Li & Fung, a Hong Kong-listed sourcing company whose clients include Walmart and Kohl’s, has engaged management guru Ram Charan, will invest $150 million in technology in the next three years and is working with new partners,
the
Financial Times
reported.
The company’s market capitalization has fallen more than 80% since 2011, and it failed to meet targets in a turnaround plan, the
FT
article said.
Morningstar analyst Chelsey Tam told the
FT
that Li & Fung must “innovate or die.”
The company was founded in Guangzhou, China, in 1906 as a trading house selling handicrafts, porcelain and fireworks to the West. In the 1980s, it evolved into a middleman connecting Western retailers with Asian factories.
Fourth-generation CEO Spencer Fung told the
FT
that the company faced a “perfect storm” after its U.S. clients were hit hard by the global financial crisis and many retailers began working directly with Chinese manufacturers. Li & Fung “has struggled to digest dozens of acquisitions, which analysts say papered over fundamental problems,” the article said.
An anonymous source told the
FT
, “Like many family-run businesses in Asia, they did well and got big. But the older generation hung on for too long, making it hard for the next generation to come in and turn it round.”
Spencer Fung became CEO in 2014 when the company spun off its branded-goods division into a separate listed company, the article said. Fung “has promised to use technology to make the group faster, more efficient and more responsive to rapidly changing consumer trends,” the article said. (Source:
Financial Times
, April 12, 2017.)
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