ai q3 barometer: asia pacific, china remain unfazed by global trade uncertainty, apparel supply...

ASIA PACIFIC UNFAZED BY GLOBAL TRADE UNCERTAINTY, APPAREL SUPPLY CHAINS

STRUGGLE WITH RESPONSIBLE SOURCING

ASIAINSPECTION Q3 BAROMETER

HONG KONG, JULY 7, 2016

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 2016 Q3 Barometer, a quarterly synopsis on outsourced manufacturing and the quality control services industry.

CHINA AND ASIA PACIFIC STRONG IN THE FACE OF GLOBAL TRADE UNCERTAINTY

Growth in Asia Pacific promises to remain strong at 6%, China to retain its Q1 pace of 6.7% reflected in AI data of +7% growth in China

for Inspection and Audit volumes year-to-date.

CHINA’S CONSUMER GOODS MARKET MATURING, BUT QUALITY STILL A PROBLEM

Local production quality in China remains a struggle, as inspections performed for local brands and buyers saw failure rates increase by 28% YTD 2016 vs. 2015.

+28%YTD 2016 vs. 2015

PAKISTAN AND INDIA: APPAREL EXPORTS CLIMBING

Pakistan and India experience double-digit YOY growth in apparel export to the EU.

AI data showed a two-fold increase in product inspections over the last 12 months, while failed inspections rates rose +26% in India and +42% in Pakistan YTD.

+42%

+26%

Inspection Failure Rate Y TD Apparel Exports to EU

APPAREL MANUFACTURERS STRUGGLE WITH SOURCING AND SAFETY

A recent report slammed major brands for doing “virtually nothing” to ensure their cotton is sustainable.

Forced and child labor remains prevalent in key cotton sourcing destinations (Uzbekistan, Turkmenistan).

APPAREL MANUFACTURERS STRUGGLE WITH SOURCING AND SAFETY

One in four factories in the Bangladeshi RMG sector requires major retro-fitting remedial work, but financing remains a problem.

AI structural audit data shows that 53.3% of factories audited “Require Immediate Action” or “Need Improvement”.

53.3%“REQUIRE IMMEDIATE

ACTION” or “NEED IMPROVEMENT”

GLOBAL APPAREL AND FOOTWEAR TRADE GREW BY 5% IN 2015

Asia Pacific remains the largest regional market, while The Middle East and Africa are the most dynamic regions for apparel and footwear sales.

AI data shows a growing yet immature manufacturing base in Africa: failed inspections rate surged by 15% in 2016 YTD vs. 2015.

+15%YTD 2016 vs. 2015

SUSTAINABILITY ALSO A STRUGGLE FOR THE JEWELRY SECTOR

As the EU adopts the framework to eliminate conflict minerals, more jewelry manufacturers turn to audit programs of the Responsible Jewelry Council.

UNETHICAL LABOR PRACTICES REMAIN AN ISSUE ACROSS INDUSTRIES

AI data shows that in Q2 2016, 5.9% of ethical audits failed because of child labor, an uptick from 4.6% in Q1.

5.9%FAILED BECAUSE OF

CHILD LABOR

PRODUCT RECALLS: RAMPANT YET INEFFECTIVE

Research shows that less than 50% of product recalls are effective, due to lack of information, inconvenience, long waits, and bureaucracy.

50%INEFFECTIVE

PRODUCT RECALLS: RAMPANT YET INEFFECTIVE

According to AI lab testing data, in Q2 14% of tested products failed to comply with safety standards when tested at the source.

14%FAILED IN Q2

AsiaInspection (AI), a leading global quality control and compliance ser vice provider

that partners with Brands, Retailers and Importers around the world to secure, manage and optimize their supply chain.

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ABOUT ASIAINSPECTION YOUR EYES IN THE FACTORY!™

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FOOTNOTES

1. http://www.worldbank.org/en/news/feature/2016/06/07/global-growth-forecast-again-revised-lower

2. http://www.focus-economics.com/regions/east-and-south-asia

3. http://atimes.com/2016/05/china-establishing-more-advanced-consumer-goods-sector/

4. http://www.just-style.com/analysis/eu-trade-trends-show-10-rise-in-clothing-imports-last-year_id128251.aspx

5. http://www.sustainablebrands.com/news_and_views/supply_chain/hannah_furlong/top_cotton_users_over_75_appear_do_virtually_nothing_sustainabili

6. http://www.just-style.com/news/map-shows-child-labour-risks-in-cotton-supply-chains_id128119.aspx

7. http://gbc-education.org/five-reasons-why-eradicating-child-labor-is-crucial-for-education/

8. http://www.ecotextile.com/2016062322198/materials-production-news/1-in-4-bangladesh-factories-face-major-remediation-costs.html

9. https://www.just-style.com/news/ten-key-trends-in-apparel-and-footwear-markets_id128169.aspx

10. http://www.fastcoexist.com/1680391/how-to-keep-conflict-minerals-out-of-your-daily-life-sort-of

11. http://www.wsj.com/articles/eu-agrees-on-measures-regulating-conflict-minerals-1466103065

12. http://www.stuff.co.nz/business/81600438/Less-than-half-of-product-recalls-work-Consumer

13. http://www.telegraph.co.uk/news/2016/06/18/faulty-tumble-dryers-cause-three-fires-a-day-and-must-be-recalle/

14. http://www.philly.com/philly/news/20160630_Can_t_get_through_on_Ikea_s_recall_hotline__We_tried_35_times__Here_s_what_happened_.html