What to make of LG and Haier eyeing GE's appliance unit?

LG and Haier are eyeing GE's appliance unit. What could that mean for GE appliance buyers?

It's looking like the end of an era--or a century--for GE, which is drawing interest overseas in its 101-year-old appliance unit.

LG's CEO Yong Namis considering a deal. "We are looking into it very carefully. I cannot share with you more than that," Nam commented cryptically at a news conference today.

Meantime, there's word that China-based Haier Group, which made an unsuccessful bid for Maytag in 2005, is also eyeing the unit, which might fetch between $4 billion to $8 billion, according to reports.

GE's Advantium Speedcook oven GE
So what does it mean for consumers of this brand?

In a nutshell, who knows?

In one scenario, whoever ends up buying GE's appliance unit could retain the best of the GE line, which has come a long way over the past few years with the affordable Hotpoint brand to the swanky Monogram line to the newer Profile appliances, falling squarely in the stylish middle.

Since its face-lift, GE now appeals to the higher-end, Euro-style-minded customer, says Richard Babyak, editor and chief of Appliance Design magazine. Not necessarily the Viking/Sub-Zero crowd, but models like the company's high performance Advantium Speedcook oven and its cool new Profile washer and dryer have helped revive the brand.

With a GE deal, either LG or Haier could use the ubiquitous GE name to expand quickly in new U.S. markets. That certainly seems like the strategy of both.

South Korea-based LG, the world's biggest seller of air conditioners, has already made inroads in the U.S. with its reliable washing machines. (A 2007 JD Powers survey found LG No. 1in customer satisfaction in its survey of buyers of the company's clothes washers and dryers.)

Could this be an LG soon? GE
LG's CEO Nam is also reorganizing, aiming for 10 percent sales growth this year, which is why he's likely looking to GE to boost his strategy. (Not a bad place to look, despite the recession, since GE's appliance division generated $7.2 billion in revenue in 2007.)

What remains to be seen is whether a buyer would keep the existing GE brands or simply stick their own name on those products, filling in the gaps where necessary.

Or maybe a buyer would just sell two of the same products under different brand names, as Whirlpool does now.

For Haier, GE's moderate- to high-priced brands would come in handy to flesh out its more affordable stuff and help move the company upstream in the U.S. market. LG, however, might hold on to its high-end appliances (washers, dryers, refrigerators) that people already love, Babyak says, and add GE's where necessary.

Perhaps lure Kelly Ripa away from Electrolux to do a relaunch?

The challenge is, as always, what to do with all the new brands that run the risk of confusing the heck out of consumers.

Whirlpool, for one, is still trying to figure out what to do with everything it owns after acquiring yet another brand in Maytag, Babyak notes. They've now got the conga line of Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Inglis, Estate, Brastemp, and more.

Maybe a chief brand officer to keep them all straight?

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About the author

    Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.

     

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