Global Supply Chain Management: Best Practices at Li & Fung Limited

            
 
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Case Details:

Case Code : OPER047
Case Length : 15 Pages
Period : 1996-2004
Organization : Li and Fung
Pub Date : 2005
Teaching Note :Not Available
Countries : Hong Kong, US, Europe
Industry : Trading, FMCG

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"We deliver a new type of value added, truly global product that has never been seen before. We're pulling apart the value chain and optimising each step - and we're doing it globally." 1

- Victor Fung, Chairman, Li & Fung, in June 2000.

"In an age when the Internet is supposedly going to eliminate the middleman, here's a middleman, an old Asian trading company that has made itself indispensable."2

- An Article in Forbes.

Introduction

In January 2004, Li & Fung Limited (Li & Fung), a Hong Kong based global consumer goods trading giant, announced that Li & Fung Trading (Shanghai), its wholly-owned subsidiary, had been granted an export company license by the Ministry of Commerce of the People's Republic of China (China).

After receiving the license, Li & Fung Trading (Shanghai) became the first wholly owned foreign trading company to be offered direct export rights in China. The company was authorized to export China-sourced goods directly to customers worldwide and import raw materials for manufacturing in China. Li & Fung was until then dependent on its Chinese partners for exporting from China.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

According to William Fung (William), managing director, Li & Fung, the license freed the company from the many trading restrictions in China. It would enhance Li & Fung's competitiveness and increase its share in the global market.

William said, "With the ability to directly export products from China to our customers worldwide, Li & Fung is now able to offer an even more complete supply chain service."3 Analysts felt that Li & Fung stood to benefit significantly from its new license as it was one of the world's leading textile export traders, and the largest to the US.

The company was well-placed to leverage China's leadership position in textile manufacturing and exports, as that country was the company's largest manufacturing hub, from where it sourced over US$ 2 bn worth products annually. Li & Fung had 16 offices in China, which it planned to increase it to 36 by 2007.

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1]  "Winning at a Global Game: Part Five of an Eleven Part Series," www.asiabusinesstoday.org, June 10, 2000.

2] "Stitches in Time," www.forbes.com, June 09, 1999.

3] "First Hong Kong Trading Firm to Gain China Licence," www.hktrader.net, February 2004.

 

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