CHINA GROWTH STABILIZING AS EXPLODING BATTERIES AND FACTORY FIRES PLAGUE

SUPPLY CHAINS

ASIAINSPECTION Q4 BAROMETER

HONG KONG, OCTOBER 6, 2016

ASIAINSPECTION (AI)

A LEADING GLOBAL QUALITY CONTROL AND COMPLIANCE SERVICE PROVIDER THAT PARTNERS WITH BRANDS, RETAILERS AND IMPORTERS AROUND THE WORLD

TO SECURE, MANAGE AND OPTIMIZE THEIR SUPPLY CHAIN

today announces its 2016 Q4 Barometer, a quarterly synopsis on outsourced manufacturing and the quality control services industry.

CHINA DISPLAYS ECONOMIC REBOUND IN AUGUST AND SEPTEMBER

Demand for product inspections grew by 12.6% in Q3 2016 YoY

September’s manufacturing PMI data shows a sustained growth at 50.4, while export PMI signals the first expansion since April

+12.6%for China

in Q3 2016

OUTPUT AND LOCAL CONSUMPTION KEEP CLIMBING

In August 2016, China’s industrial output grew +6.3% YoY, fastest in five months, while retail sales climbed 10.6%

Local demand for inspection and testing surged by 8% YoY

+6.3

%

+10.

6%

+8%

INDUSTRIAL OUTPUT INSPECTION AND TESTING RETAIL SALES

August 2016

CHINA’S FOREIGN TRADE SHOWS PROMISE, BUT COMPETITION STEEP

September’s PMI data indicates increase in new export orders

Pressure on exports comes from rest of Asia

CHINA’S FOREIGN TRADE SHOWS PROMISE, BUT COMPETITION STEEP

Tex tile, footwear, accessories inspections climb in competing countries

+80%INDIA

+40%

+14% THAILAND

INDONESIA

CHINESE FOOTWEAR MANUFACTURERS THREATENED BY VIETNAM

Vietnam’s footwear inspections up 49% in Q3 2016

Chinese manufacturers concerned about Vietnam’s pressure on their share of footwear exports to the US

+49%for Vietnam in Q3 2016

EXPANSION OUTSIDE RMG AND TEXTILE

2016 YTD demand for product inspection shows strong upward trends in:

Electrical and Electronic items: +18%

Printing and Packaging: +48%

+18%ELECTRICAL AND

ELECTRONIC ITEMS

+48%PRINTING AND

PACKAGING

SAFETY RECALLS: PHONE BATTERIES, LEAD & PHTHALATES CONCERNS

E&E product inspections in Asia up 19% YTD 2016

High-profile E&E problems: 2.5 million Samsung smartphones recalled for exploding battery concerns

2.5MSamsung phones

recalled

SAFETY RECALLS: PHONE BATTERIES, LEAD & PHTHALATES CONCERNS

Lead and phthalates still frequently found in US consumer product imports: toys, water bottles, garden products, jewelry, etc.

Among products tested by AI labs in 2016, 8.6% failed for phthalates content under California Prop 65

8.6%failed for

phthalates

STRUCTURAL SAFETY: RISKS HIGH IN BANGLADESH AND BEYOND

Tampaco packaging factory fire named Bangladesh’s worst industrial disaster since Rana Plaza

NGOs emphasize the need to expand safety initiatives beyond RMG and past the end of Accord and Alliance in 2018

STRUCTURAL SAFETY: RISKS HIGH IN BANGLADESH AND BEYOND

Structural audits reveal high numbers of factories at Major and Critical risk across Asia

Vietnam 52.1% China 51.9% India 51.1%

Major risks also identified in Indonesia, Pakistan, Kenya, Egypt

INDUSTRY VS. ENVIRONMENT: CHINA’S POLLUTION LEVELS CRITICAL

Tex tile and apparel named China’s top polluting industries

New anti-pollution measures may put up to 90% textile factories at risk of closure

INDUSTRY VS. ENVIRONMENT: CHINA’S POLLUTION LEVELS CRITICAL

China’s ground water quality worsening for 5th consecutive year

AI data showed 73.9% textile factories in China at “Major Risk” and 26% at “Critical Risk” on waste and pollution concerns (both figures

higher than industry average)

73.9%AT “MAJOR RISK”

26%AT “CRITICAL RISK”

FOOD SCANDAL SHOWS ROOM FOR IMPROVEMENT IN CHINA’S FOOD SAFETY

1,000 tons of tainted meat worth $12.3 million seized in Guangdong

Food safety remains a challenge in China despite harsher punishments under new Food Safety Law

AI data shows food inspections up +17% YoY and +32% quarter-over-quarter

+32%Q3 2016 vs Q2 2016

AsiaInspection (AI), a leading global quality control and compliance ser vice provider

that partners with Brands, Retailers and Importers around the world to secure, manage and optimize their supply chain.

ABOUT ASIAINSPECTION YOUR EYES IN THE FACTORY!™

ABOUT ASIAINSPECTION YOUR EYES IN THE FACTORY!™

DEDICATED ACCOUNT MANAGER

A supply chain partner offering advice on your specific needs

INDUSTRY LEADING TURNAROUND

Onsite within 48 hours. Reports the same day 80% of the time

COMPREHENSIVE ONLINE MANAGEMENT

Use your real-time dashboard to benchmark and identify your high performing suppliers

FLEXIBLE

Cancel or modify orders up to 4pmthe day before the inspection for free

PRODUCT EXPERTISE

Hundreds of off-the-shelf customizable product specific checklists

TRUSTED AND TRULY INDEPENDENT

100% QC. AI is not involved in sourcingand protects your factory information

MOBILE

Book, check reports and make decisions on the go

ALL-INCLUSIVE PRICING

Easy to budget. No hidden costs

FOOTNOTES

1. http://www.bloomberg.com/news/articles/2016-10-02/china-factory-gauge-at-2-year-high-eases-pressure-for-stimulus

2. http://www.bloomberg.com/news/articles/2016-09-13/china-economy-strengthened-as-factory-output-retail-strengthen

3. http://www.cnbc.com/2016/10/01/china-official-manufacturing-pmi-shows-factory-activity-continued-apace-in-september.html

4. http://www.fibre2fashion.com/news/company-reports-news/china-s-textile-imports-to-eu-slide-in-2015-190543-newsdetails.htm

5. http://footwearnews.com/2016/business/uncategorized/fdra-footwear-factory-management-report-251461/

6. https://www.theguardian.com/technology/2016/sep/16/us-regulators-issue-official-recall-samsung-galaxy-note-7-phone

7. http://www.usnews.com/news/news/articles/2016-07-20/ll-bean-recalls-kids-water-bottles-over-lead-concerns

8. http://wfla.com/2016/06/03/childrens-toy-jewelry-kit-recalled-due-to-high-levels-of-lead/

9. http://www.al.com/business/index.ssf/2016/08/mm_branded_jewelry_recalled_du.html

10. http://www.foodsafetynews.com/2016/08/six-brands-of-turmeric-added-to-recall-for-excessive-lead/#.V-5lotQrLDc

11. https://chemicalwatch.com/48168/us-ngo-finds-lead-phthalates-in-garden-products

12. http://www.dhakatribune.com/bangladesh/2016/09/26/tampaco-fire-another-body-recovered/

13. http://www.wsj.com/articles/labor-groups-call-on-bangladesh-to-improve-industrial-safety-1473611689

14. http://www.ecotextile.com/2016090922333/materials-production-news/bangladesh-to-establish-textile-sector-safety-body.html

15. http://chinawaterrisk.org/wp-content/uploads/2016/08/China-Water-Risk-Brief-Todays-Fight-for-the-Future-for-the-Future-17082016-FINAL.pdf

16. http://www.scmp.com/news/china/society/article/2022472/appalling-air-quality-beijing-takes-deep-breath-smog-season-sets

17. http://time.com/4498998/china-meat-food-safety-bleach-police-guandong-shenzhen/