Surging export growth from Southeast Asia is coming at the expense of China, according to a new analysis of audits carried out in the region – which also shows factory compliance in Bangladesh is improving, but remains a work in progress.

The 2015 Q4 Barometer report from compliance service provider AsiaInspection (AI) also suggests the yuan depreciation is expected to strongly affect China's major imports, particularly Indian textiles and apparel.

According to figures from the country’s Customs Administration, China’s exports declined by 6.1% over the previous year in August. This serves as another reminder that its economy continues to face challenges in rebalancing to cope with slowing export demand, particularly after the recent yuan devaluation.

This is also supported by AI's own data, which showed a 3.2% year-on-year increase in inspections performed in China, the slowest growth in the company’s history; while those in Southeast Asia grew 104% year-on-year.

Meanwhile, factory inspection results in Bangladesh continue to improve gradually as brands push for higher standards. AI’s data shows a modest 2.8% increase in ethical scores (from 6.51 to 6.7 out of 10) over the past 12 months, while inspections grew by 68%.

However, AI data shows that thus far in 2015, 41.6% of factories audited in Asia showed major non-compliances, and 25.9% were at serious ethical risk.

While China remains the largest supplier of apparel to the US, Vietnam and Cambodia continue to see strong growth. Not surprisingly, product inspections during the quarter grew 168% in Vietnam and 268% in Cambodia.

But the 2015 depreciation of the Indian rupee to a two-year low is expected to have mixed effects on the country's fibre, yarn and apparel exports. While the rupee's depreciation makes Indian exports more competitive, most of India's cotton (70% of total fibre exports) historically went to China where buyers, after the yuan was devalued in August, will likely attempt to renegotiate prices. As a result, Indian exporters could see increased pricing competition and will not get the full benefit of the rupee depreciation.

Despite the persistent problems in the sector and the failure of textile exports to meet the target for the 2015 fiscal year, AI recorded a 40% year-on-year growth in product inspections in India. Product quality displayed a 5% increase, it says, pointing to a possible reflection of the recent efforts by Indian textile companies to innovate in order to boost their competitiveness, especially overseas.