Li & Fung’s Reverse Supply Chain Strategy: The Seventh Three-Year Plan

As a trading company with a history of more than 100 years, Li & Fung has three distinguishing features: firstly, its intangible assets make up the overwhelming majority of its total assets. Secondly, following increased information transparency brought by the liberalization of global trade, low cost competition in developing markets, and technological advances, Li & Fung has served as an infomediary — and has contended with the pressures of this role. But since the 1960s, constant innovation in its business model has let Li & Fung transform itself from a simple intermediary into a leader of supply chain platforms. Thirdly, despite this experience and reputation in supply chain management and an impressive network, the company encountered failure in its e-commerce venture. Li & Fung’s seventh three-year plan came to a close in 2013, highlighting a number of important developments in the company. This case examines the evolving business model of Li & Fung; details its impressive mergers and acquisitions and e-commerce pursuits that brought it from the fringe to the center of online business; and explores its logic and strategic approach to becoming a leader in supply chain platforms. The case also takes a close look at the key differences between the company’s supply chain and e-commerce platforms.