DISTRIBUTION

Li & Fung first began its distribution business in the U.S. in 2005 and then expanded to Europe in 2008. By working closely with brands and retailers, Li & Fung addresses their specific needs in the areas of design, sales and marketing, and distribution as well as managing the supply chain. The Company's distribution operation consists of three pillars: private labels, proprietary brands and licensing of recognized brands.

In the area of private labels, Li & Fung helps retailers produce finished products under a private label or in-house brand. To develop proprietary brands, the Company takes nationally recognized brands and builds exclusive lines of merchandise for retailers. For licensing, Li & Fung works closely with customers to build up well-known brands through product design, branding, sourcing, product delivery, quality control, pricing and warehousing. The company validates their vendors ranging from

LOGISTIC Li & Fung operates an extensive logistics network around the world. The Company offers a comprehensive menu of logistics solutions, from warehousing, transport, repacking, customs brokerage, freight forwarding, hubbing and consolidation, and other value added services, including supply chain analytics and value engineering work. Their end-to-end solution spans the time the product leaves the factory to the time it reaches the final consumer. At present, they have partnered with local, international and multinational brand owners and retailers to help them optimize the flow of inventory and information to reduce cost and improve service level. They have been able to adapt to changes occurring in the industry as the fashion industry is dynamic and it is bound to change after a certain period of time. Their time-to-realise is very quick as compared to their counterparts. They have always been an avid believer of the fact that the people are their real assets. They are their inventory. They believe in the concept of People First. They focus on their employees and they have been constantly working to improve the work conditions of their employees. SUPPLY CHAIN RESPONSIBLITY They believe that by collaborating with and supporting their customers' sustainability programs, they help consumers worldwide make responsible choices and lead more sustainable lives. At the same time, they also seek to engage with their suppliers and customers to enhance capabilities around sustainable sourcing and sustainable products. At a basic level, their Supplier Code of Conduct provides a clear statement of labor and environmental commitments for their approved suppliers. The Code is based on local and national laws and regulations as well as the International Labor Organization's core

conventions. These include underage labor, involuntary labor, compensation, working hours, discrimination, disciplinary practices, freedom of association, health and safety, environmental practices and the right of access. Li & Fung employs over 130 in-house dedicated vendor compliance colleagues worldwide who regularly monitor compliance and work with suppliers that produce their customers' products, in line with their own Code of Conduct and industry-defined and customer-specific audit standards, protocols and methodologies. Suppliers are rated and approved based on designations ranging from Satisfactory to Failed (Zero Tolerance) and/or customer specific designations. They work with their customers, suppliers, non-governmental organizations and experts to implement energy, water and pollution reduction initiatives, as well as raise labor standards. To ensure product safety, quality and regulatory compliance, they have put in place rigorous internal processes backed by a team of 2,600 global Quality Assurance / Quality Control colleagues. Their internal compliance efforts are additionally backed by regular internal and external testing and certification to ensure that products conform to the required standards.

OUR PARTNErSHIP They recognize the benefits of implementing innovative sustainability programs and strategic initiatives with our partners - including suppliers, customers, industry associations and nongovernmental organizations. By taking the lead ourselves, contributing to the development of our customers' sustainability strategies and supporting our suppliers, we effect greater positive change in our supply chain. Examples of some of our partnerships include:

Business for Social Responsibility (BSR) they are a member of the Beyond Monitoring Working Group and we also support a number of suppliers to participate in the BSR's Energy Efficiency Program. Supplier Ethical Database Exchange (Sedex) they work with businesses to improve the ethical performance of supply chains. Sustainable Fashion Business Consortium (SFBC) they aim to increase sustainable practices across the fashion supply chain. The Natural Resources Defense Council (NRDC) they partner with industry experts and other retailers working on the NDRC's Responsible Sourcing Initiative - Clean by Design. United Nations Global Compact they have been a signatory since 2001. In 2010, they also supported the World Wildlife Fund, Hong Kong Council of Social Service and Habitat for Humanity on various outreach activities.

ORGANIZATION AND MANAGEMENT

Li & Fung is led by Group Chairman Victor Fung, Executive Deputy Chairman William Fung, and Group President and CEO Bruce Rockowitz. The Company's management team represents some of the most experienced professionals in the global supply chain management industry. Our business covers the entire supply chain, and is structured into three interconnected business networks trading, logistics, and distribution. Each senior executive, guided by an entrepreneurial approach, and with deep knowledge of international consumer markets and trends manages a business portfolio defined by geography and product line. The depth of executive experience provides Li & Fung with a strong and talented team that has been instrumental in its continuous growth and success.