends up being called if a rebranding takes effect, is rumored to be powered by Qualcomm's Snapdragon 845 with 6 GB of RAM, with iris scanner technology and slimmer bezels.

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