Debeshi Sadhukhan - 18020841100

Feba Mammen - 18020841102

Krishnaa Suresh – 18020841108
1906-1949 – Founded by Fung Pak-liu and a partner , Li To-ming
Started by selling porcelain, antiques and handicrafts for export

1949-1979 – Hong Kong based exporter Labor intensive consumer

products : garments , toys, electronics, plastic flowers
The third generation of the Fung family, Victor and William, returned
from their education and careers in the US to join the company

1979-1995 – A Regional Company Opening up of China and rapid

industrialization of less developed Asia n countries.
Heavy investments were made in establishing a regional network of
offices.

Since 1995 Evolution of a Multinational Group Enhancement of

customer base, management team, product offerings and geographic
reach through acquisitions – Swire Pacific Limited and Camberley
together with the acquisition of Colby group holdings in the late 200s.
 Li Fung’s Supply Chain
Not owning any piece of the supply chain Acquisition of competitors
• Optimizing the pricing structure of each • Broadened customer base
segment of the global supply chain
Being Customer-Centric • Better management team
• Cost Savings from the efficiencies
and market demand driven • Enhanced product Offerings
• Sophisticated value-added services
Focus on one’s core competency
and outsource non-core activities

Develop a close, risk- and profit-sharing relationship with

business partners

Design, implement, evaluate and continuously, improve the work flow, physical
flow, information flow and cash flow in supply chain

Adopt information technology to optimize the operate of the supply chain

Lower Costing in Sourcing and Warehousing

Export Trading Business
The ultimate middleman
Supplied both hard and soft goods
Soft goods – garment and apparel (2/3rd) of total
trading business and US over 69% of customer
orders.

Specialty
Big Box Brands
Stores
• Superstore • Focused on • Branded
Retailers specific soft apparel
goods

Hard goods –accessories, toys, travel goods, gift

items, fireworks etc.
Business Strategy-disciplined entrepreneurship

Reinforce customer • Competitive compensation, incentive

bonus plans and stock option grants on
culture individual performance

• Create new strategies and processes such

3 year business plan that managers were accountable for their
goals
TRANSFORMING THE
CUSTOMER EXPERIENCE
 Dedicated team takes the customer order and
works with the customer to clarify all needs
and specifications
 Manager takes order instructions and feeds
them into the intranet
 Goal is to get top-notch quality at the best
price in the timeliest manner
 Customer can make changes in design before
each production step
 Resulted in fewer markdowns and increased
sales
TRANSFER OF INFORMATION IN A
TIMELY MANNER!
INFORMATION TECHNOLOGY
AS A CORE STRENGTH
 Focused on connecting and sharing information
across its headquarters, customers, sourcing
offices and factories
 Centralized back-end operations
 Plug-and-play model adopted in case of
acquisition
MOVING UP THE VALUE CHAIN
 Provided product planning, design services,
quality control, testing, export documentation
and logistic services.
 By 2002, sales had grown to almost US$5 bn
MYTH
BREAKER!

Don’t have to own

factories to be in
manufacturing!

MYTH
BREAKER!
 THE NEXT WAVE OF ACQUISITION
Rebalancing the portfolio
MAJOR SOURCING ACQUISITIONS:
 Acquisition of KarstadtQuelle’s
sourcing arm
 The deal brought over US$1 bn
additional revenues and sourcing
customers
 Raised capital through public offering
to fund similar acquisitions
GROWING EUROPE:
Europe accounted to only 20%of the total
trading business for Li & Fung, against the
goal of ONE-THIRD of the trading business.
• Geographically fragmented and not a
homogeneous market
• European retailers not used to
outsourcing
• Retailers had their own buying offices
• Smaller businesses due to multiple
agents and supply chains
 THE NEXT WAVE OF ACQUISITION
STEADY DRUMBEAT TO FILL IN THE HARD-GOODS MOSAIC
• Hard goods were financially less profitable, required longer lead times, more labor intensive and
had lower customer prices
• In 1992, hard goods constituted less than 10% of the total trading business, which rose to 30% in
2006
• Key markets for raw materials for hard goods were China, Vietnam and Southeast Asia
• Merchandise from China were of good quality and had the most diversified base of products
• The FOUR sourcing hubs in China:
SOUTHERN CHINA (Primarily Hong Kong)- accounted for 55%-60% of hard goods sourcing
CENTRAL CHINA (Shanghai)- 25%-30%
NORTHERN CHINA- Nearly 10%
WESTERN CHINA- Less than 5%
• Vietnam: wood, sea glass, shoes and gardening items
• Southeast Asia: wood and furniture, textiles, handicrafts