Managing director of Li & Fung Dr William Fung says Hong Kong is both the window to look into China, and China's window for looking out

Dr Fung was speaking at a recent Hong Kong Trade Development Council (TDC) luncheon during the organisation's annual Branch Director's Meeting in Hong Kong. He explained how the role of trading companies is changing, from a basic buying agency, to sourcing, to borderless manufacturing, to virtual manufacturing.

"The question now is how to add value," said Dr Fung. "Hong Kong companies are moving towards virtual manufacturing, which allows them to be more flexible and to coordinate everything on the supply chain management scale. This is what Li & Fung has done, and it's working for us."

Traditionally, Hong Kong's buying agents act as brokers matching customers with factories. Supply chain specialists like Li & Fung do far more than this. They juggle a multitude of tasks, including sourcing of raw materials at competitive prices, selection of prices that meet ethical compliance as well as capacity, arbitraging of process and exchange rates and handling of shipping and logistics - all to find an optimal solution for their customer.

"Products are not all made in one place these days. They are no longer made in Hong Kong but by Hong Kong," said Dr Fung.

"As I said, Hong Kong is the world's ideal place for supply chain management. What drives this region is China. And there are two concepts: China's role as the world's factory to supply the world, and China as one of the world's largest consumer markets. Hong Kong is both the window to look into China, and China's window for looking out," said Dr Fung.

"I'm extremely optimistic about the direction Hong Kong is taking," said Dr Fung. "Basically, if you look at the whole world, Hong Kong is the best place for sourcing.

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