The document summarizes AsiaInspection's Q4 Barometer report. It finds that recent food safety scandals in China have increased demand for food inspections, which were up 21.3% quarter-over-quarter and 30% year-over-year. Ethical audits in China also showed a higher failure rate of 26.4% compared to 22.9% in 2013, with hygiene, health and safety being the most common causes of failure. Meanwhile, Myanmar is emerging as a new sourcing destination for garments, with the government aiming to train 50,000 new garment workers to meet demand.

1. ASIAINSPECTION Q4 BAROMETER
CHINA FOOD SCANDALS
HIT NEW HIGHS

2. HONG KONG, OCTOBER 8, 2014
ASIAINSPECTION (AI)
ASIAINSPECTION (AI), A LEADING QUALITY CONTROL SERVICE PROVIDER
THAT PARTNERS WITH BRANDS, RETAILERS AND IMPORTERS AROUND THE WORLD
TO SECURE, MANAGE AND OPTIMIZE THEIR SUPPLY CHAIN,
today announces its 2014 Q4 Barometer, a quarterly synopsis
on outsourced manufacturing and the quality control services industry.

3. Several food scandals in China over the past quarter
have placed pressure on brands to improve their food safety standards.
CHINA STRUCK
BY FOOD SAFETY FEARS
THE LARGEST SCANDAL INVOLVED EXPIRED MEAT
being sold to & .1

4. This risk is translating to increased orders for food inspections,
which jumped
according to AsiaFoodInspection (AFI) data, AI’s food quality control services arm.
vs. the previous quarter year over year
21.3% 30%
In another incident, police seized
30,000 tonnes of chicken feet that had been soaked in hydrogen peroxide, ²
and in September a gang was arrested
for having sold over 90 MILLION toxic gelatine pill capsules.³

5. The long term solution is stricter government regulations
and food inspections and testing at the source.
IT’S COMPLETELY UNACCEPTABLE
for Chinese manufactured food to routinely put consumers at risk,
“
“
said Sebastien Breteau, AsiaInspection CEO.
AFI figures show that 51.7% of food inspections
conducted between Q1 and Q3 2014 in mainland China have failed.

6. China’s Food Safety Law is currently being re-drafted.
Liability and penalties have been increased significantly
and it will place the burden of proof on the manufacturer to prove
that its food was compliant with food safety standards.
The new system will also motivate consumers to be more proactive
in coming forward with a monetary reward system for whistleblowers. 4

7. CHINA EMPHASIZES
HIGH-TECH CAPABILITIES
India’s campaign, which seeks to boost high tech manufacturing,
has not offered specifics on incentives.
China has responded to the September launch of India’s ‘Make in India’ campaign
with a government backed ‘Made in China’ campaign.
VS
Source: The India Post

8. The Chinese campaign is offering
tax breaks
to manufacturing companies
to upgrade their machinery,
in addition to tax reductions
on imports of high tech equipment
for key industries such as electronics.

9. China’s electronics manufacturing sector is mature but standards are mixed,
with AI data showing that in Q3 2014,
of electronics inspections were beyond AQL (Acceptable Quality Level)
24.5%
comparable to India, at 27.8%

10. ETHICAL AUDITS CAST LIGHT
ON UNSAFE WORKING CONDITIONS
Ethical Audits are a continued focus with China
responding by imposing stricter punishments
for poor conditions that violate their Workplace Safety Law.
as well as
wage garnishments for managers of
UP TO 80%. 5
These include fines of
OVER $3.2 MILLION USD
for serious workplace incidents

11. Ethical audits conducted by AI
in China have had a 26.4% critical failure rate so far this year,
an increase over 22.9% in 2013.
That figure is close to India at 28.6%
AI data shows that
Hygiene, Health and Safety, followed by Working Hours, Wages and Benefits,
ARE THE MOST COMMON CAUSES FOR FAILURE
of ethical audits in China.

12. MYANMAR GAINS
50,000 GARMENT WORKERS
Following recent economic liberalization in Myanmar,
AI has started seeing increased demand for inspections there in Q3 2014,
primarily in the textile and apparel industry.
Myanmar now seems to be a viable option for buyers looking to mitigate
rising costs in China with a "China +1" sourcing strategy.
Daily wages in Myanmar are estimated at $1.10 per day, compared with
$2.50
in Vietnam
$18
in China
$2.80
in Bangladesh

13. The Myanmar government is ramping up support
with the Ministry of Border Affairs (MBA) by running a program to
TRAIN 50,000 GARMENT WORKERS
which has already successfully placed 20,000 in jobs.6

14. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) says that
OVER 200 FACTORIES IN BANGLADESH HAVE BEEN SHUT DOWN
since the collapse of Rana Plaza last year,
costing millions in export revenue and thousands of jobs.7
The trend is likely to continue until standards improve.
BANGLADESH EXPORTS GROW
DESPITE FACTORY CLOSURES

15. Exports from the country grew by 13%
year-on-year between January and May,
AI data shows that while we saw a rise in audits performed,
38.7% OF MANUFACTURING AND 16.4% OF ETHICAL AUDITS HAVE FAILED
so far this year in Bangladesh, whereas 23.9% and 11.1% failed in 2013, respectively.
with over 66% of exports
going to Europe and the United States.8

16. A LEADING QUALITY CONTROL SERVICE PROVIDER
that partners with international Brands, Retailers and Importers
to secure and manage their global supply chain.
ABOUT ASIAINSPECTION
YOUR EYES IN THE FACTORY!™

17. With unique web-based quality control management,
AI OFFERS PRODUCT INSPECTION, FACTORY AUDIT
& LABORATORY TESTING SERVICES
for more than 3,000 clients worldwide.

18. DEDICATED ACCOUNT MANAGER
A supply chain partner
offering advice on your specific needs
COMPREHENSIVE ONLINE MANAGEMENT
Use your real-time dashboard
to benchmark and identify
your high performing suppliers
PRODUCT EXPERTISE
Hundreds of off-the-shelf customizable
product specific checklists
MOBILE
Book, check reports
and make decisions on the go
INDUSTRY LEADING TURNAROUND
Onsite within 48 hours.
Reports the same day 80% of the time
FLEXIBLE
Cancel or modify orders up to 4pm
the day before the inspection for free
TRUSTED AND TRULY INDEPENDENT
100% QC. AI is not involved in sourcing
and protects your factory information
ALL-INCLUSIVE PRICING
Easy to budget. No hidden costs
ABOUT ASIAINSPECTION
YOUR EYES IN THE FACTORY™

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WWW. A SI A INSPECT ION. COM
PRESS CONTACT
MICHAEL MES ARCH • Tel: (+86) 755 2223 9888
Email: press@asiainspection.com

20. 1/ Forbes. Queasy Reading: Shanghai Gov’t Shuts Down McDonald’s, KFC Meat Supplier. July 21st, 2014.
http://www.forbes.com/sites/russellflannery/2014/07/21/queasy-reading-shanghai-govt-shuts-down-mcdonalds-kfc-
meat-supplier/?
2/ Reuters. China police seize 30,000 tonnes of tainted chicken feet. August 26th, 2014.
http://www.reuters.com/article/2014/08/26/us-china-foodsafety-idUSKBN0GQ0O720140826
3/ China Daily. Police bust gang selling toxic gelatin pill capsules. September 4th, 2014.
http://www.chinadaily.com.cn/china/2014-09/04/content_18544268.htm
4/ China Law Insight. Revised Amendment to the PRC Food Safety Law. July 28th, 2014.
http://www.chinalawinsight.com/2014/07/articles/compliance/revised-amendment-to-the-prc-food-safety-law/
5/ Lexology. Harsher personal and corporate penalties for work safety accidents in China. September 12th, 2014.
http://www.lexology.com/library/detail.aspx?g=c58eba21-3271-4bd3-85b6-aae4b12cca0d
6/ Myanmar Business Today. MGMA to Provide Jobs for 30,000 Garment Workers. September 16th, 2014.
http://www.mmbiztoday.com/articles/mgma-provide-jobs-30000-garment-workers?utm
7/ Yahoo News. Garment industry says 200 plants shut since Bangladesh disaster. September 11th, 2014.
https://news.yahoo.com/garment-industry-says-200-plants-shut-since-bangladesh-112755529.html
8/ Fibre2Fashion. Bangladesh global apparel export share to go up 1% by 2020. September 22nd, 2014.
http://www.fibre2fashion.com/news/company-reports-news/newsdetails.aspx?news_id=167780&utm
FOOTNOTES