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Tommy Lui!
The Perspective of Li & Fung
Tommy Lui!
Li & Fung’s Global Network In 2013, we source more than 3 billions of items for 2000+ customers around the world
Tommy Lui!
GLOBAL SOURCING
A DYNAMIC, COMPLICATED, STRATEGIC DECISION
RAW MATERIAL PRICES!
WAGES!
CURRENCY!
TRADE RELATIONS!
SOURCING COUNTRIES!
SPEED TO MARKET!
CHANGING FACE OF RETAIL!SHIFTING DEMOGRAPHICS of consumers!
DEMOGRAPHICS of production countries !
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CONSUMER MARKETS!
Tommy Lui!MINIMUM WAGE TRENDS 2010 - 2013!
% increase relative to 2010 VIETNAM +103%!BANGLADESH +103%!CAMBODIA +64%!THAILAND +62%!INDONESIA +46%!INDIA +42%!
CHINA +33%!
PAKISTAN +32%!C.AMERICA +33%!
PHILIPPINES +10%!
TURKEY +34%!
MINIMUM WAGE MOVEMENT IN LOCAL CURRENCY
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Tommy Lui!CURRENCY TRENDS 2010 - 2013!
% increase relative to 2010
C.AMERICA -9%!INDONESIA -9%!VIETNAM -9%!BANGLADESH -12%!PAKISTAN -16%!TURKEY -22%!INDIA -23%!
THAILAND +5%!PHILIPPINES +7%!CHINA +8%!APPRECIATION!
DEVALUATION!
PLUS: CURRENCY FACTOR
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Tommy Lui!
US$/Month TURKEY $541 +10%!THAILAND $239 +54%!CHINA $202 +44%!C.AMERICA $172 +16%!PHILIPPINES $162 +11%!INDONESIA $124 +35%!CAMBODIA $100 +64%!VIETNAM $93 +86%!PAKISTAN $88 +8%!INDIA $80 +5%!BANGLADESH $68 +61%!
EQUALS: WAGE MOVEMENT IN ABSOLUTE USD TERMS
MINIMUM WAGE TRENDS 2010 - 2013! 6
Tommy Lui!
Bangladesh
Egypt
Pakistan
Turkey
POLITICAL / SOCIAL INSTABILITY 7
Tommy Lui!
2013 vs TODAY
• China • Vietnam • Indonesia • India • Thailand • Cambodia • Sri Lanka • Philippines
SOURCING COUNTRIES 8
Tommy Lui!
Source: U.S Department of Commerce and the U.S International Trade Commission!
SOURCING MARKET: DEVELOPMENTS
TOP SOURCING COUNTRIES For the USA !
Top 10 Apparel Exporters to the US, !2012 (mn US$) !
➡ Top 5 Countries account for 65% of all imports in 2013, up by 0.5% (2012) !
(2011: 40%, 2012: 39.3%, 2013: 38.8% )!
➡ China: Top sourcing country with 38.8% of import value into the U.S !
➡ Top 5 countries are consistent with 2011 & 2012!
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8,085
5,084
4,795
3,842
3,375
2,522
2,534
1,583
1,725
32,385
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
China
Vietnam
Indonesia
Bangladesh
Mexico
India
Honduras
Cambodia
El Salvador
Sri Lanka 2013 2012
Tommy Lui!
GLOBAL SOURCING
Key Indicators FOR THE NEXT 3 YEARS
Source: CPI - International Monetary Fund, World Economic Outlook Database, April 2014 Primary Commodity Prices - IMF
Currency Data - http://www.forecasts.org ; http://www.economist.com/blogs/graphicdetail/2014/08/chinese-and-american-gdp-forecasts
CPI r% (Emerging market and developing economies)
CPI r% (Advanced Economies)
‘A’ Cotton Index (cts/ lb)
Spot Crude (US$/bbl)
RMB/ USD (predictions)
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Tommy Lui!
International Monetary Fund (IMF) Forecast US EU
China India
Source: http://knoema.com/qhswwkc/us-gdp-growth-forecast-2014-2015-and-up-to-2060-data-and-charts
11 CONSUMER MARKETS
Tommy Lui!
Global Trade!
• 2013 Trade growth by less than 2.5% !• Due to sluggish economy in the West!• New trade restrictions!
• 2014 Global trade forecast!• To increase 3.1%!
• 2015 Global trade forecast!• To increase 4.0%!
!
CONSUMER MARKETS
Tommy Lui!
SIZE OF APPAREL MARKET GROWTH OF APPAREL MARKET US$ billion
Source from: Datamonitor, publication date in Dec, 2010!
• Traditional Markets Growth 0-2% (EU, UK, USA) • BRIC Countries Growth 4-10% (Brazil, Russia, India, China) • 50% of world apparel growth is driven by China
13 CONSUMER MARKETS
Tommy Lui!
50.4% !COMBINED!
DEMOGRAPHICS CHANGES
The Graying of Economics The New Juniors
Tommy Lui!
Source: XTS - Agency Business only!IMF - World Economic Outlook Database, April 2014 !
2013 2014 2015 2016
OPERATING ENVIRONMENT!
Then &
Now
Image courtesy of The Robin Report (http://therobinreport.com)
1. “Retail-tainment” !2. We really know you…Predictive Analytics!3. Mobile Everything!4. Omni-Channel rationalization of distribution
channels and buying behavior!5. Speed-to-Market and the impact on supply chains!6. Bricks , TECH & Clicks!7. Start-ups: Small but disruptive in the Aggregate!!ie. Nasty girl etc.!
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CHANGING FACE OF RETAIL
RETAIL MARKETS
Tommy Lui!
Fast fashion vs Traditional Brands / Retailers
RETAIL MARKETS
Tommy Lui!
New Global Sourcing Reality
“Next generation of "Sourcing“ based on !
global market dynamics and complexities!
Networks of global resources!
Proactively design and customize procurement
platforms and supply chain solutions!
!.!