Welcome to “Continuous Improvement,” the podcast where we explore the secrets behind successful businesses and how they navigate the ever-changing landscape. I’m your host, Victor, and today, we delve into the fascinating story of the Li & Fung family business. From its humble beginnings to its current global presence, we’ll uncover the lessons we can learn from their journey of reinvention and adaptation.

The Li & Fung family business, founded in 1906, has defied the odds by not only surviving over a thousand years but also flourishing in today’s challenging business environment. What makes them different from other family businesses? To help us understand their success, let’s dive right into their story.

Li & Fung was the first Chinese trader export company, born out of Guangzhou. Today, it operates across 40 countries and employs over 20,000 people. But what sets them apart is their ability to continually reinvent themselves for survival.

One key factor in their longevity lies in their global perspective and open-mindedness. By capitalizing on significant trends and shifting macro-economic landscapes, Li & Fung positioned themselves as the first Chinese middleman, bridging the gap between Western and Chinese markets. This adaptability allowed them to grow alongside Hong Kong’s rise as a manufacturing and clothing export hub.

However, challenges emerged as they ventured into their fourth generation. Their failure to anticipate digital trends became evident when they declined opportunities to invest in Alibaba. This led to struggles in adapting to the e-commerce landscape and declining profits. It’s a stark reminder that even successful businesses must stay ahead of the curve.

Despite this setback, the Li & Fung family business has consistently reinvented itself throughout history. For example, during the Korean War, they pivoted from re-exports to exporting local Hong Kong goods when the United States imposed an embargo on China. And as each generation takes the reins, they bring fresh perspectives and modern management theories into this traditional family business.

By introducing a proper management hierarchy and replacing family members with professional managers, Li & Fung successfully transitioned from a “One Boss/Employees” system. This separation of ownership and business management allowed them to go public and establish good governance practices.

The current face of the Li & Fung family business is Spencer Fung, representing the fourth generation. Educated in the United States and with an MBA, he continues to uphold the family values while embracing new opportunities. Despite the trade war between the United States and China, they have diversified their operations into Vietnam and other Asia-Pacific countries.

Looking ahead, Li & Fung recognizes the importance of speed, innovation, and digitalization. The fourth generation strategically invests in new technologies to reduce supply chain lead times and utilizes advanced analytics to improve business metrics. They understand that staying ahead requires constant improvement and staying at the forefront of industry trends.

In conclusion, the Li & Fung family business is a true testament to merging Western modernization with Eastern wisdom. They embrace change and continually seek improvement while remaining true to their core values and building strong relationships. Their longevity and ability to adapt has been guided by a balance of efficiency and emotional intelligence.

Join us next time on “Continuous Improvement” as we explore the inspiring stories behind other successful businesses and uncover the strategies they employ to thrive in an ever-changing business landscape.

Thank you for joining me today. If you enjoyed this episode, please subscribe to our podcast and leave a review. Remember, success comes with continuous improvement.

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