The View | Can Li & Fung recast itself to catch up with the Internet age?

Li & Fung will forever be known as the company that refused to invest in Alibaba - three times, actually. For a company that, for over a century, was a dominant trade middleman for sourcing, its business model has not just been overtaken, as much as subverted and made irrelevant by Alibaba. Many analysts regard it as a company with a dead business model.

Despite being international thought leaders, MIT and Harvard Business School graduates, the brothers Victor and William Fung were happy with their traditional and profitable business. They could not comprehend that innovation doesn’t just create an alternative form of business that would coexist alongside Li & Fung.

Instead, a sea change would overturn most of their current business and industry practices. Their inability to grasp e-commerce and the internet was catastrophic.

It’s almost as disastrous as RIM’s 2007 declaration that smartphones would not overtake Black Berries because “why would anyone want computing power in a phone?”

Or, as surprising as the fact that Tesla’s market capitalization today exceeds Ford Motor Co, another fourth-generation company.

Li & Fung’s turnover continues to decline. Between 2015 and 2016, revenue declined by 11 per cent from US$18.8 billion to US$16.8 billion. Core operating profit declined 19.6 per cent from US$512 million to US$412 million. However, the company was able to raise US$1 billion through strategic divestments, which they can use to fund technology and business development.