Asia Shifts from Workshop to Major Consumer: Li & Fung
Asia is emerging as a major global consumer market, and should be no longer regarded solely as the world’s sourcing and production center, said Bruce Rockowitz, president of leading Walmart supplier Li & Fungon CNBC Tuesday.
“Asia is doing unbelievably and the competition for production has now multiplied because not just the western world are buying, Asia is now buying for itself,” he explained, adding that this is subsequently driving up the price of goods.
Rockowitz noted that while consumer may not see higher price tags on store shelves today, he expects multi-year price inflation going forward, particularly with input costs ranging from wages to capital costs on the rise.
He expects that higher input costs will be passed onto the consumer over time, “There's no doubt because for 20 years China exported deflation and that really was sort of an abnormal cost price for retailers around the world. It's now changing and it's coming up.”
Rockowitz expects a "very good" year in 2011 as purchases and sourcing agreements broaden the company’s revenue stream.
Earlier this month, the merchandise provider announced it would become a sourcing agent for top Chinese sportswear maker Li Ning, both in its domestic and international market. Rockowitz says this is part of the company’s strategy of targeting mid-tier brands.
“(Li Ning is a) Chinese company that has done very, very well not only in China but…internationally and we're going to be behind them and helping them to bring down the prices.”