Speaking at the Reuters Consumer and Retail Summit, Li & Fung Ltd said the low-cost era in China was likely over but it anticipated no radical change in sourcing in the country. The Hong Kong apparel manufacturing giant added that it aimed to switch its sourcing focus to the interior from coastal areas.
President and Executive Director Bruce Rockowitz, according to a report on Reuters, said China was still a dominant and unique player in the whole supply chain despite escalating costs.
“We believe that over the next few years there is not going to be a radical change in where people source from,” he said. He added that other countries did not have and would never have the same scale as China.
Li & Fung, which this year expects to export $8 billion worth of goods from China and $1 billion of goods from Vietnam, said China would continue to be its biggest sourcing country, while Vietnam would be the second-largest.
“China is still a very dominant and unique player in the whole supply chain,” Rockowitz said.
He said structural problems restricted India from becoming as dominant as China, while Bangladesh, Indonesia, and Vietnam would grow dramatically.
Li & Fung would switch to sourcing from China's cheaper interior as infrastructure had improved with high-speed railways linking remote areas and major Chinese cities, he said.
“Over the next few years, I think still 50 percent of our production will be based in China. I don't think it will change dramatically at all, it may go up or down 1 or 2 percentage points, but I think China is still the dominate supplier of the world,” he said.
Li & Fung also gave a positive view for growth in 2010, helped by a strong recovery in the United States, which accounts for about 65 percent of its business and was expected to remain steady to slightly higher in the years ahead.