Trade War Threatens Sourcing Ethics, Quality Control

The U.S.-China tariff standoff in 2018 triggered challenges to global sourcing and there may be subsequent threats to ethics and quality control, according to a recent report by global quality control and supplier compliance service provider QIMA.

The geographic sourcing diversification movement away from China is already underway, confirms QIMA’s year-end survey of 100+ businesses across the globe. Seventy-five percent of respondents report they are already sourcing suppliers in new markets or plan to do so soon.

The markets seeing more activity include those with less developed manufacturing industries and infrastructure than China, such as Indonesia, Cambodia, Bangladesh, Turkey, and Vietnam. These are all markets where factory compliance, workers’ rights, safety, waste management, and quality control issues persist, according to the report.

For instance, Vietnam, Indonesia, and Turkey saw their average factory scores deteriorate by -5.1 percent, -3.2 percent, and -3.1 percent in 2018, respectively, QIMA reports.

On a more positive note, many global brands are taking action to mitigate the risks of shifting sourcing markets, with QIMA handling an uptick in requests for inspections and audits in most of these emerging markets. For example, the demand for inspections and audits expanded by more than 50 percent in Indonesia and Cambodia.

QIMA audit data going as far back as 2016 shows a slow yet steady upward climb of ethical scores in the textile and apparel sector. That trend—coupled with the fact that this industry has faced high levels of consumer-driven ethical accountability—validates the argument that increased demands for transparency in supply chains result in better sourcing ethics down the line.