Managing Director Fung, 60, is a Princeton graduate who controls the company along with his MIT-educated brother Victor, 63. Fung's strategy: Buy the entire sourcing operations of U.S. customers and restructure them to make them more profitable. Last year, Li & Fung made seven acquisitions that are likely to add $1 billion in revenue in 2009. On May 5 the company announced plans to raise $348 million in new shares, with the money going in part to fund further acquisitions. "They're the Cadillac of the business," says retail consultant Howard Davidowitz. "They offer retailers more value because of their efficiency."
Wednesday, May 20, 2009
Lessons in global sourcing skills from Li & Fung
There is still a lot of business to do out there in spite of the global economic challenges.
I have long admired the Hong Kong manufacturing sourcing giant, Li & Fung, for their ability to intermediate the needs of strong Western brands and, match the needs of the brands with the manufacturing prowess of China.
Li & Fung has suffered from the credit defaults of clients like Mervyns and KB Toys. There are suits from unpaid manufacturers. This is, to be sure, one of the hazards of intermediation.
But, this is a process that requires great skill and, loads of information. Information on the needs of the major brands. Information on the capabilities and quality of the manufacturers. Just look at this description of the leaders of Li & Fung in Businessweek:
And, notwithstanding the challenging economic times Li & Fung are still being courted by strong brands like Liz Clairborne to take over sourcing operations.
Their aspirations are indicative of the strength of their management leadership. Reports Businessweek:
The company doubled revenue to $11.9 billion between 2004 and 2007 and wants to reach $20 billion in sales next year.
Now that is very encouraging.