China Gets Closer to Supply Chain of the Future

What happened: China is inching further forward in the battle to create the supply chain of the future. The latest advancement comes with the announcement that e-commerce giant has made a strategic investment of $100 million in one of Asia’s oldest supply chain management companies, Li & Fung. This news follows the delisting of Li & Fung from the Hong Kong stock exchange in May. The latest speculation is based on fresh shares issued at $0.16 each and the Fung’s will continue to hold 60 percent of the voting shares, thus retaining control of the company they founded in 1906.

The Jing Take: As one of the earliest companies financed solely by Chinese capital to export Chinese manufacturing to the west, Li & Fung made its fortune as the middleman between the two. However, even before the outbreak of COVID-19, the company was showing signs of difficulty as it adapted to China’s rise in e-commerce platforms and speed of digitization. The coronavirus has reinforced even more clearly how inflated the global retail supply chain has become. Simply put, now it must streamline, becoming more demand-driven, customer-centric, and automated. Despite rising US tensions and the pandemic’s impact on an already disrupted retail sector, the execution of this latest coterie by Li & Fung is a perfect example of why China is winning right now: traditional companies are unafraid to seamlessly integrate digital into their core infrastructure.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.