This document discusses issues with food safety in China and the risks associated with shifting production to lower cost regions in Asia. Key points include: - Food safety scandals in China involving fake meat and toxic substances indicate weaknesses in China's food safety controls. - Over 60% of US food imports come from developing countries like China, but only 1.5% of shipments are inspected. - The USDA is relaxing food import regulations from China despite risks to consumer safety from contamination. - Factories in inland and western China score lower on social compliance audits as production shifts to cheaper labor markets.

1. Asia’s Shifting Supply Chain
When Chasing Lower
Costs Sacrifices Safety
AsiaInspection Q3 Barometer

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. • 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. 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. 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. 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. 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. 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. 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. 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.
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Sebastien Breteau, CEO of AsiaInspection

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your eyes inthe factory™
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