When Chasing Lower Costs Sacrifices Safety

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Asian Food Scandals, Dangerous Factories and Lack of Social Compliance. Hot Topics in Q3 2013 for anybody sourcing (or consuming) products from China, Bangladesh, Vietnam, India and the rest of Asia. Social Accountability is this quarters hot topic.

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When Chasing Lower Costs Sacrifices Safety

  1. 1. Asia’s Shifting Supply Chain When Chasing Lower Costs Sacrifices Safety AsiaInspection Q3 Barometer
  2. 2. lack of chinesefoodsafetycontrolsallow consumer illness and death to continue lack of chinesefoodsafetycontrolsallow consumer illness and death to continue 20 tons of fake beef Arsenic in Chinese herbal remedies Formaldehyde in Chinese fish sold in US Scandals continue to rock the Chinese food supply: 20 tons of fake beef Arsenic in Chinese herbal remedies Formaldehyde in Chinese fish sold in US
  3. 3. • Each year 10+ million containers of food are imported to the US • 3,037 people died in 2011 from food-borne illnesses • Over 60% of US food imports come from developing countries, with China leading • Only 1.5% of incoming food shipments are inspected • Each year 10+ million containers of food are imported to the US • 3,037 people died in 2011 from food-borne illnesses • Over 60% of US food imports come from developing countries, with China leading • Only 1.5% of incoming food shipments are inspected
  4. 4. Despite these alarming numbers, the U.S. Department of Agriculture is relaxing regulations on food imports from China Poultry slaughtered in the U.S. & Canada Poultry processed in China Poultry consumption in the U.S. Despite these alarming numbers, the U.S. Department of Agriculture is relaxing regulations on food imports from China
  5. 5. To make sure Asian facilities are up to international standards Growing concern from the food industry in Q3 saw Food Inspections increase in Q3 compared to Q3 2012 Food Hygiene Audits increase +89%+93%
  6. 6. Since the Rana Plaza Factory collapse in April 2013, AsiaInspection figures show a : • +52% increase in Factory Accountability Audits throughout Asia for Q3 2013 compared to Q3 2012 • +167% spike in Bangladesh • Demand has increased the most from North American importers, up +72% for the period north american importers drive surge in social accountability north american importers drive surge in social accountability This growth has been sustained throughout Q3 with September seeing the biggest demand for Audits AsiaInspection has ever seen. This growth has been sustained throughout Q3 with September seeing the biggest demand for Audits AsiaInspection has ever seen
  7. 7. Companies have pledged to achieve 100% inspections at all alliance factories by 2014 Growth in North America has charged forward with major retailers, brands and apparel companies founding the alliance for bangladesh worker safety the alliance for bangladesh worker safety the alliance for bangladesh worker safetythe alliance for bangladesh worker safety
  8. 8. factories in china shift inland, score low in social compliance factories in china shift inland, score low in social compliance Rising labor costs Cheaper labor costs 70% Rising labor costs Cheaper labor costs 70%
  9. 9. Average compliance score within China in 2013 Western China The North Eastern seaboard provinces compliance score within china in 2013 compliance score within china in 2013 6.08 6.12 5.91 Guangdong province 7.1 6.226.22
  10. 10. shiftingproduction to cheaper regions atthecostofsocial compliance shiftingproduction to cheaper regions atthecostofsocial compliance Recent events through Asia have shown that the social and safety risk is very real for the whole supply chain. Buyers should be aware that shifting production to cheaper regions is likely at the cost of social compliance Chasing lower production costs must come with a holistic approach of on-site monitoring and auditing. “ “ “ “ “ “ “ “ “ “ “ “ Sebastien Breteau, CEO of AsiaInspection
  11. 11. about asiainspection your eyes inthe factory™ about asiainspection your eyes inthe factory™ 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 ... AI serves 2,700 clients with twenty offices worldwide... AI serves 2,700 clients with twenty offices worldwide
  12. 12. w w w. a s i a i n s p e c t i o n . c o m Twitter.com/asiainspection Facebook.com/asiainspection Linkedin.com/company/asiainspection

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