Tom Haugen Presentation
28
The World After Quotas Washington, D.C. Li & Fung Limited October 13 th , 2005
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Transcript of Tom Haugen Presentation
The World After Quotas
Washington, D.C.
Li & Fung Limited
October 13th, 2005
Li & Fung BackgroundLi & Fung Background
Li & Fung TodayLi & 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
The Li & Fung GroupThe Li & Fung Group
Li & Fung (1937) Ltd.Li & Fung (1937) Ltd.
Li & Fung (Trading) Ltd.
Product Sourcing
Li & Fung (Trading) Ltd.
Product Sourcing
Li & Fung (Retailing) Ltd.
Retailing
Li & Fung (Retailing) Ltd.
Retailing
Li & Fung (Distribution) Ltd.
Marketing & Logistics
Li & Fung (Distribution) Ltd.
Marketing & Logistics
Publicly Listed
MSCI Hong Kong IndexHang Seng Index
Publicly Listed
MSCI Hong Kong IndexHang Seng Index
Privately HeldPrivately Held Publicly HeldPublicly Held
The Li & Fung GroupThe Li & Fung Group
IDS GroupIDS Group
• Marketing and logistics Marketing and logistics
• 9 markets in Asia and Greater China9 markets in Asia and Greater China
• 40 distribution centers, 3m sqf40 distribution centers, 3m sqf
• 300 MNC principals300 MNC principals
• 6,000 staff6,000 staff
• Turnover US $ 1 billionTurnover US $ 1 billion
IDS GroupIDS Group
• Marketing and logistics Marketing and logistics
• 9 markets in Asia and Greater China9 markets in Asia and Greater China
• 40 distribution centers, 3m sqf40 distribution centers, 3m sqf
• 300 MNC principals300 MNC principals
• 6,000 staff6,000 staff
• Turnover US $ 1 billionTurnover US $ 1 billion
The Li & Fung GroupThe Li & Fung Group
Li & Fung Retailing GroupLi & Fung Retailing Group
• Circle K operated by Convenience Retail AsiaCircle K operated by Convenience Retail Asia
• Toys R Us AsiaToys R Us Asia
• Branded Lifestyle - Ferragamo, Country Branded Lifestyle - Ferragamo, Country
Road, Frette, MangoRoad, Frette, Mango
• 2,000 staff2,000 staff
• Turnover US $ 300 millionTurnover US $ 300 million
The Li & Fung GroupThe Li & Fung Group
Li & Fung Trading GroupLi & Fung Trading Group
•Sourcing Sourcing
•66 Offices in 38 countries and territories66 Offices in 38 countries and territories
•7,200 staff7,200 staff
•Turnover US $ 6 billionTurnover US $ 6 billion
Li & Fung Trading GroupLi & Fung Trading Group
•Sourcing Sourcing
•66 Offices in 38 countries and territories66 Offices in 38 countries and territories
•7,200 staff7,200 staff
•Turnover US $ 6 billionTurnover US $ 6 billion
Coordinated Global NetworkCoordinated Global Network 66 Offices in 38 Countries and Territories66 Offices in 38 Countries and Territories
AmericasAmericas (9 locations)(9 locations)
New York City New York City BostonBostonSan FranciscoSan FranciscoDominican RepublicDominican RepublicGuatemalaGuatemalaHondurasHondurasGuadalajaraGuadalajaraMexico CityMexico CityNicaraguaNicaragua
Europe/Mediterranean
(13 locations)
London Huddersfield AmsterdamRomaniaFlorenceTurinTunisIstanbulDenizliIzmirOportoJordanCairo
Africa
(3 locations) DurbanMauritiusMadagascar
South Asia
(11 locations) BangaloreChennaiMumbaiNew DelhiKarachiLahoreDhaka ColomboSharjahBahrain
Southeast Asia
(9 locations)
SingaporeBangkokShah Alam ManilaHanoiHo Chi Minh CityJakartaPhnom PenhSaipan
East AsiaHONG KONG - Head office(21 locations)
Shanghai Dalian Nanjing Beijing Seoul QingdaoTaipei TokyoHepu NingboMacau Liuyang Huizhou Dongguan Longhua Guangzhou Shenzhen Zhongshan Shantou Zhanjiang
The Evolution of Supply Chain The Evolution of Supply Chain ManagementManagement
The Supply ChainThe Supply ChainThe Supply ChainThe Supply ChainManufacturing ControlManufacturing Control
Shipping ControlShipping Control
Factory SourcingFactory Sourcing
Raw Material SourcingRaw Material Sourcing
Product DevelopmentProduct DevelopmentConsumer NeedsConsumer Needs
ConsumerConsumer Wholesaler/ Retailer
Product DesignProduct Design
LocalLocalForwarding ConsolidationForwarding Consolidation
Forwarder ConsolidationForwarder Consolidation
Customs ClearanceCustoms Clearance
Sourcing Apparel in a Quota Free WorldSourcing Apparel in a Quota Free World…someday!…someday!
The Reality of 2005The Reality of 2005
The China Impact
U.S. ImportsU.S. Imports January – JulyJanuary – July(Million M2)(Million M2)
Square Meter Basis
2004 2005 Change
World 11,018 12,443 13%
* Data taken from The office of Textiles and Apparel
R.O.W. 9,481 9,029 (5%)
China 1,537 3,414 122%
U.S. ImportsU.S. Imports January – JulyJanuary – July(Average Unit Price) (Average Unit Price)
Price Deflation2004 2005
Change
World $3.22 $3.12 (3%)
* Data taken from The office of Textiles and Apparel
China $3.04 $2.66 (13%)
R.O.W. $2.94 $3.29 12%
The Reality of 2005The Reality of 2005
The China Impact The Winners and Losers
The WinnersThe Winners
U.S. Import WinnersU.S. Import WinnersJanuary – July January – July (Million M2)(Million M2)
2004 2005Chang
e
World 11,018 12,443 13%
India 369 476 29%
Jordan 115 142 24%
Bangladesh 512 613 20%
Sri Lanka 225 266 18%
Indonesia 412 464 13%
* Data taken from The office of Textiles and Apparel
……The LosersThe Losers
U.S. Import LosersU.S. Import LosersJanuary – July January – July (Million M2)(Million M2)
2004 2005 Change
Maldives 23 2 -90%
Russia 84 18 -79%
Fiji 12 4 -71%
Oman 34 12 -65%
Macau 237 130 -46%
Korea 311 179 -43%
Hong Kong 392 246 -37%
Taiwan 304 202 -34%
Mauritius 22 17 -23%
Turkey 176 146 -17%
Lesotho 64 57 -12%
Mexico 1123 1026 -9%
* Data taken from The office of Textiles and Apparel
The Reality of 2005The Reality of 2005
The China Impact The Winners and Losers The New “Quotas”
The New “Quotas”The New “Quotas”
Chinese Restraint Mechanisms Anti-Dumping Bi-Lateralism
Chinese RestraintsChinese Restraints
Safeguard mechanisms in use Anti-dumping beginning to surface Quota extension in negotiations
Bi-lateralismBi-lateralism
Free or almost free trade Breakdown of the multi-lateral world Challenges created
Approved Trade AgreementsApproved Trade Agreements (Apparel Terms) (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.
QIZQIZ
Egypt
Jordan
Pending Agreements Pending Agreements
CAFTA – Approved by Congress but not implemented.
Morocco – Approved by Congress but not implemented.
Bahrain – Negotiated but not yet approved.
Negotiations in ProgressNegotiations in Progress
Panama Thailand Southern Africa Customs Union United Arab Emirates Oman
Challenges to be facedChallenges to be faced
Uncertainty continues in China Infrastructure improves elsewhere Bi-lateral agreements create unknown opportunities
The World After Quotas
Washington, D.C.
Li & Fung Limited
October 13th, 2005
