Hong Kong based sourcing giant Li & Fung has secured a US$100m investment from Chinese e-commerce leader JD.com to speed the development of its digital supply chain as well as new private label initiatives for the Chinese domestic market.
The deal, achieved through the issue of new shares at HKD1.25 each, will give JD.com a minority stake in Li & Fung. The group’s founding Fung family will retain the control of the company, with 60% of the voting shares.
Under the vision of group CEO Spencer Fung, Li & Fung has been transitioning from a traditional sourcing company to a fully-integrated digital platform that connects suppliers and customers with end-to-end visibility, and leverages technology and data to add speed and value.
But the business has been buffeted by the US-China trade war, store closures and customer bankruptcies during the Covid-19 pandemic. Earlier this year the Fung family took the company private as part of a US$930.7m deal with Singapore logistics company GLP Group.
JD.com has been developing proprietary supply chain technologies for many years, and has created digital retail and supply chain platforms that are fully integrated to support its omnichannel strategies. It hopes to leverage Li & Fung’s expertise in international trade and private label, while Li & Fung says access to JD.com’s scale and digital capabilities will accelerate its efforts to create an end-to-end digital supply chain.
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“This partnership is one of the important initiatives in JD’s digital supply chain,” the Chinese retail giant says. “Li & Fung is a leader in the global supply chain with expertise in international trade and private label, while JD has developed unique capabilities in digital technologies as well as retail infrastructure.
“The JD-Li & Fung partnership is especially salient in today’s business environment under which the global supply chain is undergoing restructuring with the impact of the Covid-19 pandemic.”
