Business Case

Li & Fung was founded in 1906 by William’s grandfather, Fung Pak-Liu and his partner, Li To-Ming in Guangzhou, China, as an export trading company in Southern China selling to overseas merchants.

Holistic Supply-Chain Management: Although Li & Fung described itself as a trading company, by 2000 it was far more sophisticated than a typical Hong Kong import-export trading company and had come a long way from its roots in matching Chinese manufacturers with Western buyers.

Corporate Culture and Compensation: A combination of both thought leadership and execution, with the unique relationship between Victor and William cementing the entire organization. They create a very particular kind of culture that blends pragmatism and, at the same time, a recognition of and openness to innovation.

Tripartite Growth Strategy: In 2000 Li & Fung saw its future growth coming from a combination of organic growth, expansion through acquisition, and extension of its supply chain to new markets via the Internet.

Organic Growth: Since 1995, the Group had grown organically by receiving more orders from existing clients and by securing new mandates from strategic clients. Li & Fung further extended its network and diversified its sourcing around the globe with new offices in places as diverse as Bangladesh, Sub-Saharan Africa, and Manchester, England.

Acquisitions: Li & Fung’s acquisition strategy was based on buying rival sourcing companies, thereby gaining new client accounts, integrating their operations, and eventually bringing the operating margins of these acquired units up to Li & Fung levels.

E-Commerce: A core element of Li & Fung’s three-year planning system included an introspective look at “whether we are still relevant, including whether or not we are going to be dis-intermediated.” Part of its response was an Internet initiative of its own.