Transcript Li and Fung Case Study Presentation

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 & Fung’s 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 & Fung’s website: Follow link above
Li & Fung’s 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 Kong’s 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 & Fung’s website: Follow link above
Li & Fung’s Heritage & History
 Emergence of a Regional Company 1979-1995
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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 & Fung’s website: Follow link above
Li & Fung’s Heritage & History
 Evolution of a Multinational Group 1995-Today
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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 & Fung’s website: Follow link above
Li & Fung’s 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 & Fung’s website: Follow link above
Li & Fung Ltd. Management
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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 & Fung’s 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 & Fung’s 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 Plan’s 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
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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.
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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.
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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 & Fung’s 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 & Fung’s website: Follow link above