Li & Fung shoehorns PBI into its strategy

5 September 2007
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06 September 2007 | Antony Barton

Hong-Kong based sourcing firm Li & Fung has bought Marks & Spencer's shoe supplier Peter Black International (PBI) in a deal worth over £48 million.

PBI also supplies products to Tesco, Next, Sainsbury's, The Body Shop and Boots.

Alongside the PBI deal, the company announced its $148 million (£74 million) acquisition of US-based apparel and brand management company Regatta, which supplies US giants JC Penney and Wal-Mart.

Bruce Rockowitz, president of Li & Fung, said: "The proposed acquisition will provide a unique platform and infrastructure for the future development of our European onshore business."

Chris Webster, head of retail supply chain at business consultancy Capgemini UK, told SM the "future development" will see Li & Fung offer more buyers a ready-made supply chain that incorporates Far East sourcing but also provides everything from product concepts to inbound shipments.

He predicts Li & Fung will soon offer this service to manufacturers of consumer products as well as retailers.

He said the biggest challenge is convincing buyers to buck the trend for direct sourcing: "Many companies already have internal operations or relationships with logistics companies that do all these activities, so Li & Fung will need to offer a drastically lower price at a drastically higher level of service."

Webster says buyers are attracted by reduced personal risk and the elimination of the need for Far East offices. Li & Fung operates more than 70 buying offices in over 40 countries.

SMsep2007

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