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Washington, D.C.

The World After Quotas. Washington, D.C. Li & Fung Limited October 13 th , 2005. Li & Fung Background. Li & 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

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Washington, D.C.

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  1. The World After Quotas Washington, D.C. Li & Fung Limited October 13th, 2005

  2. Li & Fung Background

  3. Li & 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

  4. Li & Fung (1937) Ltd. Li & Fung (Retailing) Ltd. Retailing Li & Fung (Distribution) Ltd. Marketing & Logistics Li & Fung (Trading) Ltd. Product Sourcing Privately Held Publicly Held Publicly Listed MSCI Hong Kong Index Hang Seng Index The Li & Fung Group

  5. The Li & Fung Group • IDS Group • Marketing and logistics • 9 markets in Asia and Greater China • 40 distribution centers, 3m sqf • 300 MNC principals • 6,000 staff • Turnover US $ 1 billion

  6. The Li & Fung Group • Li & Fung Retailing Group • Circle K operated by Convenience Retail Asia • Toys R Us Asia • Branded Lifestyle - Ferragamo, Country • Road, Frette, Mango • 2,000 staff • Turnover US $ 300 million

  7. The Li & Fung Group • Li & Fung Trading Group • Sourcing • 66 Offices in 38 countries and territories • 7,200 staff • Turnover US $ 6 billion

  8. Europe/Mediterranean (13 locations) London Huddersfield Amsterdam Romania Florence Turin Tunis Istanbul Denizli Izmir Oporto Jordan Cairo Americas (9 locations) New York City Boston San Francisco Dominican Republic Guatemala Honduras Guadalajara Mexico City Nicaragua South Asia (11 locations) Bangalore Chennai Mumbai New Delhi Karachi Lahore Dhaka Colombo Sharjah Bahrain East Asia HONG KONG - Head office (21 locations) Shanghai Dalian Nanjing Beijing Seoul Qingdao Taipei Tokyo Hepu Ningbo Macau Liuyang Huizhou Dongguan Longhua Guangzhou Shenzhen Zhongshan Shantou Zhanjiang Southeast Asia (9 locations) Singapore Bangkok Shah Alam Manila Hanoi Ho Chi Minh City Jakarta Phnom Penh Saipan Africa (3 locations) Durban Mauritius Madagascar Coordinated Global Network66 Offices in 38 Countries and Territories

  9. Product Development Consumer Needs Raw Material Sourcing Product Design Factory Sourcing Manufacturing Control Shipping Control Forwarder Consolidation Local Forwarding Consolidation Consumer Wholesaler/ Retailer Customs Clearance The Evolution of Supply Chain Management The Supply Chain

  10. Sourcing Apparel in a Quota Free World…someday!

  11. The Reality of 2005 • The China Impact

  12. U.S. ImportsJanuary – July(Million M2) Square Meter Basis 2004 2005 Change World 11,018 12,443 13% China 1,537 3,414 122% R.O.W. 9,481 9,029 (5%) * Data taken from The office of Textiles and Apparel

  13. U.S. ImportsJanuary – July(Average Unit Price) Price Deflation 2004 2005 Change World $3.22 $3.12 (3%) China $3.04 $2.66 (13%) R.O.W. $2.94 $3.29 12% * Data taken from The office of Textiles and Apparel

  14. The Reality of 2005 • The China Impact • The Winners and Losers

  15. The Winners

  16. U.S. Import Winners January – July (Million M2) * Data taken from The office of Textiles and Apparel

  17. …The Losers

  18. U.S. Import LosersJanuary – July (Million M2) * Data taken from The office of Textiles and Apparel

  19. The Reality of 2005 • The China Impact • The Winners and Losers • The New “Quotas”

  20. The New “Quotas” • Chinese Restraint Mechanisms • Anti-Dumping • Bi-Lateralism

  21. Chinese Restraints • Safeguard mechanisms in use • Anti-dumping beginning to surface • Quota extension in negotiations

  22. Bi-lateralism • Free or almost free trade • Breakdown of the multi-lateral world • Challenges created

  23. Approved Trade Agreements (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.

  24. QIZ • Egypt • Jordan

  25. Pending Agreements • CAFTA – Approved by Congress but not implemented. • Morocco – Approved by Congress but not implemented. • Bahrain – Negotiated but not yet approved.

  26. Negotiations in Progress • Panama • Thailand • Southern Africa Customs Union • United Arab Emirates • Oman

  27. Challenges to be faced • Uncertainty continues in China • Infrastructure improves elsewhere • Bi-lateral agreements create unknown opportunities

  28. The World After Quotas Washington, D.C. Li & Fung Limited October 13th, 2005

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