Good Times In Slowdown For Li And Fung - company's exports likely to increase if US goes into recession - Brief Article

Business Asia, April, 2001 by Alec D.B. Mccabe

William Fung sounds almost gleeful as he expounds on the possibility that the US, the world's biggest economy and his own largest market, is about to slip into recession.

After all, he reckons, people buy more cheap things when incomes stagnate. And cheap things are what Li and Fung Ltd, the 95-year-old Hong Kong trading company he runs, is all about.

"Look at the last recession," Fung said in an interview at Li and Fung's headquarters in the gritty Kowloon neighbourhood of Cheung Sha Wan, where delivery trucks choke warehouse-lined streets. "We made out like bandits."

If he's right, it's an optimism that defies common wisdom. In a nutshell, Li and Fung help US and European companies make cheap clothes and other products that department stores sell under their own brands.

Fung argues that cost-conscious shoppers will be more inclined to buy no-name jeans when mortgage payments, not stock market tips, become the priority of the day.

Fung admits that there are bumps in the road. Slowing growth in the US means the company can't count on fat margins, for example.

"During the recession is where we pick up market share," he said.

Bloomberg