Question

Why do you think a retailer prefers to have Li & Fung arrange international production of its jeans rather than purchase them directly from a jeans manufacturer in mainland China?

Short answer

The retailer will save time and cost if it orders from Li & Fung instead of buying it directly from a manufacturer in mainland China.

Step-by-step solution

Reason behind retails choosing Li & Fung for international production

The Company (Li & Fung) provides many services other than manufacturing. These services include selecting the design, cost-effective production method, taking orders for the product, logistics for transporting, and many more. These services are required for a retailer’s product to succeed in the market.

Thus, if a retailer decides to take service from Li & Fung, it will save a lot of time and money. A manufacturer from mainland China will only save some cost on manufacturing the product, but Li & Fung will be much cheaper to the retailer because it includes other services.