Case Was Released in 2007 and Story Start from 2006 Backward.

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When customer placed an order, dedicated team will engage with clarification of specification to find ther right supplier of raw material with top notch quality at the best price in timeliest manner. Goods modification can be done before start to next process that not effect goods quantity. Just In Time coordination theory was offered to customer for more lead time to catch the market trend in term of fashion season product. The transfer of information in a timely manner was fundamental to the success of its services.

(Note: JIT and customer benefit are applied to serve customer. Work result collecting provide benefir to customer on evaluation.)

Information technology as a core strenght

Li&Fung invest in information system technology. Base on logistic and supply chain business. Communication system is important to control and strenghten network in many regions. Real customer centric method was done by adopted customer in house system to work for customer to make customer comfort, Li&Fung invest much money on IT system to generate world class competency as same as global leading technology compamy. Li&Fung even install plug and play device to monitor warehouse stock movment to provide immediate replace and support from center. Centralize back-end on administration, finance, human resources and IT were applied. But Li&Fung is very careful on changing fornt-end because it will effect customer relationship and work efficiency.

(Note: JIT Delivery system to control from behind)

Moving up the value chain

Instead of doing only sourcing. Li&Fung also help on distribution planning and development services as revenue stream. Li&Fung offer more service such as planning, design and development.

(Note: Li&Fung try to help on selling customer product and gain more profit from service margin.)

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Eating into the Soft $3

One of the key global strategies from 3 years planning to increase revenue from add value to finish goods in the middle after production, before reach consumer hand. Combined production process cost squeezing. Li&Fung will earn profit from mark up margin from services.

Focus on U.S. market

Over 70% of Li&Fung’s customer base was located in the U.S. Li&Fung felt that an onshore strategy would benefit their business and key customers beacuse they would be better able to participate all level of their customers’ decision making.

There are 4 primary benefits of onshore strategy in their largest market.

- Closer relationship to improve margin.

- To create more “stickiness” (Li&Fung want to stay on top-of-mind for best customer)

- To stay closer to information for faster action.

- To penetrate the import market.

Li&Fung saw a huge opportunity in the U.S. to develop the robust yet fragment “middle man” import market. There were still many, many companies base in the U.S. that managed the design, logistics, and sourcing of products in behalf of other companies in both hard and soft goods. This middlemen often sourced product through Li&Fung on behalf of their U.S. customers. Li&Fung create services to compete with these importers, points are ot improve design and logistic but still not fully competed yet because the U.S. still cannot made local commitment.

(Note : Bigger middleman eat smaller middleman)

Grow U.S. onshore business.

Begining in 2005, the start of Li&Fung fifth three-year plan, the company deepened its commitment in the U.S.with the goal to build business scale. Li&Fung sought areas of consolidattion to build onshore operation from adjacency business to a core competency. Li&Fung already signed a lease 70,000 square foot space in Manhattan’s fashion district to house global brand business, design studios, and logistics operation to provide showroom space for its licensed brands. 2005-2006 U.S. onshore business grow from almost nothing to almost US$1 billion business.

Three pronged U.S. Strategy.

- Licensing recognized brands

- Private label

- Proprietary brands

Li&Fung plan to use the companies it acquired in the U.S. to produce the design on behalf of the designer or retailer to create proprietary branded soft or hard goods or to gain a license to produce these proprietary brands directly from the designer. Li&Fung had success with some brands.

(Note: Eat’em all from up stream to down stream)

A foot in the door

It is significant customer acquisition strategy because a first step in building on going growth

(Note: find more channel)

The New Wave of Acquisition

Rebalancing the Portfolio

Major sourcing acquisitions

By becoming sourcing arm outsource to well known company in the same business field.Make Li&Fung grow rapidly even those company already has inhouse sourcing team. KarstadtQuelle was major German catalog and retail business and department store operator,Li&Fung become soucing arm for this company in cluding get KarstadtQuelle outsource customer too. At that time Li&Fung was hungry for hard-goods area for future balance portfolio.Bed, Bath & Beyond, and Avon are important Li&Fung customer.

Steady drumbeat to fill in hard-good masaic

Sourcing more product into company by looking for acquisition small and medium size company which have specialty in area like furniture, home textile, and so on.

Sourcing deeper into China, each region have their own strenght point of geography and indurtry.

Li&Fung still believe china have plenty of opportunities to source quality hard-goods product. Chan viewed china as a country with four sourcing hubs.

- Southern China ( primary Hong