2016 IN REVIEW: WORRYING TRENDS FOR QUALITY AND COMPLIANCE ACROSS

GLOBAL SUPPLY CHAINS

ASIAINSPECTION Q1 BAROMETER

HONG KONG, JANUARY 5, 2017

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 2017 Q1 Barometer, a quarterly synopsis on outsourced manufacturing and the quality control services industry.

SOURCING GEOGRAPHIES: CHINA REBOUNDS, SOUTH ASIA SURGES

+18.2%PAKISTAN

+12.5%CHINA

+11.7%BANGLADESH

+5.0% VIETNAM

YEAR

OVE

R Y

EAR

GRO

WTH

SUPPLY CHAIN SUSTAINABILITY: STRUCTURAL SAFETY STILL A MAJOR ISSUE

63% of audited factories found in need of remediation

Critical issues found in 3% factories

Number of compliant factories dropped from 41% to 37% YoY

63% in need of

remediation

PROGRESS SLOW IN ETHICAL COMPLIANCE

Less than a third of factories found compliant

27% of factories had critical non-compliances

Top concerns in ethical compliance

Forced labor and child labor

Sexual harassment

Exploitation of refugees

ENVIRONMENTAL COMPLIANCE STILL A STRUGGLE

36% of environmental audits failed in 2016, compared to 31% in 2015

Many brands find ISO 14001 commitment challenging and struggle even with much lower statutory minimum requirements

36% failed in 2016

MORE BRANDS SEEK TO EDUCATE SUPPLIERS AND IMPROVE AWARENESS

AI has seen strong demand for workshops and trainings in 2016

Structural safety and environmental compliance education in most demand

PRODUCT MANUFACTURING QUALITY: WORRYING RESULTS OVERALL

Consumer goods quality worldwide has deteriorated in 2016

AI data shows a 2.9% increase in product inspection failure rates in 2016 vs. 2015

+2.9% 2016 vs. 2015

CONTRASTED QUALITY TRENDS THROUGHOUT ASIA

Vietnam shows a small improvement, driving Beyond AQL rates down to 29%

Product quality in China remains stable,

with failed inspections around 32.4%

India, Bangladesh, Pakistan show

double-digit growth in inspection failure rates

PRODUCT QUALITY: INDUSTRY BREAKDOWN

Tex tiles most prone to quality problems: 41.6%

products beyond AQL

Toys & Juvenile Products quality slightly improved by 3 points, to 30.3% of

rejected inspections

LAB TESTS SHOW IMPROVEMENT IN PRODUCT SAFETY

Failure rates for lab tests at 3.3% in 2016, improvement by +11.4% compared to 2015

3.3%failed in 2016

SPECIFIC TEST RESULTS REMAIN MORE DISPARATE

REACH-related tests: failure rates tripled YoY

Phthalate tests: 5.4% products fail safety requirements

x3REACH FAILURE RATE

5.4%FAIL PHTHALATE

TESTS

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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