LI & Fung has joined the ranks of Hong Kong's leading trading houses after wrapping up its purchase of Inchcape Buying Services Group. It has also paid $450 million for the right to use the Dodwell name for its trading business. The group has been moving to increase its reach and depth as a trading house, and has taken on Mitsubishi Corp as a shareholder in its distribution arm, LF Distribution Centers. Li & Fung said two weeks ago that it planned to invest US$100 million to strengthen its distribution capacity in southern China. Inchcape Buying Services has been renamed Dodwell on completing the sale and purchase agreement on June 30. The combined businesses has more than 2,000 staff, aggregate turnover of US$1.5 billion in 1994, and a network of 27 sourcing offices. Li & Fung was originally due to pay HK$475 million for Inchcape Buying Services, but the price was lowered by HK$25 million after Li & Fung decided not to buy IBS small businesses. Of the HK$450 million purchase price, HK$275 million was to be paid on condition that the shareholders' funds of IBS be not less than HK$60 million. It is subject to restructuring of some Inchcape businesses. The remaining HK$175 million is payable in two instalments after the 1995 and 1996 Inchcape results and is subject to adjustment depending on how Inchcape meets agreed gross income targets. Li & Fung group managing director William Fung will be the managing director of Dodwell. Mr Fung said in late June that the combined businesses would enjoy greater economies of scale, which would boost profits in years to come. The purchase of its closest rival creates a group with an anticipated annual turnover of about HK$12 billion. Hong Kong-based Inchcape Buying Services operates in 17 countries and employs 1,000 people. Turnover in 1994 came to HK$5.12 billion. Li & Fung employs 1,200 people in the region and had a turnover of HK$6.12 billion in the year to December. Li & Fung has been upgrading and expanding its operations, and earlier this month confirmed it was spending US$100 million to build a consumer products distribution centre to provide businesses with a 'cash-and-carry' marketplace in southern China. It said yesterday that Mitsubishi Corp had become a 20 per cent shareholder of its distribution project, LF Distribution Centers. Li & Fung owns 20 per cent, LG Group holds 20 per cent, Manhattan Garments International and Meyer Group have 10 per cent each, and discussions on placing the remaining 20 per cent are continuing. Li & Fung said LF Distribution Centers was a US$50 million investment holding company formed in January and investing in 'cash-and-carry' distribution projects in major cities in China. Mr Fung said Mitsubishi's participation was a recognition of the potential of professionally planned and managed cash-and-carry distribution projects in China.