Here's a tale of two companies and their top executives who explain declining profits and underperformance by refusing to face up to the fact that outdated strategies could be to blame. And by doing so they highlight how hard it will be revitalise their businesses. Although Li & Fung and Dickson Concepts (International) operate in different industries, the remarks made by their chairmen at their recent annual general meetings were disappointing. Li & Fung chairman William Fung Kwok-lun and his brother, honorary chairman Victor Fung Kwok-king, were once touted as Asia's smartest managers by business magazines. But William Fung's remarks at the company's annual meeting suggest the management has run out of ideas to turn around performance. Li & Fung might possibly be on course to become Hong Kong's version of BlackBerry. Its trading business may not face obsolescence, but it will suffer from investor apathy and stagnant margins as internet-based platforms transform trade and whittle away the value of a traditional middleman. During the meeting, William Fung defended the management by saying: "Everyone is watching how Li & Fung will reinvent itself because they think we operate a conventional business. Investors these days chase internet and technology stocks. Many of these companies do not even make money." As internet penetration spreads, many investors wonder why anyone - trader or buyer - needs to use a sourcing agent Just because internet companies aren't profitable doesn't mean they cannot disintermediate Li & Fung. And they are doing so. As internet penetration spreads, many investors wonder why anyone - trader or buyer - needs to use a sourcing agent. Indeed, Wal-Mart Stores, one of Li & Fung's biggest clients, announced last month that it was bringing in-house some of its product sourcing. Li & Fung's epilogue is that it could end up owning even lower margin and unattractive businesses, managing low-cost operations in countries with poor enforcement records on human rights and labour compliance issues and competing in the high-end logistics business against powerful Chinese internet companies. Dickson Concepts has its issues, too. In the late 1990s and early 2000s, celebrity magazines like Vanity Fair and Harper's Bazaar described group chairman Dickson Poon as a visionary and the next global luxury retailing giant. His acquisition of Harvey Nichols and attempted bid for Barneys placed him in the international spotlight. But the failure of Dickson Cyber Concepts demonstrated how Poon completely misunderstood the future of internet retailing and Dickson Concepts is instead reduced to blaming poor results on Hong Kong's disdain for mainland shoppers. Poon said: "Unfortunately, Hong Kong's competitiveness today has declined a lot, whether for local consumers or cross-border shoppers." Perhaps Poon should consider his own company's competitiveness. Department stores have been under assault by the likes of Amazon and Alibaba's Taobao for almost 20 years now. Luxury and boutique retailing is being transformed by innovative companies like Net-a-Porter, Farfetch and Shangpin. Mobile transaction platforms and social media have dramatically changed the nature of mass and luxury retail marketing since Dickson Concepts launched itself as a global department store giant. The millennial generation socialises and makes lifestyle decisions on mobile devices. They do not necessarily aspire to owning the luxury products offered by Harvey Nichols. The business models of Li & Fung and Dickson Concepts share a common weakness with other Hong Kong strategies: obtain some sort of concession, licence or middleman position and squeeze out small profits. In many cases in Hong Kong-originated business strategies, innovation is all too often a very secondary consideration, where it exists at all. Intel Corp founder Gordon Moore created controversy 20 years ago when he said that in the future all firms would have to be internet companies, otherwise they would disappear. He didn't mean it literally; rather he implied that all businesses would be profoundly affected or even destroyed by the internet. He was right. While Dickson Concepts and Li & Fung are not technology companies, their leaders' remarks show they are struggling to understand the technological changes that confront their businesses. Peter Guy is a financial writer and former international banker