Word: funge
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Seated in a nondescript office in Hong Kong, 1,500 workers are turning the wheels of the global economy. Without leaving their desks, these merchandisers at Hong Kong--based trading outfit Li & Fung connect the far-flung dots of today's international manufacturing system. They make sure that Victoria's Secret gets its bras, American Eagle Outfitters its T shirts and Disney its stuffed Winnie the Poohs. One moment, workers in Hong Kong are haggling with fabricmakers for the best price of denim, and the next, they're ensuring that a shipment of teddy bears gets to U.S. stores...
Thousands of transactions for customers in Chicago, New York or London flow through their computers each day to be relayed to suppliers in Bangladesh, Vietnam and South Korea. William Fung, Li & Fung's group managing director, calls this intricate logistical dance "borderless manufacturing." You might think that an activity without borders could be managed from anywhere, and maybe it could. But in practice, the global supply chain has a headquarters, and it is in the Chinese special administrative region and former British colony whose economic demise has been trumpeted more times than Paris Hilton has hit a party...
...booming mainland continue to drive the economy, which grew 8.6% in 2004 and 7.3% in 2005. For 2006, the final figure is expected to be 6.5%. That success is partly due to the fact that Hong Kong is home to a cluster of firms such as Li & Fung, which help orchestrate the production and flow of goods supplied by factories in the developing world to multinational retailers. Hong Kong, says Dennis Cicetti, group managing director of product-sourcing firm William E. Connor & Associates, is "the command and control center" for much of world trade, particularly for thousands of factories...
Ever since the British founded the city in 1841, its harbor has made Hong Kong a major stop on trade routes, its dockside warehouses stuffed with silks and other valuable wares of Asia. Hong Kong prospered as China's entrepôt, and traders like Li & Fung had tight links to the Chinese market. But when the Communist Party took power in China in 1949, exports from the mainland slowed to a trickle. Hong Kong then became a formidable manufacturing hub in its own right, until the colony's growing wealth (per capita income is second only to Japan...
...next step came as the spread of communications technologies, improved transportation networks and freer international trade enabled trading companies to begin sourcing supplies and products from Korea, Indonesia, India--wherever they could get the best price and quality. Victor Fung, Li & Fung's group chairman, says his firm had hit on the "idea that you can take work apart and allocate it to other parts of the world. We took the whole thing and disaggregated...