Shanghai LG Electronics Co., Ltd. was founded in August 1995 with the total investment of 29.98 million US dollars and the registered capital of 13.57 million US dollars. The entire investment came from three corporations, with SVA Information Industry Co. ltd. holding 30% of the total investment, the Korean LG Electronics Corporation 45% and the LG Electronics Corporation, Ltd. in China 25%. Currently, our company is engaged in the following major categories of products: the single-disc DVD, the camera, the combo drive, the multi-function player and the home theater systems. More than 90% of the products are exported to over 40 countries and regions. In 2003, the company’s sales profits reached 340 million US dollars. It ranks 13^th in terms of the export volume among the companies in Shanghai and consequently becomes a member of the one hundred enterprises with largest export volumes in the city.

After the establishment of the company, it once sank into deep recession because of the Asia financial crisis in 1999. But both our Chinese and their Korean counterpart working in the company never gave up their efforts and the company was brought out of the difficult situation. From 2001 on, our company has been enjoying an average 10% growth rate. People might ask, “What is your secret method for success?” The answer is “innovation”. “To bring more benefits to our customers and to respect people” is the management philosophy of Shanghai LG Electronics Co., ltd; and “A Stronger Enterprise, A Better Team of Talented Personnel” is the core value concept in Shanghai LG Electronics Co., ltd In the spirit of the principle “the more achievements the better”, our company tries to maximize the benefits of achievements through the achievement goal management, the research process management and the achievement evaluation mechanism.

(1) Scientific Management, Innovative Management, Striving for Top One

Shanghai LG Electronics Co., ltd has been praised five years consecutively by the Shanghai municipal government for it large export volume in foreign trade; it has been qualified five years in a row as the high-tech enterprise. With our team of technological research and development enlarging year after year, we have succeeded, within just one year, in developing the products, which are in line with China’s real situations. This is an epoch-making achievement since no other overseas LG subsidiaries have ever done that. As a result, this achievement has been labeled as a grand historic “event” in the LG global strategy. Meanwhile, our LG DVD has performed a magic by “occupying the second largest market share” for six consecutive months, even if it just made its debut in the market less than three years age.

The research project which is aimed at production improvement and carried out solely by our own personnel has been presented with the “Honorary Award” by the LG Electronics Corporation and the “Global Award” by the development department of the LG Electronics Corporation. We have been awarded the title of “the Youth Team of Science and Technology” for the research project aimed at equipment maintenance by SVA Information Industry Co., Ltd. We have also been awarded the title of the quality management team in Shanghai for the research project aimed at quality improvement.

In 2003, our company formulated the goal of “Big leap, 30 plus”. To put it more precisely, we will increase our domestic market share to the position of No. three in China; the production will be increased by 30%; the quality rate will be increased by 30%; the production cost will be lowered by 30%; the delivery time will be shortened by 30 days. In accordance with the working concept of “dividing the ultimate goal into different areas where different people shoulder different responsibilities”, we have set up 76 improvement teams which are engaged in a series of attempts to “improve efficiency and curtail the production cost”.

For 2004, our goal is called “Sprint Ahead in 2004”. Namely, our domestic market share will be enlarged to the second largest in China; the company’s loss will be minimized; the complaints against the company will be reduced to zero; the total sales volume will reach 400 million US dollars. Right now, sparing no efforts, all staff members in our company are forging ahead towards the goal of globalization in 2004. It is estimated that there will be 143 improvement research projects in total, which can help us save over 30 million US dollars in the purchasing of raw materials, the designing cost and the outsourced processing cost.

Earlier this year, the first model of DVD players which have been developed by our company’s designing department were put into the market. This model has been specially designed to suit the Chinese market. In the half of this year, our company acquires 222 patents and five patents have been developed solely by ourselves. All these show that our company’s designing capability has scaled a high step. In order to improve the quality of our products, our company was awarded the certificate of ISO14001. We have awarded the level A (excellent quality) in the LG corporation’s own quality evaluation mechanism two years in a row.

(2) Building of “FAST” Corporate Culture and the Best Working team

In order to realize the goal of “Global Top One” and put into practice the value concept “A Stronger Enterprise, A Better Team of Talented Personnel”, our company has built the “FAST corporate culture”. We attach great importance to the nurturing of talented personnel, the coordination and co-operation between various departments and the efficiency of high quality work; huge attention has also been given to enriching the leisure life of our working staff, creating a comfortable working environment and raising the market profile of the LG DVD players. The meaning of “FAST” is composed of the following areas:

F stands for FUN, meaning “Fun to work”

A stands for ACTION, meaning “Just to do it”

S stands for SKILL, meaning “To be professional”

T stands for TOP 1, meaning “Become a champion”

1.      Fun to work

Shanghai LG Electronics Co., ltd attaches special importance to building a “happy” working environment. We have organized different clubs such as photography, volleyball, table tennis, department heads and the “Black Band”(BB) club. These clubs not only enrich the life of our working staff and bring out the potential of them; they also improve the communications between the working staff and the management staff so as to make a solid foundation for building a highly efficient working team. Meanwhile, our company has organized many interesting “Sprint Festival” activities, which are, like the activity “Super A Day” organized in 2003, another typical example of our cultural life. So far, we have organized such activities as the “winter long distance marathon”, the competition of “Top 3 Song”, the “volleyball match”, the “Sports meet” and so on. All these activities are designed to bring out the innovation passion of our working staff and implement the concept of “Innovation, Openness, Partnership” through concrete actions.

2.      Just to do it

Shortly after the new year of 2004, the newly appointed CEO of the LG Electronics Corporation has put stress upon the “executive ability”, which is also put high on the agenda of the building of corporate culture by the Shanghai LG Electronics Co., ltd. After undergoing the hard training in the innovation school which last for five days and four nights, our working staff should be made aware that “there is nothing impossible in the world, solutions come from thinking and there is no end to improvements” as well as that “what should be done today must be done today and what should be done at the moment must be done at the moment.” They have been also taught to bring their potential into full play and never lose the determination and courage of conquering any difficulties. Meantime, our corporate culture-working group has made a warm introduction of the “Five-action Movement”, which is aimed from different perspective at creating a brand new image of LG people. The five actions cover the following items:

“Lightening” action--- highly efficient LG people

“Green” action--- highly civilized LG people

“A Winged Steed” action--- highly versatile LG people

“Challenge” action--- highly innovative LG people

“Sunlight” action--- physically sound LG people

3.      To be professional

Shanghai LG Electronics Co., ltd has put forward another challenging requirement, which calls on our working staff to try to become the “experts in their individual technical areas”. In LG, good command of 6σknowledge is regarded as the touchstone of LG people. If you want to be part of the LG working team, you must master the 6σknowledge. Towards this end, our corporate culture working group has especially organized the 6σknowledge training programs and assists the Korean LG headquarters with its testing program entitled the “6σBlack Band Expert” evaluation and certification. At the same time, under the authorization of our company, a special technical education system has been established. It covers three major areas of training, namely, innovation education, knowledge-based training and ability training.

4.      Become a champion

“Global Top 3” is the ultimate goal set by the LG Electronics Corporation for 2010. As a member of the LG family, Shanghai LG Electronics Co., ltd goes even further by setting up the goal of “Global Top One”. In order to shorten the distance between the world’s top enterprises and ours, Shanghai LG Electronics Co., ltd is currently engaged in developing two evaluative mechanisms, namely, “Organization Certification System” (OCS) and “Project Assessment System” (PAS). The two systems will enable our company to objectively locate the current gap so that adjustments of research direction can be made accordingly. Right now, the whole systems are in the final stage of testing. It is predicted that they will be put to use in October.

(3) Attaching Great Importance to The Nurturing of Talented Personnel, Building Motivational Mechanism

The 21^st century is a time of knowledge-based economy as well as a time of competition for talented personnel. To strengthen the competitiveness of enterprises and maintain a smooth rate of development depend upon the nurturing of the excellent talented personnel who meet all the requirements imposed by the time. So we have summarized our past experience of success and spared no efforts in improving the model of training and education. We have succeeded in achieving a gradual control of the flow of talented personnel. And great achievements have been made in the area of nurturing talented personnel.

Up till now, the share of workers in the assembly line accounts for 68% of the total number of working staff. The share of workers with a college diploma accounts for 36% of the total number of contract workers. Our company has strengthened the knowledge and occupation training of all working staff. In the first half of this year, the total time spent in training has reached more than 30,000 hours and altogether nearly 4000 people have received the training; the certification of Laser machine operation is composed of the basic level and the intermediary level. There are nearly 300 mechanists in total; as regards the 6σBelt education, 58 people have passed the BB certification and 77 people have passed the GB certification.

To quicken the process of nurturing the talented people in the local area, our company organizes overseas training and business exchange programs every year. We send the excellent working staff of every department to the South Korea for studying so that their horizons can be broadened and our exchanges strengthened. From January 2003 up till now, altogether more than 120 people have received training in the Korean LG headquarters or the DAV development department located in Pyeongtaek.

Apart from the regular overseas training programs, we have also organized colorful and individually tailored E-learning activities among our working staff. Through the Internet, they can access the knowledge they are interesting in. This way, they are enabled to organize their own schedule of learning, which has raised the overall knowledge standard of our company.

To motivate our staff into achieving excellence in work, we have formulated a series of evaluation mechanisms. Every month business evaluation will be carried out in every department; excellent departments, working teams and individuals will be praised; as far as the important management task indexes, each department will be awarded the “Record Breaking” prize or the “Perfection” prize for their work. At the same time, the human resources department operates three types of cash awards, i.e. the achievement goal award, the achievement award and the award for the most important talented personnel.

(4) Sharing the Accomplishments, Rewarding society

Within only the past two years, our company has made many achievements. We are one of the 20 enterprises with largest export volume in Shanghai. We are ranked as Shanghai’s excellent export-oriented overseas-invested enterprise. We have also been awarded with the title of high-tech enterprise in Shanghai. We are ranked as the “A class management enterprise” by Pudong Customs. We have passed the certification of ISO14001 and gained its authentication. And our products have been certified as “quality products under the state quality supervision”. Our export volume is ranked as the top 3 in the Jinqiao exports processing zone. We have been presented with the honorary title of “Shanghai’s excellent work unit for IPR protection”. Luguangxi, the general manager, has been awarded with the “White Magnolia Medal”.
    Our achievements and development depend upon the generous support from our government and various social sectors. As a result, our company attaches great importance to the work of public well-fare so as to reward our society. It is known that at the beginning of summer last year various major cities in China had been plagued by the SARS virus. Even today, people are still feeling frightened upon the thought of that terrible period. Aware of SARS’serious negative impact upon our national economy and people’s life, all working staff in Shanghai LG Electronics Co., ltd organized various donation activities and the total money donated reached 20,000 RMB. Our company also donated LG microwave ovens and vacuum cleaners, with the total value reaching nearly 100,000 RMB.

To contribute to the development of China’s education, LG Electronics Corporation has initiated the nationwide “LG Electronics Academic Scholarship Program”. At the beginning of 2002, LGESH has set up the LG Scholarship Program in both time-honored Fudan University and Shanghai Jiao Tong University to encourage the development of excellent college students. From August 2003, our company entered into a long-term support partnership with the Shanghai Hui Xin Orphanage. Altogether we have organized six visits to the pitiful children in the orphanage, bringing them milk powder, toothpastes, toilet soaps and other daily necessities.
    In the first half of this year, we have maintained a smooth and good sales rate, with the sales volume surpassing the original estimate by 10%. It is predicted that the total sales volume will increase 20% in comparison with the last year’s. Our company has made a solid step forward on the road of development and innovation. But we are conscious that there is still a gap between the worlds’s top one enterprises and ours. Nowadays the DVD market is gradually dominated by the buyers, which will escalate the already tense war of prices. Under such circumstances, it is certain that we will be confronted with bigger challenges and difficulties.

The burden is heavy and the road is long. Shouldering the heavy responsibilities together, both our Korea and Chinese working staff will make concerted efforts and sustain in our innovation programs so as to realize our shared dream--- LG DVD, Global Top One.