The South African region is reaffirming its position as an increasingly prominent textile sourcing hub

The South African region is reaffirming its position as an increasingly prominent textile sourcing hub

Product quality has shown little improvement in 2017 so far, while ethical compliance suffers throughout Asia, according to a new update.

The latest figures for inspection and audit demand from AsiaInspection (AI) are a reflection of the sourcing trends that will continue shaping global trade throughout the rest of 2017, the compliance service provider believes.

China's inspection volumes rose by 16% year-on-year in the first quarter of 2017, outpacing the growth rate of 6.5% projected for 2017 by the IMF.

In the rest of Asia, first-quarter growth has been typically sluggish, with the notable exception of Taiwan, Malaysia, and Vietnam where inspection volumes rose this quarter by 20%, 10% and 5% year-on-year, respectively.

Meanwhile, outside of Asia, the South African region has reaffirmed its position as an increasingly prominent textile sourcing hub, with a 23.5% year-on-year growth in inspection volumes in the first quarter.

During the three month period, AI data saw the percentage of 'Red' or critically non-compliant factories rise to 30% (versus 27% throughout 2016).

Working hours and wages was the cause of most violations: factories scored an average of 7.1 out of 10 in this category, compared to the overall average score of 7.9 out of 10.

Ethical performance and trends were disparate by region as well as by industry. Suppliers in Southeast Asia received scores around 8.8, while factories in South Asia were rated 8.5 on social compliance (both regions improved by 8-10 percentage points in Q1 2017 compared to 2016). In the meantime, factories in Southern China scored 11% better than their Northern China counterparts (7.9 vs 7.1, respectively).

Structural safety overall continues to deteriorate, as AI data for Q1 2017 shows the percentage of compliant factories dropping to 30.5% (vs 37% in 2016 and 41% in 2015). Over 69% of factories were found in need of remediation, including 4% with critical safety risks in the short and medium term.

Product quality trends

The first quarter of 2017 failed to show improvement on consumer goods quality compared to 2016, with data showing inspection failure rates still hovering around the 33% mark.

China's manufacturing quality continues its long-term trend towards gradual improvement, with failure rates for product inspections settling at 30%, a few percentage points below the global average.

Across South Asia, well over half of on-site inspections found more defects than allowed, with Bangladesh and India as the unfortunate leaders of this statistic (at 61.7% and 55.3% respectively), and Indonesia and Pakistan not far behind.

By contrast, Turkish manufacturers made strides in product quality in the past quarter, pushing the percentage of inspection failure rates below 20% for the first time in the past two years.

The textile industry remains the worst offender for poor quality, with 41.7% of products falling short of the target specifications.

Among the products intended for the US market during the first quarter of 2017, unacceptable amounts of lead were found in 8% of children's products, and 11% of all toys tested contained banned phthalates. Meanwhile, exporters to the EU fared not much better: over 5% of products tested failed the REACH requirements (a two-fold increase compared to 2016) because they contained unacceptable levels of chemicals restricted or banned from the EU market.

"Product quality and safety remain a challenge for brands and retailers worldwide," said Sebastien Breteau, the CEO of AsiaInspection. "Evolving safety regulations on multiple levels, combined with the increased consumer and media awareness, make it difficult even for established brands to continuously ensure compliance in an ever more global market."