Victor Fung, the Chairman of Li & Fung Group, is a skilled strategist who transformed an ordinary trading company into one of the world’s largest sourcing companies through effective supply chain management. After receiving a Bachelor’s and Master’s degree in electrical engineering at Massachusetts Institute of Technology, Mr. Fung obtained his Ph.D. in business economics and worked as a professor at the Harvard Business School for four years. In 1976, he returned to his home, Hong Kong, to help run the family business.
Founded by Dr. Fung’s grandfather in Guangzhou in 1906, Li & Fung was a trading company that exported consumer goods from China and Hong Kong to Western markets. Armed with in-depth knowledge in economics and business, Mr. Fung began to transform the company’s business model.
He recognized the importance of global supply chains in the consumer product industry. For fashion apparel, for instance, production may account for 25% of the consumer price, with the rest attributed to logistics, distribution, marketing, restocking fees, and other costs. In other words, turning that 75% from cost to profit required effective distribution and inventory management, and also the ability to deliver products quickly so as to meet market demand in a rapidly changing world. Since Dr. Fung became Chairman of the Group, he has helped to cut the time required to fulfill an order from several months, down to 15 days.
To a large extent, this was made possible by using state-of-the-art IT tools to create an information and logistics management system. The system allows production to be broken down into multiple steps. Orders on each step are sent to different factories, manufactured at the same time, and sent to the point of assembly, to produce items which appear to have been made in one place. Li & Fung currently works with more than 15,000 factories in over 40 countries, and sells to leading retailers and international brands all over the world, including Wal-Mart. In doing so, the business has connected many small and medium sized enterprises to the global supply chain and international consumer markets.
Reporting annual sales of over 13 billion dollars in 2009, the company manages massive amounts of manufactured goods. In addition, the company utilizes its strength in fast delivery and asset-light business model to minimize working capital. Under his leadership, Li & Fung now has a market capitalization of over 17 billion dollars.
Aside from his business interests, Dr. Fung is keenly interested in global affairs, particularly global trade and the multilateral trading system. He was Chairman of the Hong Kong Trade Development Council, among his many public service roles. He has recently completed a term as Chairman of the Paris-based International Chamber of Commerce, and he remains Honorary Chairman of the ICC, as well as Chairman of the ICC Research Foundation. Learn more about his innovative business approach at the Seoul G20 Business Summit.
