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The World After Quotas. Washington, D.C. Li & Fung Limited October 13 th , 2005. Li & Fung Background. Li & Fung Today. Founded in 1906, close to 100 years of history Headquartered in Hong Kong Specialist in the sourcing of both private label and branded consumer goods

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The World After Quotas

Washington, D.C.

Li & Fung Limited

October 13th, 2005


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Li & Fung Background


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Li & Fung Today

  • Founded in 1906, close to 100 years of history

  • Headquartered in Hong Kong

  • Specialist in the sourcing of both private label and branded consumer goods

  • US $6 billion in shipping

  • Market cap approx US $6 billion


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Li & Fung (1937) Ltd.

Li & Fung (Retailing) Ltd.

Retailing

Li & Fung (Distribution) Ltd.

Marketing & Logistics

Li & Fung (Trading) Ltd.

Product Sourcing

Privately Held

Publicly Held

Publicly Listed

MSCI Hong Kong Index

Hang Seng Index

The Li & Fung Group


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The Li & Fung Group

  • IDS Group

  • Marketing and logistics

  • 9 markets in Asia and Greater China

  • 40 distribution centers, 3m sqf

  • 300 MNC principals

  • 6,000 staff

  • Turnover US $ 1 billion


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The Li & Fung Group

  • Li & Fung Retailing Group

  • Circle K operated by Convenience Retail Asia

  • Toys R Us Asia

  • Branded Lifestyle - Ferragamo, Country

  • Road, Frette, Mango

  • 2,000 staff

  • Turnover US $ 300 million


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The Li & Fung Group

  • Li & Fung Trading Group

  • Sourcing

  • 66 Offices in 38 countries and territories

  • 7,200 staff

  • Turnover US $ 6 billion


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Europe/Mediterranean

(13 locations)

London

Huddersfield

Amsterdam

Romania

Florence

Turin

Tunis

Istanbul

Denizli

Izmir

Oporto

Jordan

Cairo

Americas

(9 locations)

New York City

Boston

San Francisco

Dominican Republic

Guatemala

Honduras

Guadalajara

Mexico City

Nicaragua

South Asia

(11 locations)

Bangalore

Chennai

Mumbai

New Delhi

Karachi

Lahore

Dhaka

Colombo

Sharjah

Bahrain

East Asia

HONG KONG - Head office

(21 locations)

ShanghaiDalian

NanjingBeijing

Seoul Qingdao

TaipeiTokyo

HepuNingbo

Macau Liuyang

Huizhou

Dongguan

Longhua

Guangzhou

Shenzhen

Zhongshan

Shantou

Zhanjiang

Southeast Asia

(9 locations)

Singapore

Bangkok

Shah Alam

Manila

Hanoi

Ho Chi Minh City

Jakarta

Phnom Penh

Saipan

Africa

(3 locations)

Durban

Mauritius

Madagascar

Coordinated Global Network66 Offices in 38 Countries and Territories


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Product Development

Consumer Needs

Raw Material Sourcing

Product Design

Factory Sourcing

Manufacturing Control

Shipping Control

Forwarder Consolidation

Local

Forwarding Consolidation

Consumer

Wholesaler/ Retailer

Customs Clearance

The Evolution of Supply Chain Management

The Supply Chain


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Sourcing Apparel in a Quota Free World…someday!


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The Reality of 2005

  • The China Impact


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U.S. ImportsJanuary – July(Million M2)

Square Meter Basis

20042005 Change

World 11,018 12,443 13%

China 1,537 3,414 122%

R.O.W. 9,4819,029 (5%)

* Data taken from The office of Textiles and Apparel


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U.S. ImportsJanuary – July(Average Unit Price)

Price Deflation

20042005 Change

World $3.22 $3.12 (3%)

China $3.04 $2.66 (13%)

R.O.W. $2.94 $3.29 12%

* Data taken from The office of Textiles and Apparel


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The Reality of 2005

  • The China Impact

  • The Winners and Losers


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The Winners


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U.S. Import WinnersJanuary – July (Million M2)

* Data taken from The office of Textiles and Apparel


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…The Losers


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U.S. Import LosersJanuary – July (Million M2)

* Data taken from The office of Textiles and Apparel


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The Reality of 2005

  • The China Impact

  • The Winners and Losers

  • The New “Quotas”


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The New “Quotas”

  • Chinese Restraint Mechanisms

  • Anti-Dumping

  • Bi-Lateralism


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Chinese Restraints

  • Safeguard mechanisms in use

  • Anti-dumping beginning to surface

  • Quota extension in negotiations


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Bi-lateralism

  • Free or almost free trade

  • Breakdown of the multi-lateral world

  • Challenges created


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Approved Trade Agreements (Apparel Terms)

  • NAFTA – Yarn and fiber forward.

  • AGOA – 3rd country fabric qualifies for most countries through 9/08.

  • CBPTA – Generally fabric and/or yarn must be formed in the US.

  • Andean Pact – Generally fabric and yarn forward.

  • Australia/Singapore/Chile – Yarn and fiber forward.


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QIZ

  • Egypt

  • Jordan


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Pending Agreements

  • CAFTA – Approved by Congress but not implemented.

  • Morocco – Approved by Congress but not implemented.

  • Bahrain – Negotiated but not yet approved.


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Negotiations in Progress

  • Panama

  • Thailand

  • Southern Africa Customs Union

  • United Arab Emirates

  • Oman


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Challenges to be faced

  • Uncertainty continues in China

  • Infrastructure improves elsewhere

  • Bi-lateral agreements create unknown opportunities


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The World After Quotas

Washington, D.C.

Li & Fung Limited

October 13th, 2005


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