ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Business deals

Hong Kong's Li & Fung taps JD.com for digital supply chain revamp

Century-old company raises $100m from Chinese e-commerce operator

Li & Fung, a supply-chain manager that connects thousands of companies, sold a 6.7% stake in the company to China's JD.com (Source photos by Reuters and screenshot from Li and Fung website) 

HONG KONG -- Li & Fung, the world's largest sourcing company, has teamed up with Chinese e-commerce giant JD.com as it moves to bring its global supply chain business more into the digital era.

The 114-year-old family business said on Friday that it had received an investment of $100 million from JD.com through an issuance of new shares at 1.25 Hong Kong dollars each. The investment will give JD.com a stake of about 6.7% in Li & Fung, according to Nikkei's calculation. The group's founding family will retain the control of the company, with 60% of the voting shares.

The new partnership is part of the digital transformation strategy led by Li & Fung's fourth-generation leader and group CEO Spencer Fung. He envisions a digital platform that connects customers and vendors, while delving more into data analysis, online order tracking, financing and virtual design.

The rise of e-commerce and wider adoption of technology is increasingly eroding the role of retail trade intermediaries such as Li & Fung. The coronavirus pandemic and trade tensions between China and the U.S. have compounded the problems facing the group.

This year, the Fung family took the company private as part of a deal with Singapore logistics company GLP Group, which paid HK$7.2 billion for a 67.67% stake in Li & Fung. The deal came after Li & Fung lost 95% of its market value from its peak in 2011.

The partnership with JD.com and GLP Group will be "instrumental" in further strengthening the group after privatization, Feng said in a statement on Friday.

JD.com is China's second-largest e-commerce platform after Alibaba Group Holding, and made its secondary listing on the Hong Kong Stock Exchange a month after Li & Fung's delisting.

Unlike rival Alibaba, which manages online marketplaces, JD.com also operates its own supply chain and logistics network. The mainland company has embarked on a plan to transform itself into a leading supply chain-based technology and service provider, and Li & Fung's expertise in international trade and private label can help it achieve this goal.

JD.com also highlighted the challenging business environment, saying: "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."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media