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Product Scandals Drive Growth in Chinese Factory Audits

Second quarter figures reveal that quality control is high on the minds of importers, as Asian factory audits jump by 61 percent.

{mosimage} Global markets and manufacturing might be down during the current economic crisis, but product inspections and factory audits in Asia are on the rise, according to recent figures supplied by AsiaInspection (, a Hong Kong quality control company. The trend reflects the need of importers to secure their supply chains in the face of recent highly publicized product recalls, while still maintaining low costs, says the company, which performs quality inspections and factory audits throughout Asia for importers.

Based on a few selected indicators, AsiaInspection publishes a barometer of business conditions on a quarterly basis. And with 8,500 inspections performed during the second quarter of 2009, the company says it has pinpointed some illuminating trends.

Factory audits jump

As consumers demand safer and more environmentally friendly products, AsiaInspection continued to see interest from companies keeping a close eye on every step of their supply chain, in order to prevent costly and embarrassing product recalls. After countless tainted product scandals coming from China and other Asian countries during the past two years, factory audits in Asia jumped 61 percent from the same quarter one year ago while product inspections were also stronger, with 26 percent growth.

Companies around the globe are striving to improve their product, environmental and social standards. For example, Wal-Mart recently announced that by 2012, 95 percent of its production must come from factories that receive the highest environmental and social audit rankings.

Sales of inspections by client zone echo the daily news, with the United States remaining the most affected by the crisis in terms of imports from Asia. Indeed, AsiaInspection’s turnover from U.S. clients decreased by 4.8 percent between the second quarter of 2008 and the second quarter of 2009. In contrast, Europe was bullish with 29 percent growth, and emerging markets in Asia and South America saw brisk growth of 73 percent.

China rules

Based on the geographical split of inspections performed by AsiaInspection, China continues to be the world’s manufacturing floor, the company says. AsiaInspection saw product inspections in China jump to nearly 7,000 for the quarter, a 25 percent increase compared to the second quarter last year—this despite tens of thousands of factories shutting their doors since early 2008. However, other low-cost Asian countries outpaced China with a cumulative growth of 42 percent during the same period.

At a time when markets are contracting, this reflects the ongoing trend of companies securing their supply chain while maintaining low costs by producing in Asia, says AsiaInspection.
Governments and consumers are making quality a priority. After millions of toy recalls throughout the world in 2007 and 2008, toy inspections performed by AsiaInspection had an impressive year over year growth of 42 percent.


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