Quotes of the Day

That pair of jeans you recently bought has a multinational pedigree: the zipper was probably made in Japan, the fabric came from Hong Kong, the thread from China, and all the pieces were assembled at a Vietnamese factory. It's cheaper to make many types of goods by sourcing parts from around the world. And for that discovery, much of the thanks goes to Victor and William Fung, the two low-key brothers at the helm of Hong Kong-based supply-chain-management firm Li & Fung. They are the great middlemen of modern trade, orchestrating the production of everyday goods for giant retailers like Victoria's Secret, Kohl's and KB Toys. The Fungs helped invent what William, 57, calls "borderless manufacturing."

It all began in the early '70s when the Fung brothers returned to Hong Kong from the U.S. and joined the family trading firm their grandfather founded in 1906. Thirty years ago, Hong Kong was a manufacturing center for clothes, shoes, wigs and the like. But as costs rose, competitors sprouted in South Korea and Taiwan. After Deng Xiaoping opened up China, Hong Kong factories moved across the border to tap cheap labor. The Fungs realized that improvements in transportation and information technology meant manufacturing no longer had to be based in one country. Why not get the best component, the best service, the best product, at the best price — from anywhere? The challenge, says William, was "to learn how to deal with not one manufacturing sector, but two or three or five."

The Fungs began organizing production on a global scale. Today, they have 72 offices in 41 countries, and this year, Li & Fung will move some 2.4 billion shirts, toys and other consumer goods. Remarkably, the price of such products has gone down, in real terms, over the past 20 years. That's because borderless manufacturing has reduced costs, thereby allowing the world's consumers to buy more. This, in turn, has created greater prosperity and job opportunities for millions of people. The Fungs are humble men, but Victor, 61, will allow himself to say that they "created a whole new paradigm." Their achievement may not be glamorous — or, indeed, highly visible — but their impact on global manufacturing has been staggering.

• Michael Schuman
• Hong Kong's masters of global manufacturing