Li & Fung And China Supply Chain Management
Really interesting post (with many interesting links) on HK based Li & Fung Limited over at the Chinese China Apprentice Blog, entitled, "Supply “China” Management: Superior SCM at Li & Fung Ltd." The post goes into great detail on what makes Li & Fung tick and on what makes it so special. In doing so, it ends up providing good instruction on what it takes to do China business, particularly as it relates to supply chain management.
Li & Fung Limited describes itself as follows:
We are the export trading arm of the Li & Fung Group, managing supply chains for major brands and retailers worldwide.With an extensive global presence and cover over 8,000 employees, the Group operates a sourcing network of over 70 offices covering 40 plus countries and territories across North America, Europe and Asia.
In addition to the wide range and variety of consumer products available through its sourcing network, Li & Fung also leverages its strengths in custom product design and development to provide complete global sourcing solutions for its customers.
In turn, the Li & Fung Group describes itself as follows:
Founded in Guangzhou, the PRC in 1906, the Li & Fung Group is a multinational group of companies driving strong growth in three distinct core businesses - export sourcing through Li & Fung Limited, distribution through IDS and retailing through CRA and other non-listed entities. The Li & Fung Group has a total staff of over 25,000 across 40 countries worldwide, with a total revenue of over US$10.4 billion in 2006.
If you have an interest in China supply chain management, or just want to read about a very well run, highly successful, constantly evolving global company, I urge you to check out China Apprentice's post.
Comments (4)
Read through and enter the discussion by using the form at the endDavid Li - July 6, 2007 11:39 PM
I'd suggest stroke out "China" from the title. I think it's kind of misleading to suggest Li & Fung's main strength is in China while it's running a very efficient global sourcing network. Moreover, Li & Fung's rise is probably tied more closely to the rise of Wal-Mart then China. Li & Fung is what Wal-Mart suppliers turned to when they couldn't meet Wal-Mart's efficient requirement by themselves.
The recent move of Li & Fung will also be an interesting model of how Chinese companies may be going global. Li & Fung enters license agreement with Levis a couple years ago to take over Levis' for Wal-Mart . The recent buy out of Tommy Hilfinger is another step for L&F. These two essentially let L&F take over the whole supply chain for the two brands and shift the power balance between brands and the supplier.
Foxconn seems to move toward the same direction. SAIC and Nanjing MG are also moving toward the same direction. Coating Chinese products with a thin layer of established brands. And there are plenty of brands up for grab on the market. The recent private equity boom may just accelerate this. A perfect storm for a new path of globalizations.
China Law Blog - July 7, 2007 1:28 PM
David Li --
I put "China" or "Chinese" in every title -- need it for the search engines. Also, this is a China blog. But, having said this, I do agree Li & Fung is more than just China, but I'm betting China is still more than 50% for them.
I agree with you on the brand name thing. I am actually surprised at how slow it is happening. I would expect at some point it will really accelerate.
David Li - July 7, 2007 7:29 PM
Going by the percentage rule, Dell is more Chinese then Li & Fung as more then 90% of Dell's supply chain are in China.
For the brand things, it has been happening for a while but we still see few successful case. There are some high profiled failure such as TCL-Thomson and BENQ-Siemen. Haier failed to acquire Maytag.
However, the successful ones are few and rarely advertised. It's a high risk game for the companies to make a direct acquisition as the brands being acquired are most likely to be in trouble and the friction generated from such acquisition often prevent a success integration.
Private equities are likely the necessary solutions for this to work as they will shoulder part of the financial risk of such acquisition as well as prep the acquired companies to be sold. I believe the recent Chinese forex investment into Blackstone is a experimental move in the direction.
ABD - July 30, 2007 7:48 AM
Thanks for the head nod. Enjoy reading your blog.