Li & Fung, the most important company that most US shoppers have never heard of has long been on the cutting edge of globalization, chasing cheap labor to garment factories first in China, then elsewhere in Asia, including Bangladesh.
Now, with sweatshop disasters drawing international scrutiny, business is looking up for the next best place such as South America or sub-Saharan Africa where it can steer apparel buyers seeking workers to stitch clothes for a few dollars a day.
As the world's largest sourcing and logistics company, Li & Fung plays matchmaker between factories in poor countries and vendors in affluent countries, finding the lowest-cost workers, haggling over prices and handling over the logistics for roughly a third of retailers found in typical US shopping malls.
Hong Kong-based Li & Fung is a merchandiser who does not own any clothing factories, sewing machines and fabric mills. Its chief asset is the 15,000 suppliers in more than 60 countries that make up a network so sprawling that an order for 500,000 bubble skirts that once took six months from drawing board to store shelf, now takes six weeks at a sliver of the price. That scale gives Li & Fung tremendous clout.
But in pioneering and perfecting the global hunt for ways to produce clothing more quickly and cheaply, Li & Fung, which had $20 billion in revenue last year, has been described by critics as the garment industry's ‘sweatshop locator’.In Bangladesh, Li & Fung has been tied to several calamities. It arranged the production of clothing for Kohl's at one factory where 29 workers died in a fire in 2010. It brokered some work at another in 2011 where more than 50 workers who made Tommy Hilfiger clothing were injured and at least two died in an explosion and a stampede.And last year, Li & Fung was responsible for some garments produced at the Tazreen Fashions factory, where 112 workers died last November after many of them were ordered to continue working even though fire alarms had sounded.