LG Electronics is reportedly planning to lay off employees at its mobile phone unit in China, following the company's slowdown in new handset release in the country.
A Sina Tech report Tuesday cited an insider who said several employees in LG's handset division had received dismissal notices, which could indicate the Korean company was finally cutting its local headcount. The report noted some employees, since October, were informed the company might begin its layoffs but this was not carried out until now.
The insider source noted for a manufacturer of LG's size, it should be releasing one or two new models every month. However, LG's products in the Chinese market had "almost depleted" as it had not released any new products in the country for several months, he said, adding that the current products available were old models.
In China, LG faces competition from low-cost Chinese handset makers such as Huawei and ZTE as well as low-end handsets from South Korean competitor, Samsung. Competitor Motorola Mobility began laying off 30 percent of its Chinese workforce in mid-August.
In its third-quarter financial results, LG said its mobile communications business unit saw the biggest jump in operating profit, from a loss of 139 billion won (US$125.9 million) last year to 22 billion won (US$19.9 million) this year.
LG added it was expecting demand for mobile phones to increase with the fourth-quarter peak season, but noted competition would intensify. It also planned to maximize its revenue with aggressive marketing activities for the company's high-end products such as the Optimus G and Optimus Vu:2.