The era of cheap Chinese goods is over

Li & amp; Fung, a Hong Kong based consumer goods purchasing and logistics company; Fung warned that “a new era of rising procurement prices” has arrived, with manufacturers shifting the rising costs of raw materials and Chinese labor to customers< The supply chain company reported on Thursday that its 2010 profit rose 27% to HK $4.28 billion (US $550 million). Li & Fung supplies to Wal Mart and gap in the US and Debenhams in the UK Bruce rockowitz, President of Li & Fung’s trading company, said: “in this industry, the biggest topic in everyone’s mind is: price rise is indeed a foregone conclusion. At the moment, retailers are not sure which can be passed on to consumers and which cannot. “ William Fung, managing director of Li & Fung Group, said that intensified competition for China’s labor force has led to an increase of about 20% in wages this year, which indicates the end of China led deflation for the world economy the company says that traditionally, higher prices have been good for its trading business” Over the past 20 years, we have had to increase our shipments (to maintain revenue growth) as prices continue to fall, “Yue said. The company’s core operating margin rose from 3.82% in 2009 to 4.56% in 2010 rising labor costs in China have prompted Li & Fung to move its production of labor-intensive goods such as clothing to countries with lower wage levels, such as Bangladesh, Vietnam and 1ndonesia Li & Fung said that at present, China’s share of Li & Fung’s clothing procurement business is only 25%. Le Yumin said that Bangladesh and Vietnam are rapidly increasing their share in the clothing business< However, due to a series of acquisitions last year, China's share of Li & Fung's total procurement increased from 54% in 2009 to 57% in 2010 by Rahul Jacobs

Back to list