Li & Fung delivers with rise of 26pc
Leading consumer products trading firm Li & Fung has posted a 26.24 per cent increase in attributable profit to HK$574.63 million for the year to December 31, in line with market expectations.
The continued strength of consumer demand in the United States aided a 13.83 per cent increase in turnover to HK$16.29 billion.
'There are no indications of a slowdown in the US economy,' managing director William Fung Kwok-lun said.
Orders placed this month for the winter had been strong.
The firm would deepen its exposure to the European market, Mr Fung said, after demand was hindered last year by a weak euro.
Li & Fung would also seek to 'break open' the Japanese market this year.
Based on last year's results, Mr Fung said the company was on track to meet a three-year plan which ends next year of increasing turnover by 50 per cent and doubling attributable profits.
Li & Fung, which has traditionally only dealt with large customers, is now planning to extend its reach to smaller buyers with revenues of less than US$100 million through developing its Internet capabilities.
'In the past, we couldn't serve these smaller customers,' Mr Fung said.
'The Internet now gives us the ability to serve them in a very cost-effective way.' Through its on-line sales network, the small companies could band together to place orders, and obtain the same prices commanded by bigger clients.
Mr Fung predicted that by 2004, the business from these small and medium companies could be as big as US$2 billion, nearly as much as the total turnover last year.
If the on-line business were to reach that size, Mr Fung said the company would commit a further US$200 million to develop on-line operations adding to the tens of millions of US dollars it has already spent.
He said that Li & Fung was prepared for some of its traditional off-line customers to migrate to the on-line operation in addition to it generating new business.
'We're willing to be cannibalised,' Mr Fung said.
'The way things are going, if you don't cannibalise you're going to meet stumbling blocks.'