Battle For Home Appliance Market Share Becomes Actual Battle, With Execs Vandalizing Machines And Indictments Handed Down

from the La-Cosa-Nostra:-Large-Appliance-Division dept

We’re used to corporate battles over product placement, intellectual property and market share, but they usually take the form of courtroom disputes, targeted advertising and bland mission statements. But two major consumer electronics companies’ recent fight has not only found its way into a courtroom, but also involves the alleged deployment of Mafia-esque tactics.

Last fall, Samsung placed some of its washing machines in a German shopping mall as a teaser/advertisement for its appearance at an upcoming trade show. That’s when things turned surprisingly unprofessional.

Samsung accused LG executives of breaking the doors of several of its washing machines at two Berlin shopping centers in what they claim was an attempt to gain a competitive advantage in the cutthroat appliance business, which market-research firm Euromonitor International says was worth about $400 billion globally last year.

LG, of course, has denied this. It doesn’t deny the fact that it sent a small team of executives to the mall to check out the competition. It also doesn’t deny that its execs did a little stress testing of the washing machine’s door, something that was captured by the mall’s security cameras. (See video below.)

Samsung claims LG’s personnel “broke” the washing machine door deliberately in order to sabotage Samsung’s reputation ahead of the upcoming show. LG claims that if the door was indeed broken by its employees’ downward shoves, it’s only because Samsung’s washer doors are crap.

This dispute eventually made its way from mall display to the Korean courts. LG tried to head off Samsung’s lawsuit by offering to purchase the washing machines (which retail for more than $2700 a piece). Samsung replied with a curt “Thanks, but see you in court.”

The end result? An indictment of the executives involved in last year’s Man vs. Competitor’s Machine shoving match.

A top LG Electronics Inc. executive has been indicted by Seoul prosecutors for allegedly vandalizing several high-end washing machines manufactured by rival Samsung Electronics Co.

An LG Electronics spokeswoman said Sunday that Jo Seong-jin, head of the company’s home-appliance division, has been indicted on charges of deliberately damaging four Samsung “Crystal Blue” washing machines ahead of a trade show in Germany last September. Mr. Jo has also been charged with defamation and obstruction of business, she said.

Two other company executives have been indicted on similar charges over the same incident, the spokeswoman said.

LG had countersued for defamation and evidence tampering (it claims Samsung accessed the washing machines during their trip back from Berlin to be presented in court), but that will no longer move forward as a result of this court decision.

LG is now fighting back via its own corporate channel. It uploaded a video containing the questionable “examination” performed at the German shopping center, along with comparative demonstrations of everyday usage that supposedly exert as much strain on washing machine doors as Mr. Jo did. For reasons only known to LG, the video contains the sort of electronic library music more suited for painfully boring 5th period educational films than corporate exculpatory efforts… so heads up on that.

Samsung has responded to LG’s video by claiming it’s “arbitrarily edited,” pointing to the court decision as evidence enough that its rival deliberately broke the displayed machines.

Fighting for a larger share of a $400 billion market is never going to be pretty, but until now, these companies have managed to keep these efforts hidden from the public. Sabotaging a competitor is generally the sort of thing done in secrecy, behind closed boardroom doors, rather than in full view of the general public and Samsung employees. Maybe the market is too large to keep the gloves on and the cutthroat tactics obscured. Any portion of $400 billion is a whole lot of money and the potential gain of a few points in market share could be tantalizing enough to persuade large companies to put their reputation on the line with the open appearance of mob-level impropriety. (“Nice washing machine you got here. Be a shame if the door didn’t close properly.”)

Money — especially that much money — does strange things to normally logical people. In the underrated Way of the Gun, when a long-time criminal is asked why he would do something terrible for a motivator as supposedly weak as “just money,” he responds:

Not money, 15 million dollars. Fifteen million dollars is not money, it’s a motive with a universal adaptor on it.

What’s a few $2700 washers (and a few indictments) in a $400 billion market? Not enough to be of consequence and certainly not enough of a deterrent to head off future brute force attacks on competitors. I, for one, welcome our corporate giants’ embrace of low-level thuggery, which is more interesting and more relatable than a string of noncommittal and obfuscatory sentences hidden in the back pages of quarterly SEC filings. I’m looking forward to a world where demographic groups are captured not via Super Bowl ads and targeted marketing, but by competitors tripping “check engine” lights in competitors’ showroom vehicles or pinstriped execs hacking the home screen of the latest connected home thingie to display nothing but a steady stream of porn shots.

This is the future we consumers deserve. Too many products fail to excite buyers, what with a preponderance of me-too styling and features. If the products don’t move us, maybe the companies themselves will. It’s time to be wowed by the gutsiest display of executive-level disregard for corporate propriety. We need our business leaders to step up and vow to be the next Suge Knight or Broad Street Bullies of their respective fields. Even if LG’s execs didn’t actually break Samsung’s washer doors, they should be commended for their willingness to stroll into a public place and give every appearance that they were doing exactly that.

Filed Under: competition, indictments, korea, vandalism, washing machines
Companies: lg, samsung