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Li & Fung warns of price rise era
31 Mar '11
2 min read
Hong Kong-based consumer goods sourcing and logistics company Li & Fung has predicted beginning of a new era of rising purchase prices.
The company said that the cost of raw materials as well as labor have increased significantly in China. In this situation, manufacturing enterprises have been left with no other option, but to pass on price rise to customers.
Li & Fung is one of the biggest suppliers to Wal-Mart and GAP in the United States. It is on the supplier list of the Debenhams and other companies in the United Kingdom too. The company registered profit rise of 27 percent in 2010. Its profit in 2010 was HK $4.28 billion (US $550 million).
President Bruce Rockowitz told that though the industry is in dilemma about the price rise, it had really become a foregone conclusion. He added that retailers were not sure what can be passed on to consumers and what can't be.
Managing Director of Li & Fung Group William Fung said that increased competition in China's labor sector had led to wage increases by about 20 percent this year. Due to rising labor cost, China is on the verge of losing the edge in the world economy, he added.
China's rising labor costs has prompted Li & Fung to shift its production of clothing and other labor-intensive goods to countries like Bangladesh, Vietnam and Indonesia where cheap labor is available.
Due to a series of acquisitions last year, China's share in Li & Fung's total supply increased from 54 percent in 2009 to 57 percent in 2010.
The company said that the cost of raw materials as well as labor have increased significantly in China. In this situation, manufacturing enterprises have been left with no other option, but to pass on price rise to customers.
Li & Fung is one of the biggest suppliers to Wal-Mart and GAP in the United States. It is on the supplier list of the Debenhams and other companies in the United Kingdom too. The company registered profit rise of 27 percent in 2010. Its profit in 2010 was HK $4.28 billion (US $550 million).
President Bruce Rockowitz told that though the industry is in dilemma about the price rise, it had really become a foregone conclusion. He added that retailers were not sure what can be passed on to consumers and what can't be.
Managing Director of Li & Fung Group William Fung said that increased competition in China's labor sector had led to wage increases by about 20 percent this year. Due to rising labor cost, China is on the verge of losing the edge in the world economy, he added.
China's rising labor costs has prompted Li & Fung to shift its production of clothing and other labor-intensive goods to countries like Bangladesh, Vietnam and Indonesia where cheap labor is available.
Due to a series of acquisitions last year, China's share in Li & Fung's total supply increased from 54 percent in 2009 to 57 percent in 2010.
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