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W2W: What to Watch – Li & Fung Redefines The Supply Chain

The continued shift of production from the Western Hemisphere to Asia, as well as the strategy of many apparel vendors to close their factories and contract production to full-package suppliers who can handle everything from buying piece goods to...

The continued shift of production from the Western Hemisphere to Asia, as well as the strategy of many apparel vendors to close their factories and contract production to full-package suppliers who can handle everything from buying piece goods to booking space on ships, is changing the power dynamic of global sourcing.

This story first appeared in the December 31, 2002 issue of WWD.  Subscribe Today.

The center of power is shifting more toward the Far East, with multinational, flexible companies that are able to move their focus from country to country rising in stature.

At the center of this trend is William K. Fung, group managing director of Hong Kong-based Li & Fung Ltd., the $4.23 billion production powerhouse that has rewritten the rules of sourcing. The company owns no factories or sewing machines, but rather manages production in more than 100 plants in 67 countries for the branded marketers of apparel and other products. To continue to boost his business, which dwarfs its rivals Texline and Linmark, neither of which have a large presence in the U.S., Fung is looking to expand his company’s reach up and down the supply chain, offering product-development services and contracting shipping and distribution.

Fung and his brother, Victor, who serves as chairman, own a 40 percent stake in the firm, which is listed on the Hong Kong stock exchange.

“The supply chain starts with the idea. We want to take it from concept to delivery,” Fung said in a recent interview with WWD. “What Li & Fung is doing is expanding the definition of the supply chain.”