Li & Fung’s Dr William Fung discusses the future of product manufacturing
Dr William Fung’s company is a vital cog in almost every major supply chain. But how will soaring costs alter his sourcing strategy? “In the next five years, prices are only going in one direction.” If you were looking to crown the most influential, best-connected company most people have never heard of, you might start your search at one of the most conspicuous addresses in Hong Kong. Looming over the city’s bustling Sham Shui Po district is the headquarters of Li & Fung, the sourcing and logistics Company that provides the operational heft behind China’s dominance of consumer goods. Li & Fung does not shout about its achievements, but its value as a power broker in global supply chains inspires awe among its Western rivals. If it is Made in China, Li & Fung knows about it and probably helped it on the journey from factory to shelf. Founded in Guangzhou, China, in 1906, the company has become increasingly vertically integrated and now offers everything from product design and material sourcing to shipping services for retailers and manufacturers including Walmart, Toys “R” Us and Avon. It distributes in more than 40 countries and turned over US$15bn in 2010, with profits up 27% at US$551m. In July 2011, it announced the acquisition of five companies to boost its design and distribution arms. Change is in the air, however, for a company that set itself an ambitious (overambitious, say some analysts) target of doubling operating profit in the three years to 2013. Chairman Victor Fung will step down by 2012 to be replaced by his brother, Dr William Fung, currently Group Managing Director. Meanwhile, the landscape is shifting, according to a new report from KPMG International – Product Sourcing in Asia Pacific – which identifies rising manufacturing capabilities in Bangladesh, Vietnam and other […]