Wal-Mart Supply Chain Security Audit Report

Wal-Mart Factory ID: 36110536

Factory DetailsFactory Name: Xiamen Luona Industrial & Trade Co. Ltd.Factory Address: No.19, Xiajin Road, Chengnan Industrial Park, Tong An DistrictVendor/Agent: CELLCORP GLOBAL LIMITED

Audit Report Details

Audit Type: Security AuditFactory Contact Person: Mr. Ye Zhi Ming Title: Factory ManagerAuditor Name: Stanley Yang

Description of Non-Compliance

Factory Overall Score 88% Factory Overall Rating Green

Section Name1. PERSONNEL SECURITY

1. PERSONNEL SECURITY

Provide a comment for each Partial, No or N/A:

Client's Requirement: An incentive is used to encourage employees to report suspicious activity and security violations.Description of Non-Compliance: No incentive is used to encourage employees to report suspicious activity and security violations.

Merchandise Type (Product Category): Bags

Wal-Mart Audit ID:980282BV Report#: 10110310275Audit Date: February 23, 2011

Name of Port: Xiamen Port

Factory City: Xiamen Country: China

Scoring

Description of Non-ComplianceProvide a comment for each Partial, No or N/A:

Client's Requirement: The Employee Security Policy is reviewed every six months to determine if update is necessary.Description of Non-Compliance: The factory did not review its security policy since September 2010.

Remark: No more detail background check is applicable.

2. THREAT AWARENESS

90%94%93% 188% 1

90%1

Score Number of Violation93%86%

11

84%642

Degree of Compliance91%83%78%

93%92%7. INFORMATION SECURITY

2. THREAT AWARENESS3. PHYSICAL ACCESS CONTROLS4. PHYSICAL SECURITY5. CONTAINER/TRAILER SECURITY6. PROCEDURAL SECURITY

82%86%

8. CONTRACTOR SECURITY

Overall Comments~Factory established: In the year of 2007~Main manufacturing processes: Cutting, Sewing, Packing~Product category: Travelling Bags~Factory area: 1505.88 square meters~Employee number: 156 workers (46 males and 110 females)~Production capacity: 10,0000 pcs per month.~International certification: Not provided~Peak season: Not obvious~Major market: Not provided~Major customer: Sears, Carrefour~Working days: 6 days per week~Working time schedule: 8:00-12:00, 13:00-17:00~Security system: CCTV monitoring system was available and covered all entrances in the factory; In addition, security gate monitored bysecurity guards and security guards on duty even after business hours.~Arrangment of security guards: Not provided~Product liability insurance and product recall insurance were purchased? Not provided

86%

Description of Non-Compliance

Description of Non-ComplianceProvide a comment for each Partial, No or N/A:

1. Client's Requirement: A specific color-coded ID badge or electronic access code is required to access the facility's designated restricted orsensitive areas.Description of Non-Compliance: No specific color-coded ID badge or electronic access code is required to access the facility's designatedrestricted or sensitive areas.

2. Client's Requirement: Security procedures are publicized throughout the facility on posters and bulletin boards.Description of Non-Compliance: No Security procedures are publicized throughout the facility on posters and bulletin boards.

3. Client's Requirement: Security guards monitor access to facility restricted areas.Description of Non-Compliance: Security guards did not monitor access to facility restricted areas, such as warehouse and packing area.

4. Client's Requirement: A list of terminated employees is given to Security to deny access to facility.Description of Non-Compliance: A list of terminated employees was not given to Security to deny access to facility.

5. Client's Requirement: The facility requires advance notice of a vendor visit: visitor name, company representing, date and time ofarrival, purpose of visit.Description of Non-Compliance: The facility did not require advance notice of a vendor visit: visitor name, company representing, date andtime of arrival, purpose of visit.

6. Client's Requirement: Visitors are escorted throughout their time at the facility.Description of Non-Compliance: Visitors were not all escorted throughout their time at the facility.

4. PHYSICAL SECURITY

3. PHYSICAL ACCESS CONTROLS

Provide a comment for each Partial, No or N/A:

1. Client's Requirement: The facility uses fencing or other barrier materials to enclose cargo handling and storage areas to prevent unauthorizedaccess.Description of Non-Compliance: The facility did not use proper barrier to enclose cargo handling and storage areas to prevent unauthorizedaccess.

2. Client's Requirement: Access to outside lighting switches is restricted to only authorized personnel.Description of Non-Compliance: Access to outside lighting switches was not restricted to only authorized personnel.

3. Client's Requirement: Visitor and employee personal vehicles are not permitted to park near a cargo handling area, a cargo storage area, ornear cargo vehicles.Description of Non-Compliance: Visitor and employee personal vehicles parked near a cargo handling area, a cargo storage area.

4. Client's Requirement: Security guards assign a visual identification tag to vehicles in visitor parking - such as a temporary color-codedparking decal.Description of Non-Compliance: Security guards did not assign a visual identification tag to vehicles in visitor parking - such as a temporarycolor-coded parking decal.

5. CONTAINER/TRAILER SECURITYDescription of Non-ComplianceProvide a comment for each Partial, No or N/A:

1. Client's Requirement: The entire container/trailer loading process, visual of inside of the container/trailer, is captured on CCTV and therecording is kept for 45 days.Description of Non-Compliance: Not entire container/trailer loading process, visual of inside of the container/trailer, was captured on CCTV andthe recording was kept for 45 days.

2. Client's Requirement: The facility places an ISO/PAS 17712 High Security Seal on a container/trailer at the shipping dock immediately afterstuffing is completed.Description of Non-Compliance: The facility did not provide ISO/PAS 17712 certificates for review.

6. PROCEDURAL SECURITYDescription of Non-Compliance

7. INFORMATION SECURITY

Provide a comment for each Partial, No or N/A:

Client's Requirement: The transport company contract indicates the perferred transit route(s) used by the driver, the allowable transit time limit,and designated rest/meal stop locations.Description of Non-Compliance: The transport company contract did not indicate the perferred transit route(s) used by the driver, the allowabletransit time limit, and designated rest/meal stop locations.

Remark: No domestic cargo in this factory.

Provide a comment for each Partial, No or N/A:

Client's Requirement: Written contractor procedures include a process for a contractor to report a security violation to facility management.Description of Non-Compliance: Written contractor procedures did not include a process for a contractor to report a security violation to facilitymanagement.

Description of Non-ComplianceProvide a comment for each Partial, No or N/A:

Client's Requirement: Company system data is saved on a back-up system that enables restoration in the event of significant data lossDescription of Non-Compliance: Company system data was not saved on a back-up system that enables restoration in the event of significantdata loss.

8. CONTRACTOR SECURITYDescription of Non-Compliance

Report No.: 10110310275 Page 1 of 1

Digital Photo Record

(1) Factory exterior view (2) Factory building (3) CCTV camera

(4) CCTV monitor (5) Security guard on duty (6) Visitor registration record

(7) Personal vehicle parking

in the loading area

(8) loading dock (9) Employee parking area

(10) Packing area (11) Finished goods

warehouse

(12) Material warehouse

(13) Access control for

warehouse

(14) Outside lighting (15) Employee wearing photo

badge