Li & Fung to double sourcing from India

Li & Fung to double sourcing from India

New Delhi: Global trading firm Li & Fung Ltd plans to double sourcing from India to $1.2 billion (Rs4,728 crore) in the next three years as the company looks at competitively priced goods for its clients worldwide.

“India is very very important for us …going forward India is the No. 1 incremental growth market for us," said William K. Fung, group managing director for Hong Kong-based Li & Fung.

The company currently sources textile and home products, toys, shoes and kitchen items among other products from India. This accounts for $600 million or 6% of its global procurement .

The firm, listed on the Hong Kong Exchange, plans to increase procurement from India to 10% by 2010.

The company recently started sourcing health and beauty products, including lotions and perfumes, from India and it plans to add food products to the list “at some point" in the future.

Fung declined to discuss specifics of its investments in India but said the company plans to scale the number of employees up to 1,000 in the next three years from 600 people at present.

Li & Fung also intends to acquire trading and sourcing companies in India as part of its growth strategy. Currently the company sources almost 40% of its global procurement from China, but the $10 billion revenue company sees sourcing from China tapering off with the country’s labour market becoming less competitive in coming years.

“China in the next three to six years will be less competitive .. as it will go through a period of very severe dislocation," Fung said. “I think there is an opportunity for India."

However, Fung sees India’s weak infrastructure, which includes poor roads, delays at ports and lack of sophisticated logistics, as the biggest challenge.

“If you ask me, one question mark I have in my mind about whether India can compete with China after the sort of three- to six-year opportunity period… will depend on how India will shore up the infrastructure," he said.