LG Electronics continues to try to get its mobile phone business up and running, with only 22 quarters of net loss. LG announced Monday that it is reorganizing its mobile phone division to expand its outsourcing of mid-range and entry-level models. The move, according to analysts, will help the company cut costs and compete with Chinese manufacturers.

REUTERS / Sergio Perez

According to a spokeswoman for the South Korean company, LG’s mobile division will outsource the development and production of mid-range and entry-level smartphones to third-party OEMs. In this case, the manufactured products will be marked with the LG label.

The company also abolished some research and production positions and regrouped others to focus its own research and development on the premium smartphone segment.

Although the South Korean company ranked 3rd in the global smartphone market in the first quarter of 2013, according to Strategy Analytics, it did not even make it into the top seven in the third quarter of this year after losing ground to Chinese smartphone makers like Huawei. Xiaomi, Oppo, and Vivo, according to research firm Counterpoint.

Realizing that it is competing with Chinese competitors, not Apple or Samsung, the company is trying to add value to its lower-end models by using the same original design manufacturers as Chinese firms.“- said Counterpoint analyst Tom Kang. He added that LG would have to spend a lot on marketing to compete with competitors who are good at marketing their products.

Last October, LG said it would shift to ODM manufacturing and mid-range smartphones, not just limited to low-cost models.


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