HONG KONG, February 5, 2009 - Having run the global export and sourcing company Li & Fung for more than a century, the Fung family has “witnessed firsthand the globalization process” said the company’s Group Managing Director William Fung, who with brother Victor, is a third-generation proprietor of the successful family-run business.
As part of the Asia Society Hong Kong Center’s Asian Families Series, Fung reflected on his family’s experiences in developing Li & Fung from a small, regional business to an international corporation, and stressed the need for reinvention to achieve enduring success.
Founded in 1906 during the reign of China’s last emperor, Li & Fung was the only Chinese-owned export company in a time when foreign companies controlled Chinese trade. Li & Fung began with headquarters in Guangzhou, while shipping operated out of Hong Kong. The company has since grown to 72 offices in 41 countries and incorporates materials and labor from multiple countries in its products, making it the world’s largest sourcing firm.
Fung emphasized that a company such as Li & Fung must constantly reinvent itself in order to survive for so many years. He explained that the key to Li & Fung’s enduring success is a “three-year plan” which Fung adapted from the Five-Year Plans implemented by the Chinese Communist Party. The company can “avoid feeling like it’s on a treadmill” he explained, because the team focuses on only three years at a time and therefore constantly reassesses its goals and strategies.
With the financial crisis quickly changing the global business environment, Fung expressed the possibility of a Western backlash against global outsourcing. Speaking about the dangers of protectionism, he argued that the Great Depression in the U.S. was caused “not by the recession but by subsequent protectionism ... If anything, people should be looking for more outsourcing under this environment.” He predicted that as a result of the global recession, outsourcing will actually accelerate as companies and consumers seek cheaper and more efficient goods and services.
A company as old and established as Li & Fung has long learned to foresee change and adapt to it; Fung attributed the company’s current foresight and vision to his brother Victor. But it was William who, straight out of graduate school in the 1970s, advised his father to take the company public, bringing about monumental change to the company.
Despite the inevitable need for companies to change with the times, however, Fung described the unique characteristics of a family business. He recalled that his father told him to never change the company’s name. Fung added that as a result, he continued to “think about the source” while developing Li & Fung, and realized that the company was still influenced by his family’s traditional Chinese thinking. “In a company where the family has a big stake, the management and ownership are naturally aligned,” Fung said.
Reported by Julianne Chou, Asia Society Hong Kong