Li & Fung

1. Li & Fung

2. About us

3. Global multinational headquartered in Hong Kong • World’s leader in consumer goods design, development, sourcing and distribution • More than 100 years of history since 1906 • Over 28,000 employees worldwide • Orchestrates over 15,000 suppliers in more than 40 economies to service about 7,700 customers • Member of Hang Seng Index, MSCI Index, FTSE4Good Index, Dow Jones Sustainability Asia Pacific Index and Hang Seng Corporate Sustainability Index Series • Market capitalization of approximately US$11 billion • Awards / Recognitions: • Fortune’s “World’s Most Admired Companies” (2013) • The Financial Times’“FT Global 500” (2009 - 2012) • Forbes Asia’s “Fabulous 50” (2007 - 2010, 2012) • Ranked no. 612 in Forbes’“Global 2000” (2012) • The Asset Magazine’s “The Asset Corporate Platinum Award” (2009-2012) • Mr. Bruce Rockowitz was named Asia’s Best CEO for the Hong Kong region in 2nd Asian Excellence Recognition Awards and received “Asian Corporate Director Recognition Awards” by Corporate Governance Asia (2012) • Mr. Bruce Rockowitz ranked as one of the world’s 30 best CEOs by Barron’s (2011 and 2010) Li & Fung Today

4. Global and Diversified Customer Base Trading

5. Global and Diversified Customer Base Logistics

6. Global and Diversified Customer Base Distribution

7. Trading Office Global Network Trading Offices: 62

8. DC Logistics Office Trading Office Global Network Trading Offices: 62 Logistics Offices: 42 DCs: 164

9. DC Logistics Office Distribution Offices Trading Office Global Network Trading Offices: 62 Logistics Offices: 42 DCs: 164 Distribution Offices: 60

10. DC Logistics Office Distribution Offices Trading Office Over 300 offices and DCs in more than 40 economies with 28,000 employees and a sourcing network of over 15,000 suppliers Global Network Trading Offices: 62 Logistics Offices: 42 DCs: 164 Distribution Offices: 60

11. Turnover by Geographical Markets in 2012 1% 1% 2% 3% 6% 6% 62% 19%

12. Sourcing Trends

13. ↑ ↑ 14% Guatemala ↑6% China 6% Turkey ↑ 3% Philippines ↑ ↑ ↑ ↑ 3% Bangladesh 20% Vietnam 4% India LF’s Top 10 Countries in Production Volume ↑ 20% Thailand ↑ 8% Indonesia 2012 2011 1% Cambodia Sourcing Trends in 2012

14. Our Supply Chain

15. In addition to our sourcing business, we have been offering more value-added services to support our organic growth. Managing the Supply Chain Consumer Needs Product Design Product Development Consumer Vendor Compliance Raw Material Sourcing Retailer Factory Sourcing Wholesaler Local Forwarding Consolidation Manufacturing Control Customs Clearance Shipping Control Forwarder Consolidation

16. Where Do We Need To Go? • What does the future look like? • OPPORTUNITIES • Developed vs Emerging Markets … the game changer • History of World GDP

17. Where Do We Need To Go? Developed vs EmergingMarkets Global balance http://www.economist.com/blogs/dailychart/2011/08/emerging-vs-developed-economies?page=3

18. Where Do We Need To Go? History of World GDP http://www.ritholtz.com/blog/2010/08/history-of-world-gdp/

19. The Emerging Markets Have In Fact Emerged! “Made in the world” .… the world is now so integrated that there is no “out” and no “in” anymore …. So many companies actually see themselves now as citizens of the world” Thomas Friedman “Source everywhere …. Manufacture everywhere Sell everywhere …. The whole notion of “export” is really disappearing” Victor Fung “I always remind people that 96 percent of our potential new customers today live outside of America” Michael Dell

20. Where Do We Need To Go? CHALLENGES Traditional threats and obstacles Energy Water Inflation Labour + Wage Increases Currency Exchange Rates Rule of Law Intellectual Properties Compliance Trade Barriers Government + Political Stability Climatic Credit Speed to Market

21. Where Do We Need To Go? Challenges – Summarised • Emergence of global consumerism will increase the complexity of regional and national consumer safety laws and regulations. • Global trade will become compromised due to these new rules and regulations from these newly emerging economies. • The US and European consumer markets are no longer the main destinations for consumer products being sourced. • The growth of Global Brands will depend on the expansion of distribution into these new emerging consumer markets.

22. Where Do We Need To Go? To mitigate the chaos ahead, we must …. • Not look to the past for solutions • Not assume the status quo • Shatter the paradigm of past procurement practices • Must ‘break the cycle’ + collectively + collaboratively. • Create a new sourcing + procurement model. 30 years of deflationary procurement will be replaced by 20-30-40 years of inflationary procurement! Consumerism as we have known it is changing and with it so will our respective business models ! The new frontier, is not about finding the next low cost country (Myanmar-Africa !) The new frontier is about us! It’s about real collaboration … process optimization, built on trust! German food and Commodities Law

23. Breaking the Sourcing Paradigm The Global Sourcing Paradigm has reached its tipping point – What is the next value equation? FROM A TRANSACTIONAL TO A TRANSFORMATIONAL MODEL – OPPORTUNITIES FOR MSMEs • Upgrading the value proposition • Newness and Design • Product Re-engineering • People & Skills PRODUCTION INNOVATION • Fast Tracking / Chase • VMI Models • Low MOQs • Modular Manufacturing FLEXIBILITY & LIQUIDITY Need for Speed: Forecasting / Planning • Rationalizing + leveraging vendor base through consolidation • Inwards / Outwards Strategy • Basket / Portfolio Approach • Verticality PROGRESSIVE VENDOR BASE AND PARTNERSHIPS • Design, PPMC, Tech, Lean Management, Support, Systematic Integration, EDI Interface with Vendors VALUE ADDED SERVICES Cost Mitigation

24. Thank You !