ASIA: Shifting production carries a “social cost”
Buyers who shift production to lower-cost regions of China do so at the likely cost of social compliance, according to a new report based on factory audits.
The third quarter Barometer report from quality control provider AsiaInspection looks at trends across the region in the manufacturing and quality control services industry.
It says that, as costs rise in China’s developed manufacturing areas, such as Guangdong, Jiangsu, Shandong and Zhejiang, manufacturing is moving inland, where costs can be up to 70% lower.
But, quoting data from social audits carried out at factories across China, AsiaInspection said that while the average compliance score in the country was 6.22/10 – it was only 5.91/10, the lowest regional score, in Western China, “where buyers have been chasing lower costs”.
The report contrasts this figure with the 7.1/10 scored by Guangdong, China’s largest manufacturing hub, and scores of 6.12/10 and 6.08/10 in the North and eastern seaboard provinces respectively.
“Buyers should be aware that shifting production to cheaper regions is likely at the cost of social compliance,” said Sebastien Breteau, AsiaInspection CEO.
“Recent events through Asia have shown that the social and safety risk is very real for the whole supply chain.
“Chasing lower production costs must come with a holistic approach of on-site monitoring and auditing.”
Turning to Bangladesh, the report says that, following the Rana Plaza factory disaster in April, there was a 52% increase in Factory Accountability Audits throughout Asia in the third quarter – and a 167% surge in Bangladesh.
September showed the biggest demand for audits that AsiaInspection has ever seen, with North American importers leading the growth spurt with an increase of 72% on last year.
Help test our new apparel sourcing tool.
- Unlocks for the future fashion sourcing landscape
- EU eyes mandatory due diligence for apparel supply
- Digitalisation and data to disrupt supply chains
- Where next for Corporate Human Rights Benchmark?
- What TTIP might mean for US, EU textiles & apparel
- Li & Fung forms supply chain partnership with PVH
- US Q4 in brief – Finish Line, Oxford Industries
- Sears has "substantial doubt" of future
- Levi Strauss and ILO probe Cambodia factory death
- Adidas mulls roll-out of in-store customisation
- Central and East Europe Report Package
- Central America strategic sourcing review - a focus on Guatemala, El Salvador and Honduras
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- REPORT BUNDLE: Africa-Med, Southeast Asia and Central America strategic sourcing pack