Asian Safety Audits Jump 56 Percent in Q2

7/8/2013
AsiaInspection, a provider of quality control services for businesses importing from Asia and Africa, announced the AsiaInspection 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 May 13 killed over 1,100 people. During Q2 there were also continuous reports of deaths in factory fires which kept Bangladesh in the limelight.

Meanwhile, AsiaInspection saw a 56 percent 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 percent with other Asian countries following close behind; China (41 percent) and India (53 percent).

Global brands were singled out as responsible parties 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 May.

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 survey showed that 70 percent 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 percent in Q2 2013 compared to Q2 2012), AsiaInspection figures show that besides Social Auditing, there is also additional demand from importers for Factory Manufacturing Practices Audits (38 percent).

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 percent 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), AsiaInspection figures showed that Performed Inspection growth was higher in Vietnam (38 percent), India (35 percent) and Bangladesh (44 percent).

Although China is set to remain as the major sourcing region in Asia, as described in AI previous barometers, structural changes including an expected 9.2 percent increase in wages in 2013 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.
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