Online bookseller Amazon.com transformed the book industry forcing traditional book retailers to respond. Some information in this section comes from previous Harvard Business School Case Studies: “Li & Fung: Beyond “Filling in the Mosaic”-1995-98,” (HBS Publishing No. 398-092) Michael Y. Yoshino, Carin-Isabel Knoop, Anthony St. George; January 1, 1998; and “Li & Fung (Tr Contention between the United States and Japan during the 1930s and early 1940s ading) Ltd.,” HBS Publishing (No. 396-075) Gary Loveman, Jamie O’Connell, October 26, 1995. With a press conference the following day, William was confident of the Group’s performance and lifung.com’s prospects. But he knew that important issues remained unresolved: Was there any chance of channel conflict or cannibalization between the offline business and the start-up? How would the market react to the start-up once it was launched the following year? And how specifically would e-commerce ultimately transform his family’s century-old company? Company Background Li & Fung was founded in 1906 by William’s grandfather, Fung Pak-Liu and his partner, Li To- Ming in Guangzhou, China as an export trading company selling to overseas merchants. In the 1 Contention between the United States and Japan during the 1930s and early 1940s 920s and 1930s the company diversified into warehousing and the manufacture of handicrafts. Shortly after Fung Pak-Liu passed away in 1943, his son Fung Hon-Chu assumed charge of the company. Two years later, silent partner Li To- Ming retired and sold his shares to the company. The company retained Li’s surname, a homophone “I’m not an Internet guy, I’m a business guy,” quipped William Fung, managing director of Li & Fung Trading Co. Clad in his chinos and black American Eagle T-shirt, Fung looked much more like a new economy entrepreneur than the selfdescribed offline, “old economy relic”: “I’m 51, I’m more than a grey hair in Internet terms, I’m a fossil.”1 Nor did lifung.com, his elder brother Victor’s new online company, resemble a typical Internet start-up, particularly with a 96-year-old parent born at the end of the Qing Dynasty. In August 2000, the day before beta launch of the new business-to-business (B2B) e-commerce portal, William described the challenges facing Li & Fung: About three or four years ago, Victor and I discussed the Internet and how it impacts us. Our starting point was a defensive posture: Would the Internet disintermediate us? Would we get Amazoned2 by someone who will put together all of the information about buyers and factories online? After a lot of research we realized that the Internet facilitates supply c Contention between the United States and Japan during the 1930s and early 1940s hain management and we weren’t going to be disintermediated. The key is to have the old economy know-how and yet be open to new economy ideas.>