A Critical Corporate Profile of Li & Fung

Behind the prominent Brand names and Retail stores of global supply chains are intermediaries who provide services to large volume buyers. A key feature of the global apparel industry is complex supply chains with many contractors and subcontractors and intense competition among factories – induced by the buyers – to reduce cost and increase speed. Over the past two decades, scholars have noted the dramatic increase of market power of international retail corporations gained at the expense of the fragmentation of centers of production. Enter Li & Fung, a Hong Kong based firm which is the largest sourcing agent in the global apparel business. Li & Fung’s central role in shaping the supply chain of apparel potentially affects the lives of millions of workers in their direct supply chains and the labor markets in which they are such a commanding force. Their strategy of sourcing emphasizes the cutthroat competition among factories that is the source of apparel workers’ conditions. Our analysis also indicates that already an “unseen giant” Li & Fung appears to have decided to move towards higher value-added processes in the supply chain. Understanding the complex implications of Li & Fung’s business strategy for workers’ rights is crucial for securing decent conditions for workers in the apparel industry over the coming years

Compromised Stability And Security In The “Race To The Bottom”

Complex webs of global supply chains are rooted in low wage labor abroad. Transnational corporations (TNCs) – large global corporations that do not identify with a single country as its headquarters – have gained power over producers through these arrangements at the expense of the workers’ rights and job security. We present the hypothesis that the flexibility and inherent lack of accountability of global supply chains combined with the constant pursuit of lowest production costs has the potential to destabilize countries inadvertently. Evidence supports the proposition that exploitative conditions at the bottom can threaten the physical security and political/economic stability of those at the top. This is tangibly evident in the garment industry, which is explored in depth in this article. Governments and corporations in developed countries must take a more proactive role guaranteeing the rights of workers throughout global supply chains to ensure long-term socioeconomic stability for all. Multitudes employed in sweatshop factories are plunged further into destitute poverty when the global economy wavers. The failure of subcontractors to comply with basic labor standards or fulfill their contracts to workers as well as the TNCs’ lack of accountability for their supply chains has jeopardized the job security, well-being, and stability of fragile communities. Unfair labor practices perpetuated by U.S. corporations exacerbate global class polarization, domestically as well as abroad. A global crisis emerges on many levels; to apparel workers and their communities, to the financial and social stability of the producer countries, and potentially to U.S. national security interests. The global linkages of apparel supply chains provide a poignant example of how injustices anywhere can affect everyone everywhere, in negative ways that even the most ardent security-driven conservatives must recognize.</p