core global sourcing update q3 2014 final

Global Sourcing Update

Facts & Insights

Produced by:

Q3 2014 - Global Sourcing Update CORESOLUTIONS

1 www.coresolutions.com [email protected]

Americas: +1.908.898.1880 Europe: +44.20.8133.0328 Asia: +852.2378.6300

FOREWORD

[GLOBAL SOURCING UPDATE] Core Solutions’ Global Sourcing Update provides research and analysis aimed at informing global sourcing and buying decisions for retailers, brands and other sourcing professionals. Each issue includes a snapshot of key information impacting global sourcing, such as economic conditions in sourcing countries, container shipping prices, currency exchange rates and commodity costs. We also cover hot topics ourselves and include insight from customers and analysts.

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Contents

Purchasing Manager’s Index ........................................................................................................ 3

Major Economic Indicators ........................................................................................................... 4

Global Competitiveness Index: Selected Indicators, 2013-14 (Ranking of 148 countries) ............ 5

China Minimum Wage Snapshot .................................................................................................. 6

Global Low Cost Sourcing Country Wage Snapshot .................................................................... 7

Container Freight Rates for Major Routes .................................................................................... 8

Currency Exchange Rates ......................................................................................................... 10

Global Commodity Rates ........................................................................................................... 11

Crude Oil ..................................................................................................................................... 11

Rubber ......................................................................................................................................... 11

Metals .......................................................................................................................................... 12

Wood ........................................................................................................................................... 13

Wool, Hides, Cotton .................................................................................................................... 13

Plastics and Fibers ...................................................................................................................... 14

Quality Focus ............................................................................................................................. 15

Topic Spotlight: The Promise of Myanmar .................................................................................. 17

CBX Sourcing Solution ............................................................................................................... 18

Next Steps ................................................................................................................................. 19






Purchasing Manager’s Index To help understand industry and economic conditions in a country, the PMI Index tracks

variables such as output, new orders, stock levels, employment and prices across private

companies in the manufacturing, construction, retail and service sectors.

A reading below 50 indicates contraction from the previous month, while a reading above 50

indicates growth. Currently 22 countries and regions conduct the PMI survey and compilation,

based on an internationally standardized methodology.

This update looks at a selection of emerging economies and key sourcing countries, providing

indicators for recent months (based on data provided by Markit)

Trend: Manufacturing conditions in most emerging economies continued to improve going into

the second half of the year, with some exceptions due to political or inflationary conditions.

China’s manufacturing has seen somewhat of a turnaround in recent months, supported by

government policy interventions to stimulate recovery.

COUNTRY May 2014

Jun 2014

Jul 2014

INDICATORS

Brazil 48.8 48.7 49.1 Output fell steadily for the fourth consecutive month as Brazil’s economy stagnated

China 49.4 50.7 51.7 Operating conditions are improving with exports and output at highest level since March 2013

Czech Republic

57.3 54.7 56.5 The Czech manufacturing sector experienced a strong performance going into the third quarter

Egypt 48.7 51.5 -- Egypt’s private sector experienced solid improvements in output, orders and exports heading in to 2H 2014

India 51.4 51.5 53.0 Business conditions in India improved for the ninth consecutive month on high demand

Indonesia 52.4 52.7 52.7 Indonesian manufacturers reported a solid improvement with increasing purchasing activity in recent months

Mexico 51.9 51.8 51.5 Some increase in production with a forecast of moderate growth on new exports from abroad

Poland 50.8 50.3 49.4 Polish manufacturing entered a downturn in second half of the year with drop in new orders

Russia 48.9 49.1 51.0 A marked improvement in the third quarter signaled a turnaround in Russian manufacturing

South Africa

49.7 49.5 -- Private sector output and new orders continued to contract with an impact of mining strikes

South Korea

49.5 48.4 49.3 Output and new business fell as Korea’s manufacturing sector and remained weak

Turkey 50.1 48.8 48.5 Turkey’s manufacturing sector remained in a downturn on falling new orders and output

Vietnam 52.5 52.3 51.7 Expansion of Vietnamese manufacturing continued with some slowing due to inflation and high oil prices

PMI Index Source: HSBC, Markit



http://www.hsbc.com/news-and-insight/emerging-markets




Major Economic Indicators The price index for US imports from China stayed high in June as China’s export growth

increased, rising to a 13-month high of 104.1 in May and in June, after registering 103.8 in

March and in April. Total value of deals signed at the 115th Canton Fair fell 2.0% from the

previous session. Global merchandise trade gained only 2.1% in 2013, predicted to rise at a

faster pace in 2014. Selected highlights:

Cambodia – Exports of textiles and garments rose by 9% by Q1 2014, with an agreement reached to annually review the garment sectors minimum wage Indonesia – Exports declined 3.2% yoy to reach US $ 14.3 billion in April, while new president, Joko Widodo, elected in July, is expected to turn things around Vietnam – Anti-China riots impacted production while a garment industry development plan for 2020 was approved, with a target of 65% localization of raw materials by 2020

CPI (% yoy growth)

Dec 2013

Jan 2014

Feb 2014

Mar 2014

Apr 2014

May 2014

Bangladesh 7.4 7.5 7.4 7.5 7.5 -

Cambodia 4.7 4.5 - - - -

India 9.9 8.8 8.1 8.3 8.6 -

Indonesia 8.4 8.2 7.8 7.3 7.3 7.3

Pakistan 9.2 7.9 7.9 8.5 9.2 -

Philippines 4.1 4.2 4.1 3.9 4.1 4.5

Thailand 1.7 1.9 2.0 2.1 2.5 2.6

Turkey 7.4 7.8 7.9 8.4 9.4 -

Vietnam 6.0 5.5 4.7 4.4 4.5 4.7 Exports (% yoy growth)

Dec 2013

Jan 2014

Feb 2014

Mar 2014

Apr 2014

May 2014

Bangladesh 10.5 7.8 6.4 4.8 16.0 -

Cambodia 43.7 - - - - -

India 3.5 3.8 -3.7 -3.2 5.3 -

Indonesia 10.3 -5.9 -2.5 1.2 -3.2 -

Pakistan 26.1 1.9 18.1 4.9 -10.0 -

Philippines 24.9 -3.0 11.6 12.4 1.3 -

Thailand 1.8 -2.1 2.3 -3.2 -1.0 -2.3

Turkey 4.6 8.3 5.7 12.4 - -

Vietnam 15.4 -0.8 13.8 14.8 18.9 15.9

Imports (%yoy growth)

Dec 2013

Jan 2014

Feb 2014

Mar 2014

Apr 2014

May 2014

Bangladesh 29.9 8.2 15.7 25.6 - -

Cambodia 26.8 - - - - -

India -15.3 -18.1 -17.1 -2.1 -15.0 -

Indonesia -0.8 -3.5 -9.9 -2.3 -1.3 -

Pakistan -2.5 9.9 6.4 -1.6 4.0 -

Philippines 2.7 24.7 1.7 10.6 3.0 -

Thailand -9.9 -15.5 -16.6 -14.2 -14.5 -9.3

Turkey 16.7 2.6 5.9 -3.0 - -

Vietnam 16.1 -5.5 12.6 12.9 12.2 10.3

Source: Fung Group, various statistical bureaus






Global Competitiveness Index: Selected Indicators, 2013-

14 (Ranking of 148 countries)

The Global Competitiveness is a ranking of countries based on their competitiveness across

different measures such as government regulation, labor market efficiency, education,

infrastructure and other measures important to doing business in a country. Below is a selection

of emerging economies which are important sourcing locations. As might be expected, Countries

which made significant gains in the index include Bangladesh, Indonesia, the Philippines and

Vietnam, while China remained relatively flat.

Source: World Economic Forum






China Minimum Wage Snapshot

Minimum wages may be set at the city, province or administrative unit and vary considerably (as

the 2013 wage map below indicates) - although the 2011-15 Five Year Plan stipulates an annual

increase of 13%. Actual increases have been in excess of 10% annually for more than a decade.

Source: China Briefing, Dezan Shira

2014 Minimum Wage Updates

Region Monthly Min Wage (RMB) Hourly Min Wage (RMB Effective Date

Shanghai 1,820 17 Apr. 1, 2014

Shenzhen 1,808 16.5 Feb. 1, 2014

Beijing 1,560 16.9 Apr. 1, 2014

Shandong Class A District: 1,500 Class A District: 15 Mar. 1, 2014 Class B District: 1,350 Class B District: 13.5

Class C District: 1,200 Class C District: 12

Shaanxi Class A District: 1,280 Class A District: 12.8 Feb. 1, 2014 Class B District: 1,170 Class B District: 11.7

Class C District: 1,060 Class C District:10.6

Class D District: 970 Class D District: 9.7

Chongqing Class A District: 1,250 Class A District: 12.5 Jan 1, 2014

Class B District: 1,150 Class B District: 11.5

Trends: By April 2014, minimum

wage increases were seen in

seven key economic areas of

China (as indicated in the table

above). It is expected that this

trend will continue through the

remainder of 2014, affecting

approximately 28 regions.

According to some analysts, wages

are expected to increase at a more

moderate rate of 8% in 2014

compared to 10% plus in previous

years. The labor market is

expected to remain tight with skill

shortages, an aging population and

less migrant workers. Studies show

that productivity among Chinese

workers is higher, which should

offset rising labor costs.

All four regions (central, north,

East, West) witnessed double

digit wage growth in 2013,

ranging from 13.5% to 16.0%

New Wage Agreements:

Shanxi – April 1, 2014

Qinghai – May, 2014

Yunnan – May 1, 2014

Sichuan – July 1, 2014

Jiangxi – July 1, 2014






Global Low Cost Sourcing Country Wage Snapshot Below is a snapshot of minimum wages in key Asia sourcing locations, with the addition of Egypt

and Ethiopia. Wages often vary by region or province and in some cases might include costs

other than the base wage. In cases with a distinct variance, we provide an average. With greater

visibility into social conditions and increasing unrest and union pressure, wages in traditional low

cost sourcing countries are on the rise across the board.

Note: Consult Fair Wage Guide to calculate benchmarks for wages in particular countries on an

hourly or piece rate basis and determine a fair wage in those regions.

BANGLADESH CAMBODIA CHINA EGYPT ETHIOPIA

$68/month (Dec 1, 2013) US$ 83/month US$ 188/month US$ 105/month US$ 23/month

The minimum wage for entry level workers will increase by 77% to US$68/month from $38 per month. This includes: US$ 38.55 - basic wage US$ 15.42 – rent US$ 3.21 – medical US$ 2.57 - transport US$ 8.35 - food subsidy.

Breakdown US $ 55 – Regular + US $ 6 –living +US$ 10 – Attendance +US$ 5 – Health +US$ 7 – Transport Total = US$ 83 Wages expected to increase $20-40 in 2014.

Set locally, ranges from US$ 138 per month in Jiangxi Province to US$ 238 per month in Shenzhen, Guangdong Province. Wages increasing at least 10% per year.

Currently there is only one national minimum wage; there are no sectorial rates or occupation-based rates. Only one national rate: EGP 700

Some government institutions and public enterprises set their own minimum wages: public sector employees, earned a monthly minimum wage of US$ 23

INDIA INDONESIA LAOS MALAYSIA MYANMAR

US$ 60/month US$ 71-230/month US$ 79 per month US$ 297 per month US$ 65

From April 1, 2011 the Minimum Wage was raised to US$ 1.73 /day. Wages vary by region. US$ 2.18 per day in Bihar to US$ 3.40 per day in Haryana. The rupee hit an all-time low of 60.76 against the US dollar on 26 June.

Depends on region. 17 areas have different minimum wage. E.g. Jakarta: US$ 230 Solo: US$ 109 Central Java: US $ 71 Rupiah depreciated to new low: closed at 10,297 against the US dollar on 14 August

Expecting US$ 120 at end of June 2013 – negotiating Increase needed to offset migration to Thailand

US$ 79 per month; employers required to pay US$ 1 meal allowance per day.

70%-80% of textile workers are foreigners

US$ 297 per month on the Peninsula Malaysia, and US$ 261 per month for the states of Sabah, Sarawak, and Labuan

Rates vary widely.

Rate for day laborers is $0.50 per day. Min wage was temporarily increased to $65 per month pending approval of a new wage bill in late 2013.

PHILLIPPINES SRI LANKA THAILAND VIETNAM

US$ 190- 220 /month US$ 63 US$ 300/ month US$ 78 - 111 /month

Garments are made in 3 regions and wages range from $6-8 per day.

In 2013 minimum wages will be replaced with a two-tier system. 1

st tier: Minimum

floor wage for new hires/ low skilled. 2

nd tier: productivity

– based system. Manila - raise to 466 pesos (US$10/day) as of October

In the industrial sector, minimum wages are varied depending on the worker category. Semi-skilled: US$ 55 – US$ 63 Skilled: US$ 59 – US$ 75

Last increase was in April 2012, up 40% Automotive industry expansion means textile workers will migrate US$ 300 per month applies from 1

st Jan

2013

US$ 85 -95 per month (urban), US$ 67-74 per month (rural) for unskilled laborers at private enterprises Proposed min wage increase of US$ 12-19 (15-17%) per month as of Jan 2014

Sources: WageIndicator.org, SAFSA, Wikipedia



http://fairwageguide.org/




Container Freight Rates for Major Routes

The rates below are supplied by The World Container Index - which reports actual spot

container freight rates for selected East-West trade routes – and Xeneta which relies on data

provided by shippers, allowing users to cross-reference prices. All indices are reported in USD

per Forty Foot Container. We report on historical and forward looking rates for key Asia-Europe

and Asia-U.S. routes.

Analysis: Demand for containerized freight has been strong in Europe and North America.

Despite and over-supply of freight shipping, container freight rates are not expected to drop

much in the coming year as economies continue to recover. Container shipping companies are

still struggling to make a profit due to overcapacity and a volatile global economic climate.

Source: www.worldcontainerindex.com



http://www.worldcontainerindex.com/

https://www.xeneta.com/why-xeneta

http://www.worldcontainerindex.com/




Shanghai – Antwerp 40ft Market average: $2,021 Market low: $1,497

Hong Kong – Hamburg 40ft Market average: $2,759 Market low: $2,099

Shanghai – Rotterdam 40ft Market average: $2,124 Market low: $1,616

Source: www.xeneta.com

Source: www.xeneta.com



http://www.xeneta.com/

http://www.xeneta.com/




Currency Exchange Rates

Following are exchange rates and indicators from 30 day to 2 year historical rates for major

currencies commonly factored into global sourcing costing estimations.

EURO to USD:

EURO to RMB:

USD to RMB:

EUR/USD - % change

2 years 8.86%

1 year 5.05%

6 months 0.00%

3 months -1.37%

30 days -0.07%

Source: Oanda

USD/RMB - % change

2 years -2.27%

1 year -0.30%

6 months 0.96%

3 months -0.12%

30 days -0.12%

Source: Oanda

EUR/RMB - % change

2 years 6.39%

1 year 4.74%

6 months 0.96%

3 months -1.49%

30 days -0.19%

Source: Oanda

The Euro declined against the USD through Q2, which is on a bullish trend, but is recovering as we head into Q3 2014.

The Euro has entered a weakening phase against all major currencies, including the RMB as the Euro zone recovery remains soft.

The Chinese Yuan appreciated slightly against the USD in the first half of 2014, which is expected to continue in the medium term.






Global Commodity Rates Cotton prices have fallen markedly since April as the Chinese government is clearing large

stockpiles. Viscose staple fibers fell while PP prices rose over past three months. Crude oil

prices continue to be volatile, as uncertainty in the Middle East continue and global oil demand is

expected to outpace supply in the near term, putting downward pressure on prices. Metal prices

eased during Q2 2014 due to weakening demand from China.

Crude Oil

90

95

100

105

110

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Crude Oil , average of three spot prices:

Dated Brent, WTI and Dubai Fateh

95

100

105

110

115

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Oil - Dated Brent, light blend 38 API, fob

U.K., US$ per barrel

9698

100102104106108110

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Oil - Dubai, medium, fob Dubai

Fateh 32 API, US$ per barrel

85

90

95

100

105

110

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Oil - West Texas Intermediate 40 API,

Midland Texas, US$ per barrel

0

20

40

60

80

100

120

140

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4Rubber, Singapore Commodity Exchange,

No. 3 Rubber Smoked Sheets, US cents per

pound Rubber

Rubber price continue a downward

trend in Q3, despite modest recovery

in Q2. Oversupply of natural rubber is

expected to exceed 4 million tons in

the near term.

Commodity Price Sources: IMF data, Index

Mundi, Plasticker






Metals

155160165170175180185

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-14

Ap

r-14

Ma

y-1

4

Metals Price Index, 2005 = 100, includes

Copper, Aluminum, Iron Ore, Tin, Nickel,

Zinc, Lead, and Uranium Price Indices

170017501800185019001950200020502100

Jun

-13

Jul-13

Au

g-1

3

Se

p-1

3

Oc

t-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Zinc, high grade 98% pure, US$ per metric

ton

19000

20000

21000

22000

23000

24000

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Tin, standard grade, LME spot price, US$

per metric ton

1500

1600

1700

1800

1900

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Aluminum, 99.5% min purity, LME spot

price, CIF UK ports, US$ per metric ton

1950

2000

2050

2100

2150

2200

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Lead, 99.97% pure, LME spot price, CIF

European Ports, US$ /metric ton

40

60

80

100

120

140

160

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

China import Iron Ore 62% FE spot (CFR

Tianjin port), US $ per metric ton

660067006800690070007100720073007400

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Copper, grade A cathode, LME spot

price, CIF Eur ports, US$ / metric ton

8000

10000

12000

14000

16000

18000

20000

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Nickel, melting grade, LME spot price, CIF

European ports, US$ per metric ton






Wood

Wool, Hides, Cotton

0

50

100

150

200Ju

n-1

3

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Soft Logs Average Export price for

Douglas Fir, US$ per cubic meter

270

280

290

300

310

320

330

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Soft Sawnwood, average export price of

Douglas Fir, U.S. Price, US$ per cubic

meter

100

150

200

250

300

350

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Hard Logs, Malaysian meranti, import

price Japan, US$ / cubic meter

780800820840860880900920940

Jun

-13

Jul-13

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Hard Sawnwood, Dark Red Meranti, C&F

U.K port, US$ per cubic meter

900

950

1000

1050

1100

1150

1200

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Wool, Coarse, Australian Wool Exchange,

US cents per kg

900950

100010501100115012001250

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Wool, fine, Australian Wool Exchange, US

cents / kilogram

0

20

40

60

80

100

120

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Hides, Heavy native steers, wholesale

dealer's price, fob Shipping Point, US cents

/ pound

75

80

85

90

95

100

Jun

-13

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-14

Ap

r-1

4

Ma

y-1

4

Cotton 'A Index', Middling 1-3/32 inch

staple, CIF Liverpool, US cents / lb






Plastics and Fibers

A selection of plastic related prices is provided below. These are calculated from offer prices in

the Plasticker Material Exchange, which provide an indication of trends.

Analysis: Despite a modest recovery of plastic related prices in Q2, prices experienced a strong

downward trend going in the second half of the year. Volatility in oil prices, oversupply of various

plastics, along with weaker demand from China, are contributing to this trend.

1

1.1

1.2

1.3

1.4

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Jun

-14

Nylon - Price of PA 6.6

Regrind/ Flakes (Euros/kg)

0.4

0.45

0.5

0.55

0.6

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Jun

-14

Polyester - Price Development of PET

Regrind/ Flakes (Euro/kg)

0.60

0.65

0.70

0.75

0.80

0.85

0.90

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Jun

-14

ABS Price Development of ABS Regrind/

Flakes (Euro/kg

0.42

0.44

0.46

0.48

0.5

0.52

0.54

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-14

Ma

y-1

4

Jun

-14

PVC - Price Development of PVC-h

Regrind/Flakes (Euro/kg)

0.52

0.54

0.56

0.58

0.6

0.62

0.64

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-1

4

Ma

y-1

4

Jun

-14

PP - Price Development of PP


0.5

0.55

0.6

0.65

0.7

0.75

Jul-1

3

Au

g-1

3

Se

p-1

3

Oc

t-1

3

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Ma

r-1

4

Ap

r-14

Ma

y-1

4

Jun

-14

PS - Price Development of PS


Source: Plasticker






Quality Focus

This new section of the Global Sourcing Update will focus on manufacturing/sourcing quality

related news and the impact on retailers and brands. This section is contributed largely by

AsiaInspection, a leading global provider of quality control services for businesses importing

from Asia, Africa, Southern Europe and Latin America.

Unrest Puts Increased Focus on Quality

Recent protests due to political tensions with China sent fear into supply chains, with Asia

Inspection figures showing that ordered inspections were 3.3 times higher than the average for

May 2013 to April 2014. This is due to increased concern from foreign buyers to ensure their

supply chain and quality has not been

disrupted. In Vietnam, textile and apparel

exports increased 18% year-on-year between

January and May, reaching $7.5 billion USD. In

the first half of the year apparel imports from

Vietnam into the US saw a 12.7% increase,

well ahead of rival China at 0.9%.

China is also experiencing unrest, as over

40,000 workers in the Dongguan province

engaged in one of the largest industrial

disputes in recent times. However China only

also saw a 10% increase in inspections in this

period, significantly lower than others in the

region. Chinese government stimulus efforts

have positively impacted manufacturing output going into the second half of 2014.

The largest inspections growth in Asia was in Cambodia, up 99% year over year, then

Bangladesh and Vietnam 73% each, India 63% and China 10%. In growth by industry category,

food and food container inspections were up 55% quarter over quarter globally.

Africa Gains Momentum

Ordered inspection growth in Asia remained strong

with 21% year over year growth. This was

surpassed by Africa with 31% inspection growth.

Interestingly, growth for inspections in Africa was

led by Swaziland which saw 50% growth in just the

last quarter. At the same time, Swaziland is losing

benefits from the United States under the African

Growth and Opportunity Act for its failure to make

progress towards internationally recognized

workers’ rights.



http://www.asiainspection.com/




Toxic Chemicals Found in Clothing

When the Australian Competition and

Consumer Commission (ACCC) randomly

screened for azo dyes in imported clothing in

March of this year, approximately 3%

contained carcinogens which may be

harmful to human health, resulting in the

voluntary recall of over 200,000 items from

stores, involving 37 product lines from

various retailers. Analyzing its own data,

AsiaInspection found that over 5% of all azo

dye lab tests in 2014 failed for exceeding the

legal minimum.

"Time and time again we see outsourced manufactured products putting consumers at risk. The

fact that 200,000+ products made it to store shelves containing a known cancer causing

carcinogen shows the need for stricter controls and testing at the source," said Sebastien

Breteau, AsiaInspection CEO.

Bangladesh Inspection Groups Raise Tensions

North American and European inspection groups 'The Alliance' and 'The Accord' are together

auditing 2,100 of Bangladesh’s 5,600 garment factories, employing some 4 million workers

accounting for 80% of the country’s exports. AsiaInspection 2014 data shows that for factories

that underwent ethical audits, 27% are

at serious risk and 59% are not

compliant.

The groups are involved in a debate

with stakeholders over the process by

which they shut non-compliant

factories. It’s feared that the

disruptions may contribute to slowing

export growth, with buyers turning to

sources they deem more stable, such

as China, India and Vietnam. While

the groups exist to protect workers,

there are practical issues at stake –

the protection of jobs and provision of

worker compensation during extended

shutdowns for repairs, often ordered

without notice. So far 14 factories have

been shut down and 5 have had their

operations limited.

http://www.asiainspection.com










Topic Spotlight: The Promise of Myanmar Overview

In 2000, Myanmar was exporting approximately US $800 million in garments, just less than

Cambodia, mostly to the US. By 2004, US political sanctions eliminated most of the exports,

except for those to Japan and Korea. After a series of political and economic reforms in 2011,

Myanmar has transitioned gradually from military dictatorship to civilian rule, gaining increasing

attention from the rest of the world. With most of the economic sanctions removed by the US and

the EU in late 2012, the long isolated nation has begun to re-embrace the world, witnessing

strong influxes of foreign investments and international aid.

Developments

GDP - Has now accelerated to approximately 7.5% for 2013-2014

FDI - US $ 4.1 billion in foreign investment, mostly into the manufacturing sector.

Exports – Total of US 11.2 billion, an increase of 24.8% over the 2012-2013 fiscal year

Garment exports – Reached US $2.2 billion in 2013

Comparison to Cambodia – 2012 exports were 22.6% of Cambodia’s total

Population – 52.8 million (median age is 27.8)

Literacy Rate – 92.7%

Average Wage – US$70/month (Bangladesh is US$86) and Cambodia is US$101)

Active Unions – Approximately 600

Prominent Apparel Brands – H&M, GAP

Trade Preferences – ASEAN Free Trade Agreement, Generalized System of Preferences

Opportunities

- Large, young, literate working population

- Relatively low wage rates compared to other Asian

countries

- Abundant resources including forestry, metals,

- Strong strategic location

- Huge potential for industrial relocation

Challenges

- Low productivity – one 8 hour shift per day in a

factory (compared to 2-3 for other Asian countries)

- Low utilization of factory space

- Lack of machinery, electricity and transportation

infrastructure

- Inexperienced government and inadequate judicial

system and intellectual property laws

- No unified labor code, potential for significant labor

unrest






About Core Solutions

Core Solutions (CORE) helps retailers, brands and suppliers streamline their supply chains, from

Concept to Delivery. CORE’s extended supply chain management platform (CBX) enables

organizations to drive greater speed, agility and efficiency and profit in bringing private label and

branded merchandise to market.

The CBX platform, offered as an on-premise system or cloud service, includes functionality for

Planning, Product Development, Buying, Sourcing, Order Management, Logistics and Finance.

CBX Sourcing Solution Provides automated request for quotes for one or more products.

Vendors receive email notifications and reminders automatically.

Vendors complete quotes online or via Excel interface.

Side-by-side quote comparison, with configurable Estimated Landed Cost (ELC)

What-If analysis enables staff to adjust cost components to refresh ELC.

Facilitates quote review, shortlisting and confirmation between buyers, category

managers and sourcing team.

Vendor can upload photos/images and product documentations (e.g., instructions,

certifications and 3rd party test reports)

Reduce overheads in issuing RFQs and processing quotes.






Next Steps

Are you a retailer or a brand interested in…?

Streamlining your sourcing operations?

Scaling your direct sourcing?

Growing your private label program?

Driving greater visibility through your supply chain?

Increasing profitability for your company?

Click below to learn more about how Core Solutions can help!

Request a Callback

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Email: [email protected]

Or call our Client Service Team directly:

Americas: 1.908.898.1880

Europe: 44.20.8133.0328

Asia: 852.2378.6300



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