HK’s Richest 2019: Fung Family Sees Notable Drop Off

15-Feb-2019 Intellasia | Forbes | 6:00 AM Print This Post

Li & Fung CEO Spencer Fung has been steering his 113-year-old company through one of the roughest patches in its history. The company’s stock had fallen to a near 20-year low of HK$1.30 on February 1, down 63 percent over 12 months. His father Victor and uncle William, who made the list last year with a combined $3.3 billion fortune, have now fallen off because neither reached the $1.27 billion cut-off.

After four years of declining earnings, Li & Fung posted a loss of $309 million in 2017. It bounced back last year with first-half net profit of $50 million, but this figure was still down 19 percent compared to the same period in 2017.

Online merchants such as Amazon have been strangling Li & Fung’s biggest customers, among them Wal-Mart and Macy’s. The escalating US-China trade war also poses a new threat. To counter these, Fung is now spearheading an effort to develop advanced technologies such as 3D-aided designs and digitalising supply chain operations to help both traditional brick-and-mortar retail customers and online merchants track inventory in real time and quickly adjust to shifting consumer trends.

The key to surviving the trade war, Fung says, is diversification. Li & Fung’s strategy has long been to offer back-up manufacturing facilities that customers can turn to if the situation sours at a main production base. In Asia, Li & Fung has suppliers not only in China, but also in Bangladesh, India, Indonesia and Vietnamall countries where in August it said it would “continue to expand.”

Fung remains optimistic that the venerable Li & Fung can bounce back, and with it the possibility that his family will return to the ranks of Hong Kong’s 50 richest. Li & Fung is familiar with geopolitical disturbances, Fung says. Whether it’s in China, Southeast Asia, India or Africa, the company has long operated in volatile economies and has seen many market cycles over its long history. Fung is the ninth CEO of the company his great-grandfather Fung Pak-liu founded in 1906 with partner Li To-ming (the original Li & Fung). “What is happening now is something that we’ve experienced for the last 40 years,” Fung said in a July interview with Forbes Asia.


Category: Hong Kong

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