The Complete Factory Audit Checklist: 60 Things to Check on a China Factory Visit

A factory audit is the single most informative thing you can do before placing a serious order with a Chinese supplier. A good audit, executed by a competent auditor, surfaces nearly every category of supplier risk — well before you've wired any money.

This guide is the actual 60-point checklist we use on every audit, organised into five categories. Each item has: what to verify, how, and what the finding actually tells you.

If you're hiring a third-party auditor (SGS, Bureau Veritas, AsiaInspection, Intertek, or competent independents), make sure their report covers all five categories. If they only cover legal and capability — the most common minimum scope — you're missing major risk areas.

Category 1: Legal & compliance (10 points)

1. Business licence verification. Confirm the Chinese name on the licence matches what's on the proforma invoice. Verify on the National Enterprise Credit Information Publicity System (gsxt.gov.cn) using the Unified Social Credit Code from the licence. Date of incorporation: under 3 years is higher risk. Registered capital: should be at least 10× a typical order value.

2. Business scope. The licence's "scope of business" (经营范围) must explicitly include manufacturing of your product type. A licence for "trade and import/export" without "manufacturing" indicates a trading company, not a factory.

3. Tax registration. General taxpayer status (一般纳税人) is required for any factory issuing VAT-deductible invoices. Confirm with their tax registration certificate.

4. Bank account verification. The bank account on the proforma invoice must match the licence entity exactly. Account name should be the full company name in Chinese, not an abbreviated version. Confirm the SWIFT code matches a real bank.

5. Foreign trade registration. Factories that export directly need 对外贸易经营者备案 registration. Without it, they need a third-party export agent — a layer that can hide problems.

6. Production licences (category-specific). Food producers need food production licences (生产许可证). Toy makers need CCC for some categories. Medical device makers need MAH or relevant approvals. Verify the actual paper documents on-site.

7. Environmental compliance certificates. Environmental Impact Assessment (EIA, 环评) approval, pollutant discharge permits. Increasingly enforced; non-compliant factories can be shut without notice.

8. Fire safety certification. Fire safety check certificates from local fire department. Lack of these means insurance issues and potential forced closure.

9. Recent inspection records. Ask to see the most recent local-government inspections — environmental, fire, labour, tax. Reluctance is a yellow flag.

10. Litigation history. Search the company name on China Judgments Online (wenshu.court.gov.cn). Court records reveal past payment disputes, contract violations, criminal cases.

Category 2: Production capability (12 points)

11. Physical factory existence. Walk the entire premises. Photograph the entrance, signage, building exterior, and a recognisable interior. The address on the licence should match.

12. Premises ownership / lease. Owned or long-term leased premises indicate stability. Short-term lease (under 2 years remaining) is a yellow flag for stability.

13. Production area square metres. Compare claimed vs observed. A factory claiming 10,000 sqm with 3,000 visible is overstating capacity.

14. Equipment list and condition. Photograph all major machinery. Brand and model of each major machine. Age and condition. New high-quality equipment indicates capital investment; old/mixed/improvised equipment indicates lower capability.

15. Worker count. Observe at multiple times of day. Compare to claimed staffing. Workers per machine, workers per square metre — both should match industry norms for the product type.

16. Production line layout. Logical flow from raw material in to finished good out, or chaotic? Logical flow indicates lean operations; chaotic indicates ad-hoc processes.

17. Raw material warehouse. Organisation, labelling, FIFO management. Materials should match what would be expected for your product. Check expiry dates on consumable materials.

18. Finished goods warehouse. Organisation, labelling, batch tracking. Photograph finished goods from other clients (with their permission) — quality of those is a leading indicator of yours.

19. Capacity claims. Verify production capacity claims with invoices for last 6 months — actual production volume should be consistent with claimed capacity.

20. Major customer references. Request 3 references with active orders. Cross-check on Alibaba or LinkedIn that those customers exist. A factory with no verifiable references is a flag.

21. Sub-contracting. Direct question: "Do you sub-contract any part of production?" If yes, audit the sub-contractor too. Hidden sub-contracting is a quality-control red flag.

22. Sample room / R&D facility. Quality factories have a dedicated sample room with previous samples archived. Absence of this for a factory claiming custom capability is a flag.

Category 3: Quality systems (12 points)

23. ISO 9001 certificate. Verify on the certifying body's database (TÜV, Bureau Veritas, SGS, etc. — there are scores). Many factories claim ISO 9001; not all currently hold valid certificates.

24. Other relevant certifications. ISO 14001 (environmental), ISO 45001 (occupational health), product-specific (FDA, BRC, IATF 16949 for automotive, etc.). Verify each one.

25. Incoming material inspection (IQC) procedures. Documented procedures, IQC records for the past month, IQC reject log. Photograph examples.

26. In-process inspection (IPQC) procedures. Documented inspection points along the production line. Inspectors visible at workstations? IPQC records.

27. Final inspection (FQC) / outgoing quality (OQC). Sampling plans (AQL levels — see our AQL guide). FQC reject rates for the last quarter. Reject handling — what happens to rejected units.

28. Calibration of measurement equipment. Calipers, scales, gauges. Calibration certificates with valid dates. Equipment without calibration evidence produces unreliable measurements.

29. Testing equipment for your product type. Specific to your product: integrating sphere for LEDs, audio test chamber for speakers, drop-test rig for fragile items, salt-spray cabinet for metals. Real factories have product-appropriate test equipment.

30. Statistical process control (SPC). Control charts visible on the production floor. SPC indicates a quality-mature factory; absence indicates ad-hoc QC.

31. Non-conformance handling procedure. What happens when defects are found? Root-cause analysis records, corrective action records.

32. Complaint / return handling. Process for handling customer complaints. Past complaint records and resolution (with confidentiality on customer identities).

33. Training records. Worker training documentation. Quality-trained workers are demonstrably more consistent than ad-hoc trained ones.

34. Tool / equipment maintenance. Maintenance schedules and records. Equipment in poor maintenance produces inconsistent quality.

Category 4: Working conditions / ethical (14 points)

This category matters increasingly under EU CSDDD (Corporate Sustainability Due Diligence Directive, in force 2026), US Uyghur Forced Labour Prevention Act, and major retailer codes (Walmart, Target, IKEA, etc.).

35. Worker wages. Pay records for the past 3 months. Wages should meet local minimum wage. Minimum wage in major cities (Shenzhen, Shanghai, Guangzhou) is approximately CNY 2,500–2,650/month in 2026; in tier-2 cities, CNY 1,800–2,200.

36. Working hours. Time records for past month. Chinese labour law: 40 hours/week standard, max 36 hours overtime/month. Severe overtime (60+ hours/week) is a violation.

37. Worker contracts. Sample 5–10 worker contracts. Should include wages, hours, scope of work, signed by both parties.

38. Social insurance. Workers should be enrolled in five social insurances + housing fund. Records confirming enrolment. Non-enrolment is a major flag.

39. Worker age. No workers under 16. Verify ID checks at hiring. Photograph any worker who appears under 18 (flag for follow-up — possibly young worker, possibly violation).

40. Migrant worker treatment. Most Chinese factories employ migrant workers. Their housing, food allowances, family-leave policies should be at industry standard or above.

41. Working conditions on the floor. Adequate ventilation, lighting, temperature control. Personal protective equipment (PPE) provided and worn. Photograph workplace conditions.

42. Safety equipment. Fire extinguishers in date. Emergency exits unlocked and unblocked. First aid kits stocked. Safety signage in Chinese.

43. Chemical handling. If applicable: MSDS (material safety data sheets) on file. Chemical storage rooms ventilated. Workers handling chemicals have PPE.

44. Workplace harassment policy. Documented anti-harassment policy. Worker complaint mechanism (anonymous if possible).

45. Forced labour due diligence. Worker freedom of movement. No retention of worker IDs. No debt bondage. No "company housing only" mandates. Particular scrutiny for factories in or sourcing from Xinjiang region (under sanction in US/EU).

46. Worker overtime consent. Overtime should be voluntary and documented. Mandatory overtime is a labour-law violation.

47. Worker dormitory conditions (if applicable). Bed space per worker, ventilation, fire safety, water/sanitation.

48. Strike / disturbance history. Past worker strikes or disputes — visible on local news, sometimes on social media. A history of strikes indicates labour issues.

Category 5: Security & operational (12 points)

49. Document storage security. How are customer designs, CAD files, samples stored? Locked cabinets, restricted access, NDA-bound staff?

50. IT security. WiFi password protected. Customer data not stored on shared computers. Email accounts with proper authentication.

51. Sample retention. Old samples from other clients visible? If yes, ask: "How do you store our samples — what protections are in place?"

52. Mould / tooling storage. Custom moulds for other clients — visible, accessible? How is your future custom mould going to be protected? See our custom moulds and IP guide.

53. Visitor management. Visitor sign-in, escort policy, restricted-area access. Casual visitor walk-throughs of production floors indicate weak security.

54. Staff turnover. Worker turnover rate over last 12 months. Above 30% is industry-norm; above 50% indicates labour issues; above 80% indicates serious operational problems.

55. Management stability. Same key management (factory head, sales head, R&D head) for at least 2 years? High management turnover = risk.

56. Backup power / equipment redundancy. Single-machine processes (one CNC, one moulder) are operational risk if that machine fails. Multiple machines = resilience.

57. Insurance coverage. Property insurance, product liability insurance, workers compensation (中国工伤保险). Adequate coverage for the factory's operations.

58. Disaster recovery. Floor in a flood zone? Earthquake-prone area without retrofit? Plan for non-rare events.

59. Financial health. Recent invoice payment patterns to suppliers, payroll consistency, equipment investment trajectory. Ask suppliers (where you can) whether the factory pays on time.

60. Reputation in the local industry. Talk to other factories in the same industrial cluster, talk to local trade associations, Google the factory in Chinese. Reputation in the local industry is very telling.

What an audit costs and how long it takes

A standard one-day on-site audit for a typical 100-worker factory:

• Time on-site: 6–10 hours for a competent auditor
• Report turnaround: 5–10 business days
• Cost: $400–$1,200 through a third-party firm in China (varies by region — Pearl River Delta is at the higher end)

For full ISO 9001 + SMETA / BSCI ethical audit combined: $2,000–$3,500.

Factory audit pays for itself many times over for any supplier you'll spend $50k+ with. For smaller suppliers, the 30-point supplier verification (which is much faster and cheaper) is usually sufficient.

Audit findings: what to do with them

A typical audit report finds:

• Critical findings (1–2 typical) — issues that should block the order. Examples: missing business licence, fire safety failure, child labour. Critical findings = walk away.
• Major findings (3–5 typical) — issues that need remediation before placing orders. Examples: working hours violation, no IQC procedures, certifications expired. Major findings = factory must remediate; re-audit after remediation.
• Minor findings (5–15 typical) — improvements but not order-blockers. Examples: incomplete training records, calibration gaps, minor housekeeping issues. Minor findings = monitor.

A "clean" audit (zero findings) is suspicious — even excellent factories typically have 5–10 minor findings on first audit.

What audit doesn't catch

Audit is a snapshot. It doesn't catch:

• Behaviour-on-the-day staging — some factories prepare for audits (clean up, brief workers, hide off-the-books practices). A surprise re-audit often reveals different reality.
• Sub-contracted production — if the factory sub-contracts your specific product to a non-audited shop, your audit doesn't apply.
• Future deterioration — what's true today may not be true in 12 months.

The defence is annual re-audits and unannounced site visits during production for major clients.

DIY audit vs hired

You can run an audit yourself if you visit the factory in person and have manufacturing-quality experience. You can use this checklist as the framework. Allow 8–10 hours.

For most importers, hiring a third-party firm is more efficient. Cost is modest; expertise advantage is significant. The auditor sees patterns across many factories that you don't.

If you'd like our team to run audits as part of a sourcing engagement, we cover this in the factory audit service.

The bottom line

A factory audit is high-leverage, low-cost insurance. The 60 points above cover real risk classes; missing any category leaves entire failure modes unaddressed. For any supplier you'll spend $50k+ with, audit before scaling. For long-term suppliers, re-audit annually.

Treat audit findings as the start of a supplier conversation, not the end. The most successful supplier relationships we see are with factories who took remediation seriously after early audit findings — proving they're a stable partner.

If you'd like our team to commission an audit on your behalf or use this checklist on a specific factory, get a quote — we run audits as part of our quality control service.

Related: Factory audits service · 30-point supplier verification · AQL inspection 2.5 explained · How to source from China in 2026