QIMA 2013 Q2 Barometer

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1,800+ Deaths Later, Is Social Accountability on the Rise in Asia?

Shenzhen, China, July 5, 2013 - QIMA, a leading provider of quality control services for businesses importing from Asia and Africa, today announces the QIMA 2013 Q2 Barometer, a quarterly synopsis of Asia-based manufacturing and the quality control services industry.

Silver Lining to a Fatal Quarter: Rise in Social Audits

In the wake of the tragic fire at the Tarzeen Fashion Factory in late 2012, thousands more factory workers died in preventable accidents across the Asian Continent in Q2 2013. Bangladesh was once again the major focus after a factory collapse in Dhaka on 13 May killed over 1,100 people. During Q2 there were also continuous reports of deaths in factory fires1 which kept Bangladesh in the limelight.

Meanwhile, QIMA saw a +56% increase in Social Audit orders including, notably, Fire Safety Audits in Asia in Q2 2013 compared to Q2 2012. In particular, Bangladesh orders increased +64% with other Asian countries following close behind; China (+41%) and India (+53%).

Global brands were singled out as responsible parties2 after it was found that their products were produced in the affected factories, which caused them to initiate Audit programs across their supply chains as a first response. The largest apparel brands later took a clearer stance towards worker safety by signing the Bangladesh Fire and Safety Accord in May3.

The backlash caused by these disasters resulted in Western buyers understanding the full impact of ethical and social non-compliance in their supply chain. A recent consumer survey4 showed that 70% of people were willing to pay more for their clothes if they knew that workers were being paid a fair wage in good conditions: the Bangladesh events may have finally changed consumers' attitudes and made a winning case for brands and importers to significantly focus on Social conditions in manufacturing premises.

The most requested standard by buyers was the Global Standard SA8000, which encourages organizations to develop, maintain and apply socially acceptable practices in the workplace.

Consumers Forcing Brands into Full Supply Chain Monitoring

Consumer demand for quality goods at competitive prices has traditionally caused importers to focus on Product Inspections, such as Pre-Shipment Inspections and Container Loading Checks to reduce cost and waste. Whilst inspections are still on the rise (+22% in Q2 2013 compared to Q2 2012), QIMA figures show that besides Social Auditing, there is also additional demand from importers for Factory Manufacturing Practices Audits (+38%).

In particular Q2 2013 saw increased interest from buyers around the globe in finding ways to tackle sub-contracting to unlicensed factories. It is often difficult to get full visibility over one's supply chain when relying on 3rd party factories, and Factory Audit programs coupled with Inspections at the actual manufacturing location are found to be an efficient monitoring solution.

Manufacturing Competition: China, Vietnam, India & Bangladesh

Q2 Performed Inspections in China continued to grow in double-digits, at +15% vs. last year. Even if China still dominates global manufacturing (retaining its crown as the world's largest manufacturer and still exporting in value 20 times more than Vietnam or 70 times more than Bangladesh for instance), QIMA figures showed that Performed Inspection growth was higher in Vietnam (+38%), India (+35%) and Bangladesh (+44%).

Although China is set to remain as the major sourcing region in Asia, as described in QIMA previous barometers, structural changes including an expected +9.2% increase in wages in 20136 are starting to make other Asian countries a more attractive option for manufacturing goods which are lower down the value added chain, such as garments and textiles.

Chinese Food Scandals Cause Jump in Food Inspections

Despite continuous scandals that expose problems in the Chinese food supply (high levels of toxic chemical Cadmium found in rice7, rat meat being passed off as lamb8 and eggs preserved with a toxic additive9) China remains a growing source of food for export, with the FDA estimating an annual +9% growth in exports to the US10.

This means global importers are incentivised more than ever to check their supply chains and QIMA figures show an increase for Performed Food Inspections of +72% in Q2 2013 compared to Q2 2012, with China seeing the biggest growth at +84%. In addition, QIMA figures showed an increase of +27% in Food Hygiene Audits (GHP) abiding to international requirements, as well as individual HACCP plans.

About QIMA - Your Eyes in the Supply Chain!™

QIMA is a leading quality control services provider for importers sourcing from Asia and Africa, providing web-based account management, fast scheduling and highly competitive all-inclusive pricing for companies seeking Product Inspection, Factory Audit and Laboratory Testing services. QIMA serves clients from over 100 countries worldwide.

Press Contact
Michael Mesarch
Tel: (+86) 755 2223 9888
Email: press@qima.com

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