A Critical Corporate Profile of Li & Fung

Abstract

Behind the prominent Brand names and Retail stores of global supply chains are intermediaries who provide services to large volume buyers. A key feature of the global apparel industry is complex supply chains with many contractors and subcontractors and intense competition among factories – induced by the buyers – to reduce cost and increase speed. Over the past two decades, scholars have noted the dramatic increase of market power of international retail corporations gained at the expense of the fragmentation of centers of production. Enter Li & Fung, a Hong Kong based firm which is the largest sourcing agent in the global apparel business. Li & Fung’s central role in shaping the supply chain of apparel potentially affects the lives of millions of workers in their direct supply chains and the labor markets in which they are such a commanding force. Their strategy of sourcing emphasizes the cutthroat competition among factories that is the source of apparel workers’ conditions. Our analysis also indicates that already an “unseen giant” Li & Fung appears to have decided to move towards higher value-added processes in the supply chain. Understanding the complex implications of Li & Fung’s business strategy for workers’ rights is crucial for securing decent conditions for workers in the apparel industry over the coming years.

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