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Cheap Labor Came at a high priCe in 2014
asiainspeCtion Q1 barometer
hong Kong, january 14, 2015
asiainspeCtion (AI)
a Leading gLobaL QuaLity ControL and CompLianCe serviCe provider that partners with brands, retaiLers and importers around the worLd
to seCure, manage and optimize their suppLy Chain,
today announces its 2015 Q1 Barometer, a quarterly synopsis on outsourced manufacturing and the quality control services industry.
Looking back at 2014, AI’s data reveals some interesting trends in manufacturing output quality in Asia
(measured by the Acceptable Quality Level results of onsite inspections) for four major sourcing regions in Asia.
Notably, AQL inspection results in Bangladesh have gradually improved throughout the year,
from an initial high of over 50% Beyond AQL inspections
to just above 25% in December.
2014 QuaLity trends:
aLL is not made eQuaL
It is likely that this is due to the
enormous pressure being appLied on brands to demonstrate ethically compliant supply chains in Bangladesh
following incidents such as Rana Plaza in 2013, causing buyers to more carefully select suppliers and push them to improve standards.
On the food front, data from AsiaFoodInspection, AI’s food inspection arm, shows that
48.1% of inspeCtions in China faiLed in 2014.
China is struggling with low consumer confidence in food safetyas the country was hit with multiple scandals.
Most notably, the closure of Shanghai Husi Food Co. by authorities after it was discovered to be
suppLying expired meat to gLobaL brands such as
and
a year ofLost ChiLdhoods
AI’s figures for 2014 shows that
5.6% of ethiCaL audits in asia faiLed for ChiLd Labor,a slight increase over the Q2 figure of 5.5%.
The US Dept. of Labor released a new report in October stating that
there are 168 miLLion ChiLd Laborers worLdwide,and that over 85 million are engaged in hazardous work.1
Actual children laborers discovered by AI in 2014
These aren’t just numbers on a page, AI auditors continue to discover child laborers in factories.
there’s a disbeLief that ChiLd Labor Can stiLL exist in 2015,
but this is reaL.
Tackling the issue is no easy task for brands and retailers in supply chains that are increasingly complex and fragmented,
but aCtion Can be taKen to safeguard these ChiLdren’s ChiLdhoods
““
said sebastien breteau, AsiaInspection CEO.
The annual global slavery index by the WFF reported
35 miLLion peopLe in modern sLavery worLdwide in 2014, with India and China topping the list.2
Further, Thailand’s billion dollar fishing industry is struggling after the International Labor Organisation (ILO) announced that
nearLy 17% of worKers in the industry have experienCed forCed Labor.3
no heaLth nor safety for worKers
The past year also saw unrest regarding working conditions in Asia. AI’s 2014 figures show that Health & Safety is consistently
the main reason for failure of ethical audits,
Bangladesh scored 4.2 China scored 4.4
with India scoring the worst, at an average of 3.8/10.
The Accord on Fire and Building Safety in Bangladesh identified
more than 80,000 safety issues in 1,106 factories inspected.4
The ILO also published a report stating that Vietnamese factories still had much work to do to meet international standards for fire safety.5
Working Hours and Compensation
are the second most common cause of failure in AI’s ethical audits.
Here again, India scores an average of 3.9/10, worse than China at 5.3 and Bangladesh at 6.2.
However, conflict remains and Cambodia’s overall ethical audit score for 2014 was just 5.2/10.
Unions claim that
1,200 worKers were fired without severanCe after they went on strike over working conditions in December.7
The Cambodian Labor Advisory Committee agreed to increase the minimum wage for garment workers by 28%
to US$128 per month, with the new wage taking effect on January 1, 2015.6
what to expeCt in 2015 gLobaL sourCing
While 2014 did not have any major disasters involving the loss of human life on the scale of Rana Plaza,
it is evident that despite the work done to raise awareness of ethical compliance,
gLobaL suppLy Chains stiLL suffer from widespread labor abuses.
were found to have one or more Major Non-Compliance for Health & Safety in 2014.
AI’s data shows that
of factories audited by AI in India
of factories audited by AI in Bangladesh
50% 43%
transparenCy and anaLytiCs wiLL be Key topiCs in 2015 .
Sedex Global published a briefing in September highlighting the risks of corruption and how it exacerbates supply chains issues, and methods to combat the risk.8
Key among those are audit programsmated to business intelligence systems such as those developed by AI,
which allow real-time oversight of suppliers.
The Deloitte Global CPO Survey 2014 reveals that
these systems wiLL be an essentiaL tooL in 2015 for understanding supply chains.
of CPO’s are investingin supplier portals
list quality of data as a barrier to the use of effective analytics
cite lack of integration.9
65% 67%
40%
Geographically,
changes in global manufacturing cost-competitiveness will likely
Cause buyers to taKe advantage of Lower Costs and proximity to consumer markets in countries such as Mexico.
China’s estimated cost advantage over the US is now less than 5% as the country transitions to increasingly value-added production
with higher labor costs.10
Established and Emerging Sourcing Regions
This also allows developing Asian countries such as India and Indonesia, whose costs have risen at a comparatively lower rate,
to capture manufacturing volume in apparel and other goods as buyers develop China +1 sourcing strategies.
year in review figuresKey Kpi’s
bangladesh China india vietnam
* Acceptable Quality Level - Source : AsiaInspection data
january 2
014
february 2
014
march 2014
april 2014
may 2014
june 2014
july 2014
august 2014
september 2014
october 2014
november 2014
december 2014
60
50
40
30
20
10
0
2014 Beyond AQL* Percentages
bangladesh China india vietnam
Source : AsiaInspection data
january 2
014
february 2
014
march 2014
april 2014
may 2014
june 2014
july 2014
august 2014
september 2014
october 2014
november 2014
december 2014
10
9
8
7
6
5
4
3
2
1
0
2014 Average Audit Scores
bangladesh China india vietnam
Source : AsiaInspection data
january 2
014
february 2
014
march 2014
april 2014
may 2014
june 2014
july 2014
august 2014
september 2014
october 2014
november 2014
december 2014
250
200
150
100
50
0
-50
-100
2014 Inspection Growth Percentages
asiainspeCtion is a Leading gLobaL QuaLity ControL and CompLianCe serviCe provider
that partners with international brands, retailers and importersto secure and manage their global supply chain.
ABOUT ASIAINSPeCTIONyour e yes in the faCtory! ™
With unique web-based quality control management,
ai offers produCt inspeCtion, suppLier audit programs and Laboratory testing serviCes
for more than 4,000 clients worldwide.
dediCated aCCount manager
A supply chain partner offering advice on your specific needs
Comprehensive onLine management
Use your real-time dashboard to benchmark and identify your high performing suppliers
produCt expertise
Hundreds of off-the-shelf customizable product specific checklists
mobiLe
Book, check reports and make decisions on the go
industry Leading turnaround
Onsite within 48 hours. Reports the same day 80% of the time
fLexibLe
Cancel or modify orders up to 4pmthe day before the inspection for free
trusted and truLy independent
100% QC. AI is not involved in sourcingand protects your factory information
aLL-inCLusive priCing
Easy to budget. No hidden costs
ABOUT ASIAINSPeCTIONyou r e y e s in t h e faCtory ™
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W W W . A S I A I N S P E C T I O N . C O M
press ContaCt Michael Mesarch • Tel: (+86) 755 2223 9888
Email: [email protected]
1/ US Dept. of Labor, Bureau of International Labor Affairs. 2013 Findings on the Worst Forms of Child Labor. October 7th 2014. http://www.dol.gov/ilab/reports/child-labor/findings/2013tda/2013tda.pdf
2/ Walk Free Foundation. 2014 Global Slavery Index. November 17th 2014. http://www.globalslaveryindex.org/findings/
3/ International Labour Organisation. Employment Practices and Working Conditions in Thailand’s Fishing Sector. Accessed December 17th 2014. http://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/documents/publication/wcms_220596.pdf
4/ Accord on Fire and Building Safety in Bangladesh. Accord Reached Important Milestone by Completing Initial Inspections of Factories in Bangladesh. October 14th 2014. http://bangladeshaccord.org/2014/10/accord-reaches-important-milestone-completing-initial-inspections-factories-bangladesh/
5/ International Labour Organisation. Despite Some Progress, Garment Factories Need to Strengthen Fire Safety. Dec. 11th 2014. http://www.ilo.org/hanoi/Informationresources/Publicinformation/Pressreleases/WCMS_327036/lang--en/index.htm
6/ Associated Press. Cambodia Increases Garment Industry Minimum Wage. November 12th 2014. http://bigstory.ap.org/article/81342bb04fe7451da943cc0da4c5575f/cambodia-increases-garment-industry-minimum-wage
7/ Cambodia Daily. Unions Claim Garment Factory Fired 1,200 Workers for Strike. December 10th 2014. https://www.cambodiadaily.com/news/unions-claim-garment-factory-fired-1200-workers-for-strike-73934/
8/ Sedex. New Sedex Briefing Highlights Need for Global Response to Corruption. December 11th 2014. http://www.sedexglobal.com/new-sedex-briefing-highlights-need-for-global-response-to-corruption/
9/ Deloitte. The Deloitte Global CPO Survey 2014. December 2014. http://www2.deloitte.com/uk/en/pages/operations/articles/cpo-survey.html
10/ Boston Consulting Group. The Shifting Economics of Global Manufacturing. August 19th 2014. https://www.bcgperspectives.com/content/articles/lean_manufacturing_globalization_shifting_economics_global_manufacturing/
footnotes