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Li & Fung, the biggest supplier to Wal-Mart, is convinced that China’s leaders will carry through on their talk of shifting the country’s economy toward domestic consumption and away from exports.

The company is looking to buy Chinese companies in the fashion, cosmetics, and furniture sectors over the next three years, Li & Fund president Bruce Rockowitz, told Bloomberg on January 3. And the company isn’t shooting for the luxury market either. “The mid-tier, there is no place to buy,” Rockowitz said. “We want to dominate the mid-tier and below.”

Li & Fung just completed its $900 million takeover of Hong-Kong’s Integrated Distribution Services Group. Integrated distributes consumer and health-care products in eight Asian companies, including China. That deal is just one part of $2 billion in acquisitions that Li & Fung announced in 2010.

The company’s strategy is shifting from the days when its goal was to build up a network of producers, distribution companies, and logistics companies that would let it link supply overseas companies such as Wal-Mart with to Chinese producers of everything from toys to Tommy Hilfiger clothing.

In the last year or two Li & Fung has made acquisitions that seem targeted at giving it more control over the goods it distributes. For example, in October 2010 Victor and William Fung, the billionaire bothers who own the parent company of Li & Fung, bought a 1.03% stake in Japan’s Sanrio, the marketer of the Hello Kitty brand. Just a little earnest money that could grow into a closer relationship—possibly distribution of Hello Kitty products in China?– between Sanrio and Li & Fung, which already outsources manufacturing in China for Sanrio.

One of Li & Fung’s goals, according to Rockowitz, is to bring U.S. and European brands, targeted at the mid-tier consumer, into China and then distribute them in China through the company’s existing distribution system.

Not that Li & Fung intends to abandon its traditional model. Mild inflation, Rockowitz figures, is good for the company’s business because it means more U.S., European, and Japanese companies will be looking for sources of lower-priced supply.

Li & Fung trades on the U.S. over-the-counter market under the symbol LFUGY. Volume recently has averaged 6,800 shares a day. The big volume is in the company’s Hong Kong home market where the stock trades under the ticker 494.HK.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Sanrio and the Hong-Kong-traded shares of Li & Fung as of the end of November. For a full list of the stocks in the fund as of the end of November see the fund’s portfolio at  I’ll have the fund’s portfolio as of the end of December posted in a few days.