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Protests Cause Li & Fung Week-Long Production Delays in Vietnam

A Protest Against China's Role in Vietnam | Source: Reuters
By
  • Bloomberg

HANOI, Vietnam — Li & Fung Ltd., the world's biggest provider of clothes and toys to retailers, said production at most of its suppliers' factories in Vietnam may be delayed for a week because of anti-China protests.

The Southeast Asian country accounts for about 7 percent of Li & Fung’s supply base, company executives said today after a shareholders meeting in Hong Kong. Vietnam is the company’s second-largest source country after China, according to data on its website.

China’s placement of an oil rig in contested waters near the Paracel Islands set off rallies in Vietnamese cities last weekend and protests in factory parks where foreign companies operate. The protests have turned violent, with an attack on workers at the site of a Taiwanese steel mill leaving one dead and 128 people injured.

“We understand that the violence is quite random,” Li & Fung Chairman William Fung told reporters. “The government is now going about, hopefully, restoring law and order. Most of our suppliers closed their plants yesterday and the day before, just to make sure none of their workers are hurt.”

Shares of the Hong Kong-based company was little changed at HK$11.00 at 2:59 p.m. local time.

The Vietnamese government has moved to restore order in the southern province of Binh Duong by increasing forces in the area, and the situation has stabilized, it said. Taiwanese companies with factories in Vietnam have halted operations.

Contingency Plans

Li & Fung Chief Executive Officer Bruce Rockowitz said today that it was “too premature” to think about contingency plans, which would involve diverting production to countries such as China and Bangladesh.

“We are expecting a week-long type of delay, not months,” Rockowitz said. Should the delays extend into the end of June and July, then that will critically affect deliveries, he said. Most of the affected clients were American, he said.

Separately, the company said today it submitted a listing application to the Hong Kong stock exchange for its unit Global Brands Group. Fung said the company is seeking a listing within 90 days.

Li & Fung in March said that it would spin off a brands- and-licensing business whose products include Coach Inc. shoes. Fung on March 21 described the spinoff as a "cash generator" that would allow the company to focus on its more stable core trading business.

By Clement Tan; Editors: Anand Krishnamoorthy, Brendan Scott, Tan Hwee Ann

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