Li & Fung is considering the flotation of its retail and distribution operations, according to group managing director William Fung Kwok-lun. 'The companies managed by our retail and distribution arms could be listed as separate entities in the near future,' Mr Fung said. The group's business is divided into three main areas - sourcing of consumer goods, retail, and distribution services. Li & Fung (Trading), which is primarily engaged in the sourcing and export of garments, is a listed company. Mr Fung said the group was considering floating firms managed by Li & Fung (Retailing) - including Circle K, Toys 'R' Us and Fotomax - as separate entities. The same strategy could be applied to the group's distribution business. 'Back in the 1960s and 1970s, it was very common for a conglomerate to go public. But the recent trend is to list the operations separately,' he said. 'Fund managers tend to welcome this move because they prefer to invest in a company with focused operations, rather than having a package prepared for them.' Going public was one of the ways for a company to provide motivation for its staff, he said. Speaking at a luncheon given by the American Chamber of Commerce yesterday, Mr Fung said China's imminent entry to the World Trade Organisation would be one of the major changes in the textile industry in the near future. 'The biggest impact is that China and Taiwan will be partnering for the first time,' he said. 'And I think China is going to emerge as the leader among developing countries.' The emergence of virtual manufacturing - in which traders would assume a greater role in the supply chain - would also be pivotal in the development of the industry, Mr Fung said. 'The role of the trading company and manufacturer is merging so that there is a blur between the two,' he said. Earlier this year, Li & Fung acquired former competitor Colby Group Holdings for HK$2.2 billion. Mr Fung said the company had reserved HK$2 billion for further acquisitions. 'We are very interested in exploring the Japanese market. But we will not be doing textiles and garments: instead, we will focus on toys and shoes,' he said. Mr Fung said the Japanese market had been rather difficult to tap into because of language barriers, as well as different business strategies.