Today’s Financial Times featured a rather interesting article penned by Asia correspondent Tom Mitchell indicating some significant export trend data reported by the world’s largest apparel trade sourcing company, Li & Fung. It indicates that the average price of Asian exports shipped by Li &Fung to its various retail customers fell by 9 percent in 2009, which was describe as unprecedented, The company feels is a firm indicator that western retailers were trading down in their apparel sourcing decisions. They also noted a noticeable shift in orders from relatively high cost production sites in the coastal southern region of China, to other competitive regions in Southeast Asia. A quote from William Fung, managing director notes that the prime beneficiary of this sourcing strategy shift was the country of Bangladesh. The company does note however that orders taken in last two to three months are at higher prices, which may be an early indicator of a more confident retail consumer.
From my perspective, I would have to agree that once again Li & Fung has demonstrated its ability to adapt to a rather difficult business environment and still increase its margins. That is a quite enviable capability to have in a traditionally low margin business environmemt.
You can view a video capsule of the article at the FT website. (free preview account may be required)