Li&Fung will be dropped from Hong Kong’s Han Seng index of leading quoted businesses from March 6, the index compilers announced on February 12.
Li & Fung have acquired UK garment supplier May Trading, which went into administration after a major case of embezzlement at its Dhaka factory AMCS.
L&F efforts used to split: clients 90, factories 10. “Now it is closer to 60-40 or 70-30.”
Business claims it’s due to flawed US diversification project. But its purported insights into Western markets are hopelessly out of line with what current trading data’s showing
If you think the way stock markets do, Li and Fung (L&F) is currently an awful company to get involved with. If you think the way garment buyers do, recent events at L&F might make you think a bit harder about increasing you business with them or reviewing alternatives– but for most of us, most of the time, they’re still the best third-party sourcing operation in the world.
In the late October 2011 FlanaRant, we took issue with Li & Fung’s assertion that “there’s “a total shift in how the supply chain operates. You’ll be sourcing everywhere and selling everywhere.” Li& Fung’s ability to forecast the time of day in 24 hours’ time was looking pretty shaky at the time. After they’d claimed to be about to shift their sourcing out of China they revealed they’d actually increased the proportion of their garments they source coming from China.
Consumers have already enjoyed “too long a period of very low prices” said Li & Fung’s Leung Wai Ping recently, when asked her views on the impact of rising input costs. She reportedly went on to say that according to Li & Fung’s indices, apparel prices are currently running 30% up on last year.
Some pessimism emerged about India’s future as a sourcing location as Li and Fung’s acquisition of Timberland’s sourcing operation led to the closure of Timberland’s separate Indian sourcing office. This decision – which has nothing to do with India as a place to buy clothes from – coincided with rumours in India that Liz Claiborne was reviewing the future of its Indian sourcing office, and came shortly after the decision of UK retailer Next to close its Bangalore office – while keeping its Delhi one.