Li & Fung: A Case Study

Bonnie R. Patterson For IS6679, Term 1, 2008 Troy University, Troy, AL

Logo and pictures are the property of Li & Fung: They are being used here for educational purposes

Li & Fungs Heritage & History

A Canton-Based China trader from

1906-1949
Founded in Canton in 1906 by Mr. Fung Pak-liu and Mr. Li To-ming

Traded largely in porcelain and silk before diversifying into bamboo and

rattan ware, jade, ivory, handicrafts and fireworks Formally established in Hong Kong as a limited company on 28 December 1937 Devolved into the hands of the second generation after Fung Pak-liu passed away in 1943. Trading stopped during World War II
Information taken from Li & Fungs website: Follow link above

Li & Fungs Heritage & History

A Hong Kong Based Exporter 1949-1979
Fung Hon-chu was instrumental in leading the company into a new era; 1949, Hong Kong developed as a manufacturing economy exporting

labor intensive consumer products; Began to export garments, toys, electronics and plastic flowers on top of its original product line: One of Hong Kongs larges exporters; In the early 1970s, the third generation of the Fung family, Victor and William returned from education in the US to enter the family firm; In 1973 the company was listed on the Hong Kong Stock Exchange

Information taken from Li & Fungs website: Follow link above

Li & Fungs Heritage & History

Emergence of a Regional Company 1979-1995

With the opening up of China in 1979, Hong Kong regained its hinterland and Hong Kong manufacturers relocated factories to Southern China; In 1985, Li & Fung (Retailing) Limited was formed as a company wholly-owned by Li & Fung (1937) Limited. Retail includes Circle K and Toys R Us. Business is in Asian countries at this time; In 1989, as part of a re-organization of the family's interests, Li & Fung was taken private in one of the first management buyouts in Hong Kong. Business at this time is in exporting and retail; In 1992 the export trading business was listed in The Stock Exchange of Hong Kong in its present form.

Information taken from Li & Fungs website: Follow link above

Li & Fungs Heritage & History

Evolution of a Multinational Group 1995-Today

In 1995, Li & Fung acquired Inchcape Buying Services (also known as Dodwell)-Li & Fung doubled in size an it customer base in Europe to match that in the U.S; Li & Fung continued to expand on the sourcing side - traditional strengths in the Far East are complemented by a growing presence in the Indian sub-continent as well as the Caribbean and Mediterranean basins; Li & Fung further broadened its customer base in the US and Europe through the acquisitions of Swire & Maclaine Limited and Camberley Enterprises Limited in 1999; Colby Group Holdings Limited in 2000, and Janco Overseas Limited in 2002 adding new customer base; 1999, Li & Fung also diversified into the distribution business through the formation of a privately held business, the IDS Group. The IDS Group acquired the Marketing Services businesses of Inchcape in Asia Pacific region and provides a menu of Integrated-Distribution Services- Including manufacturing, logistics and marketing.

Information taken from Li & Fungs website: Follow link above

Li & Fungs Heritage & History

The Li & Fung Group Today
Li & Fung has a 100 year history; Li & Fung has become a multinational group with holdings in 40

countries; Li & Fung has 26,000 employees; With the global expansion of China as a manufacturing nation, Li & Fung will expand with this growth as one of the worlds leading exporters, traders, commodity distributors, retailers and experts in logistics; Leaders in strategy for all to follow.
Information taken from Li & Fungs website: Follow link above

Li & Fung Ltd. Management

Makoto Yasuda (Independent Non-Executive Director) Bruce Rockowitz (Executive Director and President) Lau Butt Farn (Non-Executive Director) Henry Chan (Executive Director) Danny Lau Sai Wing (Executive Director) Annabella Leung Wai Ping (Executive Director) William Fung Kwok Lun (Group Managing Director) Paul Selway-Swift (Independent Non-Executive Director) Allan Wong Chi Yun (Independent Non-Executive Director) Franklin W McFarlan (Independent Non-Executive Director) Victor Fung Kwok-King (Group Non-Executive Chairman) Spencer T Fung (Executive Director) James Siu (Chief Compliance Officer) Dow P Famulak (Chief Executive Officer, LF Europe) Richard N Darling (President, LF USA Business Stream) Emily Mak Mok Oi Wai (Head, LF Three Business Stream) Edward Yim Kam Chuen (Executive Vice President, Finance) Executive Director, Li & Fung (Trading) Ltd) Chen Kuan Jeang (Chief Operating Officer)

From Source: Li & Fung Ltd, The Major Companies Database. (2008). Retrieved October 5, 2008, from http://www.lexisnexis.com/us/lnacademic/: LexisNexis academic LexisNexis Academic: Dateline: Redwood Shores, Calif

Dr. Victor Fung

Group Chairman of the Li & Fung group of

companies; Chairman of several business councils and committees and non-profit organization; Born in Hong Kong; married with 3 children; Bachelor and Master Degrees in Electrical Engineering from the Massachusetts Institute of Technology, and a Doctorate in Business Economics from Harvard University where he has taught.
Information taken from Li & Fungs website: Follow link above

Dr. William K. Fung

Group Managing Director of Li & Fung Limited;

Chairman of several business councils and

committees and non-profit organization; Bachelor of Science degree in Engineering, Princeton University and holds an MBA degree from the Harvard Graduate School of Business. He was conferred the degree of Doctor of Business Administration, honoris causa, by the Hong Kong University of Science & Technology.
Information taken from Li & Fungs website: Follow link above

Successful 2007: End of one 3 yr plan & the beginning of a new one
The Fung Brothers like 3 year plans: The one ending

in 2007 was to make US&10Bil in the U.S. Market: This was exceeded due to the following claims:
Robust turnover and core operating profit growth due to market share gains Driven by both organic and acquisition growth Acceleration of outsourcing deals Onshore strategy continues to progress well in US and Europe (Li & Fung Limited 3rd, 2008)
Li & Fung Limited 3rd Quarterly Report 2007. (2008). Retrieved October 9, 2008, from http://www.lifunggroup.com/investment/index.html : Li and Fung Website

Successful 2007: End of one 3 yr plan & the beginning of a new one cont.
The new Three-Year Plans targets are to reach US$20 billion in turnover, of which US$16 billion will come from the core sourcing business and US$4 billion from the onshore businesses in the US, Europe, and China. The Group is also targeting to achieve US$1 billion in core operating profit and has set a target to achieve operating leverage of doubling income percentage growth over turnover percentage growth (i.e. 2x) by the end of this new Three-Year Plan. (Li & Fung Limited 3rd, 2008)
Li & Fung Limited 3rd Quarterly Report 2007. (2008). Retrieved October 9, 2008, from http://www.lifunggroup.com/investment/index.html : Li and Fung Website

Comments about Li & Fung

Li & Fung Limited will see years, decades of continued success and growth under the helm of the Fung Brothers. Once the organization changes leadership at the top, it may slump, or not, depending upon the choice made for new leadership at that time. Garments, sporting goods, toys, the main stay of Li and Fung Limited, will always be in demand. As the world economy provides a world wide middle class, which seems to be the case (look at the changes in India, Taiwan and other Asian nations) there will be more, not less, demand for fashion and luxury leisure (toys) items. Li and Fung Limited has a strong hold on this market, and they are likely to maintain this for decades into the future. Patterson, B.R. (2008). Li and Fung Case Study. (Available from Troy University)

Research from Li & Fung Site

PMI Reports

Li & Fung China Trade Quarterly

The 10 Highlights of China's Commercial Sector China Distribution and Trading

China Update
Industrial Cluster Series Industry Series Supply Chain Management
Information taken from Li & Fungs website: Follow link above

Some Li & Fung Services

Li & Fung Trading

Integrated Distribution Services

Convenience Retail Asia Li & Fung Retailing Toys LiFung Branded Lifestyle Trinity
Information taken from Li & Fungs website: Follow link above