JD.com has established a strategic partnership with Li & Fung, one of Asia’s oldest supply chain management companies. It is reported that the Chinese tech company has invested $100 million for a stake in Li & Fung. In addition, both companies will work on a global digital supply chain initiative known as ‘supply chain of the future’.
The development comes at a time when most of the markets in Southeast Asia are scrambling for profits amid the Covid-19 crisis. Spencer Fung, Li & Fung’s chief executive, told the media, “Our goal to create the supply chain of the future and to improve the lives of one billion people in our global supply chain remains more relevant than ever in this turbulent world.”
According to Li & Fung, JD.com’s investment is based on the fresh shares issued at $0.16 each. Furthermore, 60 percent of the voting rights will be controlled by the Fung family. The partnership will see JD.com boost its business in China and help the country in private-label initiatives by leveraging its resources and strategies.
The investment by JD.com floated just over two months after Li & Fung was delisted from the Hong Kong Stock Exchange. JD.com has raised 3.8 billion in a secondary listing in Hong Kong in June. It took several years for the oldest supply chain management company to reform its business in terms of digitalisation. In recent years, the rise of ecommerce websites has hit Li & Fung hard and slowed China’s economic growth.