Li & Fung, one of the worlds biggest merchandise sourcing agents, said its strong global presence will enable it to absorb any shock from possible international trade conflicts. The supply-chain giant generates about two thirds of its revenue from the US and is among firms expected to be most at risk from a potential China-US trade war. “We have a global network of 15,000 suppliers in over 40 markets,” said Spencer Fung, the company’s chief executive officer, at a press conference announcing 2017’s full-year results on Thursday. “We are well positioned to weather any trade uncertainty.” His comments came as US President Donald Trump is reportedly poised to announce an estimated US$60 billion tariff package on Chinese products on Thursday. Everyday consumer goods such as clothing and footwear could be on the hit list, although tariffs would mainly target China’s high-technology sector. Restrictions on Chinese investments in the US could also be announced, according to US Trade Representative Robert Lighthizer. Like a ‘dog with a bone on trade,’ Trump won’t back down until US deficit narrows, Reince Priebus says As such, a number of Hong Kong and mainland Chinese firms such as Li & Fung, which source items like toys and clothes for major western clients including Walmart, are exposed to the risks of any trade war between the two counties. Hong Kong-listed footwear manufacturer Stella International, which generates about half of its revenue in the US, and Hong Kong-based AAC Technologies, that gets 62 per cent of its revenue from the US, are likely to be hurt by tariffs proposed by both countries. “The Trump administration’s tougher, protectionist stance on trade may disrupt the sourcing landscape,” said Fung. “Potential tariff hikes and new trade policies may accelerate the diversification of the production base away from China.” Li & Fung, founded in 1906, is about one year into a three-year plan to reorganise its traditional business as the global middleman for manufacturers to meet the digital age. It is seeking to remain competitive and relevant while the large retailers that make up its core customers increasingly sell directly to buyers online. The company reported a 6.5 per cent annual increase in net profit from continuing operations to US$170 million for 2017, while revenue dropped by 4.6 per cent to US 13.5 billion after excluding the impact of the divestment of the company’s Asia consumer and health-care distribution business. The drop in revenue was mainly because of customers’ destocking and price deflation during the period. Li & Fung said although retail consumption in general picked up towards the end of 2017, brands and shops continued to face disruption from online vendors. Customers responded to this trend by “rationalising” their physical-store portfolios, pushing to destock goods, exercising tighter inventory control and expanding their online business, said the company. It proposed a special conditional dividend of 47.6 HK cents per share, as well as a final dividend of 2 HK cents per share for a total of 49.6 HK cents in total per share.