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Firms No Longer Need Middlemen to Help Find Factories to Make Their Products



(p. B6) The migration of shoppers online has been squeezing profits throughout the retail industry--including at Li & Fung Ltd., one of the world's largest factory middlemen.

The more than 100-year-old company, based in Hong Kong, contracts with 15,000 factories globally to make apparel, toys and other goods. Its core business has been connecting Western retailers such as Abercrombie & Fitch Co. and Target Corp. with factories around the world.

But as consumers increasingly shop online for the best deals, retailers have been forced to offer lower prices, putting pressure on factories and intermediaries alike.

Middlemen need to "either figure out ways to create value, or they will be going out of business," said Edwin Keh, chief executive of the Hong Kong Research Institute of Textiles and Apparel. "The bigger question is whether middlemen can still exist in a globalized economy."



For the full story, see:

KATHY CHU. "Shift to Web Hits Factory Middlemen." The Wall Street Journal (Fri., Aug. 26, 2016): B6.

(Note: the online version of the story has the date Aug. 25, 2016, and has the title "Lower Retail Prices Threaten Profits of Middleman Li & Fung.")






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