Washington, D.C.

1
The World After Quotas

• Washington, D.C.

Li Fung Limited October 13th, 2005
2
Li Fung Background
3
Li Fung Today

• Founded in 1906, close to 100 years of history
• Headquartered in Hong Kong
• Specialist in the sourcing of both private label
  and branded consumer goods
  
• US 6 billion in shipping
• Market cap approx US 6 billion

4
The Li Fung Group
5
The Li Fung Group

• IDS Group
• Marketing and logistics
• 9 markets in Asia and Greater China
• 40 distribution centers, 3m sqf
• 300 MNC principals
• 6,000 staff
• Turnover US 1 billion

6
The Li Fung Group

• Li Fung Retailing Group
• Circle K operated by Convenience Retail Asia
• Toys R Us Asia
• Branded Lifestyle - Ferragamo, Country
• Road, Frette, Mango
• 2,000 staff
• Turnover US 300 million

7
The Li Fung Group

• Li Fung Trading Group
• Sourcing
• 66 Offices in 38 countries and territories
• 7,200 staff
• Turnover US 6 billion

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Coordinated Global Network 66 Offices in 38
Countries and Territories
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The Evolution of Supply Chain Management
The Supply Chain
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Sourcing Apparel in a Quota Free Worldsomeday!
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The Reality of 2005

• The China Impact

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U.S. Imports January July(Million M2)

• Square Meter Basis
• 2004 2005 Change
• World 11,018 12,443
  13

China 1,537 3,414
122
R.O.W. 9,481 9,029 (5)
Data taken from The office of Textiles and
Apparel
13
U.S. Imports January July(Average Unit
Price)

• Price Deflation
• 2004 2005 Change
• World 3.22 3.12
  (3)

China 3.04 2.66
(13)
R.O.W. 2.94 3.29
12
Data taken from The office of Textiles and
Apparel
14
The Reality of 2005

• The China Impact
• The Winners and Losers

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The Winners
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U.S. Import Winners January July (Million M2)
Data taken from The office of Textiles and
Apparel
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The Losers
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U.S. Import LosersJanuary July (Million M2)
Data taken from The office of Textiles and
Apparel
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The Reality of 2005

• The China Impact
• The Winners and Losers
• The New Quotas

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The New Quotas

• Chinese Restraint Mechanisms
• Anti-Dumping
• Bi-Lateralism

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Chinese Restraints

• Safeguard mechanisms in use
• Anti-dumping beginning to surface
• Quota extension in negotiations

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Bi-lateralism

• Free or almost free trade
• Breakdown of the multi-lateral world
• Challenges created

23
Approved Trade Agreements (Apparel Terms)

• NAFTA Yarn and fiber forward.
• AGOA 3rd country fabric qualifies for most
  countries through 9/08.
  
• CBPTA Generally fabric and/or yarn must be
  formed in the US.
  
• Andean Pact Generally fabric and yarn forward.
  
  
• Australia/Singapore/Chile Yarn and fiber
  forward.
  

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QIZ

• Egypt
• Jordan

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Pending Agreements

• CAFTA Approved by Congress but not
  implemented.
  
• Morocco Approved by Congress but not
  implemented.
  
• Bahrain Negotiated but not yet approved.

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Negotiations in Progress

• Panama
• Thailand
• Southern Africa Customs Union
• United Arab Emirates
• Oman

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Challenges to be faced

• Uncertainty continues in China
• Infrastructure improves elsewhere
• Bi-lateral agreements create unknown
  opportunities
  

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The World After Quotas

• Washington, D.C.

Li Fung Limited October 13th, 2005