Asia’s Shifting Supply Chain – When Chasing Lower Costs Sacrifices Safety

Shenzhen, China, October 4, 2013 - QIMA, a leading provider of quality control services for businesses importing from Asia, Africa, Southern Europe and Latin America, today announces the QIMA 2013 Q3 Barometer, a quarterly synopsis of manufacturing and the quality control services industry.

North American Importers Drive Surge in Social Accountability

Since the Rana Plaza Factory collapse in April 2013, QIMA figures show a +52% increase in Factory Accountability Audits throughout Asia for Q3 2013 compared to Q3 2012 and a +167% spike in Bangladesh. This growth has been sustained throughout Q3 with September seeing the biggest demand for Audits QIMA has ever seen. Demand has increased the most from North American importers, up +72% for the period.

Growth in North America has charged forward with major retailers, brands and apparel companies founding the Alliance for Bangladesh Worker Safety. Companies including Target, Gap Walmart, Nordstrom, Macy's and Kohl's have pledged to achieve 100% inspections at all alliance factories by 2014.

Factories in China Shift Inland, Score Low in Social Compliance

As costs have continued to rise in developed manufacturing areas such as Guangdong, Jiangsu, Shandong and Zhejiang, manufacturing has been moving inland where labor costs can be up to 70% cheaper.

QIMA analyzed data from the Social Audits performed at factories in China, with all audits adhering to the internationally recognized SA 8000 or Sedex (SMETA) Standards for Social and Ethical Compliance. For the study, compliance scores were measured as a number between zero and ten, with ten representing full compliance.

The average compliance score within China in 2013 was 6.22/10. Factories in Western China, where buyers have been chasing lower costs, scored the lowest with a compliance score of 5.91/10. China’s largest manufacturing hub, the Guangdong province, had the highest average compliance score of 7.1/10, followed by the North at 6.12/10 and the well-known eastern seaboard exporting provinces 6.08/10.

"Buyers should be aware that shifting production to cheaper regions is likely at the cost of social compliance," said Sebastien Breteau, CEO of QIMA. "Recent events through Asia have shown that the social and safety risk is very real for the whole supply chain. Chasing lower production costs must come with a holistic approach of on-site monitoring and auditing."

Lack of Chinese Food Safety Controls Allow Consumer Illness and Death to Continue

Scandals continue to rock the Chinese food supply: 20 tons of fake beef were seized in China, arsenic was found in Chinese herbal remedies by Sweden’s Food Safety Watchdog and formaldehyde was found in Chinese fish being sold in US supermarkets.

According to the CDC, 48 million Americans contracted food-borne illness in 2011, of which 3,037 died. Each year over 10 million containers of food are imported to the US with over 60% coming from developing countries, with China leading. The FDA has admitted it only inspects 1.5% of incoming food shipments, though it rejects 16,000 containers annually.

Despite these alarming numbers, the U.S. Department of Agriculture is relaxing regulations on food imports from China; it will now allow poultry slaughtered in the U.S. and Canada to be processed in China and returned to the U.S. for consumption.

Showing an increasing need to control food supply chains, QIMA saw Food Inspections increase +93% in Q3 2013 compared to Q3 2012, with China seeing growth of +57%. Food Hygiene Audits increased +89%, showing growing concern from the food industry in making sure Asian facilities are up to international standards.

About QIMA - Your Eyes in the Supply Chain!™

QIMA is a leading quality control service provider that partners with international Brands, Retailers and Importers to secure and manage their supply chain in Asia, Africa, Southern Europe and Latin America. With unique web-based quality control management tools for companies seeking Product Inspection, Factory Audit and Laboratory Testing services, QIMA serves 2,700 clients with twenty offices worldwide.

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