1 Sun Yun-Hsuan Management Forum Competing in the flat world: the Li & Fung Experience Dr. Victor K. Fung Chairman of the International Chamber of Commerce (ICC) Chairman of Li & Fung Group 30 July 2008 Good afternoon, ladies and gentlemen. It is a great honor to speak on the occasion of the Sun Yun-Hsuan Management Forum. Today, I would like to address this topic as a member of the private sector and to give my own business point of view. I. The new global manufacturing paradigm – decomposition of supply chains and dispersed manufacturing In the old days, when we talked about manufacturing a product, the idea that immediately sprang to mind was that everything should be done “in-house” – in one factory, under one roof and in one country – before it was exported and sold in another country. But times have changed and manufacturing a product carries a completely different meaning today. Products are no longer produced in one factory and under one roof. Production is becoming increasingly spread across different countries and globalized. Under this new global manufacturing paradigm, companies are no longer geographically restricted but are expanding their production in more cost- 2 effective locations and developing businesses in new markets. Their supply chains have become more complex because of their quest to expand product depth and customer base. Competition is no longer solely based on products or services. Participants of the supply chain now form a new kind of team. Competition is no longer between companies but between supply chains. Today, if we get an order for 10,000 shirts, what shall we do? We must first consider the best place to source the yarn required for making th...
