Exporter streamlines in Shanghai
By Thomas Russell -- Furniture Today, October 3, 2005
Shanghai, China — Export trading company Li & Fung Trading has consolidated its furniture division in Shanghai.
In early June, the division moved into a 200,000-square-foot building it shares with the apparel, home décor, and toy and home textile divisions.
About 100 of the location's 400 employees are in the furniture division, up from 25 when it was formed in 2003. Hong Kong-based Li & Fung has more than 6,500 employees in 38 countries.
The furniture division specializes in merchandising, design, product development, communications, and order placement and logistics services.
Those functions were once handled in offices in Hong Kong, Taipei, Taiwan, Bangkok, Thailand, and Jakarta, Indonesia. Those offices are now production support offices that work closely with the factories in areas such as quality control, manufacturing control, and social and environmental compliance issues.
Li & Fung also has production support offices in Qingdao, Ningbo and Chengdu, China, and Ho Chi Minh City, Vietnam.
Together, the production offices work with about 200 furniture source factories, 70% of which are in China, the rest in Indonesia, Vietnam and Thailand.
Li & Fung doesn't own the plants, but maintains relationships with them to help develop and supply product for Li & Fung clients, mostly retailers.
"In effect, we provide the day-to-day support to a direct import program that is difficult and expensive to build internally, and we do it on a variable cost basis," said Li & Fung President of Global Branding Rick Darling. He declined to identify any retail furniture clients.
In non-furniture areas, including apparel, Kohl's is one of its largest retail clients.
Li & Fung also has relationships with Canon and Royal Velvet in home textiles, Levi Signature and Levi Red Tab in apparel, and Disney in plush toys.
In furniture, the company is looking to develop its wholesaler business. In about five years, it expects that 30% of its clients will be wholesalers, up from 15% today, Darling said.
Julian Manting, who previously worked for Li & Fung in Amsterdam and Thailand, is managing the new Shanghai office, located where it can service existing business and also handle new trade as it grows in the northern and central parts of the country, Darling said.
"More companies are going deeper into China, including the central and western areas. That is why Shanghai will be more important.... It becomes a place where buyers can go to one sophisticated location and conduct business all over Asia," he said.
"We do believe that retailers and importers of (furniture) will continue to expand their offshore product and will more and more need to be as direct as possible," Darling added. "That said, it is as difficult to develop a strategic sourcing capability as it was to open efficient factories in the old days.
"So having a strong network on the ground is critical to the long-term success of that product shift. We feel we are properly positioned to provide that on-the-ground management."
To contact Li & Fung, e-mail Manting at JulianManting.LH@lifunghs.com.cn.
