Korea, Inc: Past, Present, and Future

1. Korean and Korea, Inc: Past, Present and Future Mr. Yong NamCEO LG Electronics, Inc. November 3, 2009

2. Several themes for today’s presentation 1 Korea and “Korea Inc.”, have come a long way in the past 30 years We still face many challenges in reaching our goal to be world leaders 2 3 LGE is responding on several important fronts We are optimistic and will continue to do the things required to create success for our companies and our people 4

3. From deeply impoverished in the 1960-70’s, Korea is now among the most successful developed markets in Asia GDP per capita (real*), USD Korea: #2 fastest growing in Asia 6.7 times 1970 2008 * Base year = 2005 Source: Global Market Insight

4. 1 2 3 4 5 6 7 Korean brands are now among of the world’s most respected and pervasive Rank 2009 Korean companies among the global top 100 9 10 Ranked #19 11 12 13 Ranked #69 14 15 . . . . 8 Source: BusinessWeek (2009)

5. Top 10 Korean companies now generate $200+ billion in global revenues and employ around 270,000 people outside of Korea IN Korea OUTSIDE of Korea $230+ billion 500,000+ employees $200+ billion 270,000+ employees Outside of Korea, LGE now employs 56,000 people in 100+ countries around the world and over 85% of our sales occur outside of Korea Source: Company website and annual reports, Bloomberg; Kisline

6. 570,000 units sold (~Sep ’09) And Korean companies are becoming increasingly innovative Hyundai Assurance Program Innovative Products of LGE • Allergy care • Wrinkle-free • Fast dry US market share has nearly doubled since program launch • Red dot & iF design awards are among the world most renowned top 3 design awards. • EISA stands for European Imaging Sound Association

7. To enhance global competitiveness, Korean companies need to overcome several significant issues • Competitive challenge: What do Korean companies need to do to stay ahead of Chinese and Indian companies? • Management quality: overcoming the productivity challenge • Services: Move from largely a manufacturing-oriented revenue base to a health mix of products and services revenues • Engineering: quality and quantity in Korea is insufficient to fuel continuing growth

8. Of Korean companies with significant revenue outside of Korea, top management are dominated by Koreans Total Revenues US$ billions % foreign executives* Overseas revenues (%) Company 81% $90 ~3% 87% $50 ~10% $44 0 42% $22 0 78% 77% $17 ~1% 24% $10 0 * Estimated by # of foreign executives in each company’s annual business report, company website SOURCE: Company website; Kisline; BusinessWeek, Company annual reports

9. (SILICON GRAPHICS) Korea is Heavily Dependent on Manufacturing “Products”, Which Creates Long-term Sustainability Challenges Diversify, adding services. . . . . . or slowly die-off Personal computers Printers Photography

10. LGE is responding through several transformation initiatives • Business portfolio: enhancing the mix of services and solutions in our portfolio • Innovation: deepening our ability to form proprietary insights about consumers and customers • Globalization: highest quality functional and “local” talents (which enables innovation) • LG Way: Creating an atmosphere to attract best in class talents – locally and globally

11. We’re developing new solutions that will allow us to turn our products into solutions (Example: in-room solution for hotel) Devices Solutions • Hotel information • Lights / Room temperature control • Entertainment Program Guide • Traffic / Weather • Flight status • Visitor identifying / Door opening • Bill view • …. Software Services Contents

12. Insight driven innovation is the foundation for LGE’s contentand service solutions Business context Solution Generation Development Consumer Tech Business Model Set the Frame Develop and collide insights Create Concepts Rapid Learning • Relevant brands, categories and opportunity spaces • Consumer desires • Enabling technology • Business model • Core consumer value proposition • Iterative prototyping • Validate business proposition

13. 30 Globalization, including recruitment of global talents Globalization Global Integration Global-level Capability Global Leadership Localization • Standard organization / Process / system • Functional capability (led by CXO) • External recruiting* • Local COO (in 16 overseas subsidiaries as of Oct. ’09) • Future leader pool(~100) • Leadership training * Non-Korean executives (VP-level) : 4 in ’07 to 41 in ’09

14. Management philosophy : The LG Way Vision - Pursue to be the best in its class Code of Conduct - Work by principles - Provide equal opportunities and fair treatment. Management Principles - Value individuality and diversity - Develop capabilities to the maximum - Place greatest importance on serving customers - Create differentiated ideas * "Jeong-Do" is " The right way” in English.

15. Korea, Inc: Continuing to respond to our challenges and opportunities through creative investment The Incheon-Songdo development project 14

16. LGE has achieved significant success in recent years; I am optimistic about our future! LGE Revenue Growth 50 (US$billion) CAGR 19.3% 13 4 0.3 1980 1990 2000 2008

17. http://www.lge.com