Li & Fung upbeat about exports despite gloom
Li & Fung, whose customers include major retailers like Wal-Mart, said the slowdown in China's export growth had not yet affected its business, which was sourcing more high-value products from the mainland for export to Western markets.
About 60 per cent of the products handled by the trader are exported to the United States and 20 per cent to Europe, and the company remains upbeat about its prospects despite the global economic gloom.
'We're seeing the US economy continue to pick up and steady growth in orders,' said William Fung Kwok-lun, who succeeded his elder brother as Li & Fung chairman yesterday. Victor Fung Kwok-king, who retired as chairman after 23 years, will assume the title of honorary chairman and be a non-executive director.
William Fung said the group saw opportunities amid the current global uncertainties. 'Sluggish economies in the US and Europe offer us great opportunity for more mergers and acquisitions,' he said.
The firm raised US$500 million through a share sale in Hong Kong in March, providing funding for future acquisitions, Fung said. Li & Fung is seen as an export bellwether because of the breadth of its client base. It is being closely watched as the mainland's export growth softens.
Data show exports grew at 4.9 per cent in April from a year earlier - half as much as economists had expected. The data also showed import growth inched up by a meagre 0.3 per cent, signalling further downward pressure on economic growth.
Bruce Rockowitz, Li & Fung's president and chief executive, said the export slowdown was partly due to factories fleeing the mainland for cheaper production bases elsewhere in Asia. 'For apparel products, there is a continued outflow of factories from China,' said Rockowitz.
But in US dollar terms, Li & Fung exports from China remained high because they were dominated by beauty and other high-value products, he said.
Rockowitz said the company's three-year core operating profit target of US$1.5 billion in 2013 was still very much intact.