www.investhk.gov.hk

WHSmith Opens Regional Sourcing Offi ce in Hong Kong

WHSmith has been sourcing products from Mainland

China and Asia Pacifi c via Hong Kong-based supply chain

manager Li & Fung since 2001. The arrangement with Li

& Fung has had several benefi ts, chiefl y enabling the UK-

based newsagent, book and stationery retailer to be closer

to its supplier base in the region, deliver margin benefi ts and

develop product expertise.

A leading British newsagent, book and stationery retailer has decided to go it alone, opening its own sourcing operation and almost quadrupling its workforce in the process

But as its business in Asia Pacifi c grew in signifi cance,

WHSmith’s management recognised the potential to handle

the company’s sourcing inhouse, and subsequently decided

last year to build on its foothold and experience by opening

its own regional sourcing offi ce in Hong Kong.

“Value creating opportunities such as reduced costs and

better margins, and improved sourcing could be achieved

by going it alone,” Simon Price, Head of Asian Sourcing,

WHSmith, said.

Initially, the company’s management looked at basing the

sourcing offi ce in the Mainland but there was little fi nancial

advantage in doing so. Staff in Hong Kong also had more

relevant expertise and experience, and Hong Kong’s central

location with world-class transport links to the Asia Pacifi c

region gave WHSmith access to a huge number of markets

or potential markets other than Mainland China.

Business Benefi ts and Goals

To foster competitiveness the sourcing offi ce does not have

preferred supplier status and has to compete with other

suppliers to win WHSmith business. As well as lower costs,

better service and improved margins the other key benefi t

resulting from the new sourcing offi ce in Hong Kong has

been in human resources. Several staff moved across from

Li & Fung and became both accountable and incentivised

as WHSmith employees. The UK business trading teams

work with the Hong Kong staff as colleagues rather than

suppliers and are now more open and proactive than

when they worked with them as agents. From a business

standpoint, the new sourcing offi ce also allows WHSmith to

deal with suppliers that did not work with Li & Fung.

In terms of goals, Price said he would like to see the sourcing

offi ce exceed its budgeted export numbers and establish a

strong supply chain within its fi rst six months of operation.

In the second half of the year the offi ce will be expected to

over-deliver on value, achieve its strategic fi nancial goals

and access a wider pool of product opportunities than was

achieved via the agent arrangement, he said.

“The business goals are demanding but WHSmith works

with six to 12-month lead times. To make an impact in

the second year of the current three-year plan all these

goals need to be achieved in the fi rst year of operation. I’m

convinced it can be done,” Price said.

www.whsmithplc.co.uk

WHSmith Fast Facts

• Established in 1792 as a small news vendor in

London by Henry Walton Smith and his wife Anna

• It is one of the UK’s leading retail groups and aims

to be Britain’s most popular bookseller, stationer

and newsagent

• With 565 high street stores and 490 travel outlets

in the UK, WHSmith now employs more than

17,000 people

• It sells about 78 million magazines and 40 million

books per year

• WHSmith plc is listed on the London Stock

Exchange (SMWH) and is part of the FTSE mid

250 index

• In 2009, WHSmith opened a regional sourcing

office employing 32 people in Hong Kong