Core global sourcing update q3 2014 final

Global Sourcing Update
Facts & Insights
Produced by:

Q3 2014 - Global Sourcing Update CORESOLUTIONS
1
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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

3
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

4
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

5
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

6
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: 12.8
Feb. 1, 2014
Class C District: 1,060
Class C District:10.6
Class D District: 970
Class D District: 9.7
Chongqing
Class A District: 12.5
Jan 1, 2014
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

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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. 1st tier: Minimum floor wage for new hires/ low skilled. 2nd 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 1st 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

8
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

9
Shanghai – Antwerp 40ft
Market average: $2,021
Market low: $1,497
Hong Kong – Hamburg 40ft
Market low: $2,099
Shanghai – Rotterdam 40ft
Market low: $1,616
Source: www.xeneta.com
Source: www.xeneta.com

10
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.

11
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-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Crude Oil , average of three spot prices: Dated Brent, WTI and Dubai Fateh
95
100
105
110
115
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Oil - Dated Brent, light blend 38 API, fob U.K., US$ per barrel
96
98
100
102
104
106
108
110
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Oil - Dubai, medium, fob Dubai
Fateh 32 API, US$ per barrel
85
90
95
100
105
110
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Oil - West Texas Intermediate 40 API, Midland Texas, US$ per barrel
0
20
40
60
80
100
120
140
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Rubber, 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

12
Metals
155
160
165
170
175
180
185
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Metals Price Index, 2005 = 100, includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium Price Indices
1700
1750
1800
1850
1900
1950
2000
2050
2100
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Zinc, high grade 98% pure, US$ per metric ton
19000
20000
21000
22000
23000
24000
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Tin, standard grade, LME spot price, US$ per metric ton
1500
1600
1700
1800
1900
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Aluminum, 99.5% min purity, LME spot price, CIF UK ports, US$ per metric ton
1950
2000
2050
2100
2150
2200
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Lead, 99.97% pure, LME spot price, CIF European Ports, US$ /metric ton
40
60
80
100
120
140
160
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
China import Iron Ore 62% FE spot (CFR Tianjin port), US $ per metric ton
6600
6700
6800
6900
7000
7100
7200
7300
7400
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Copper, grade A cathode, LME spot price, CIF Eur ports, US$ / metric ton
8000
10000
12000
14000
16000
18000
20000
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Nickel, melting grade, LME spot price, CIF European ports, US$ per metric ton

13
Wood
Wool, Hides, Cotton
0
50
100
150
200
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Soft Logs Average Export price for Douglas Fir, US$ per cubic meter
270
280
290
300
310
320
330
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Soft Sawnwood, average export price of Douglas Fir, U.S. Price, US$ per cubic meter
100
150
200
250
300
350
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Hard Logs, Malaysian meranti, import price Japan, US$ / cubic meter
780
800
820
840
860
880
900
920
940
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Hard Sawnwood, Dark Red Meranti, C&F U.K port, US$ per cubic meter
900
950
1000
1050
1100
1150
1200
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Wool, Coarse, Australian Wool Exchange, US cents per kg
900
950
1000
1050
1100
1150
1200
1250
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Wool, fine, Australian Wool Exchange, US cents / kilogram
0
20
40
60
80
100
120
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Hides, Heavy native steers, wholesale dealer's price, fob Shipping Point, US cents / pound
75
80
85
90
95
100
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Cotton 'A Index', Middling 1-3/32 inch staple, CIF Liverpool, US cents / lb

14
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-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Nylon - Price of PA 6.6
Regrind/ Flakes (Euros/kg)
0.4
0.45
0.5
0.55
0.6
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
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-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
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-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
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-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
PP - Price Development of PP Regrind/Flakes (Euro/kg)
0.5
0.55
0.6
0.65
0.7
0.75
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
PS - Price Development of PS Regrind/Flakes (Euro/kg)
Source: Plasticker

15
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.

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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.

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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

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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.

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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
Request a demonstration
Email: info@coresolutions.com
Or call our Client Service Team directly:
Americas: 1.908.898.1880
Europe: 44.20.8133.0328
Asia: 852.2378.6300

Core global sourcing update q3 2014 final

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