China Factory Audit Checklist: What an Audit Checks, How Long It Takes and What It Costs

1. Why Audit Before You Order

Most losses in China sourcing happen before production starts: a deposit wired to a trading company that presented itself as the factory, a factory that cannot make the quantity in the time promised, or a product that cannot meet the Indian standard it will be tested against. A factory audit is the check that catches these while the money is still in India. It is not the same as a pre-shipment inspection, which checks the finished goods; the audit checks the maker. The China factory visit guide covers the visit itself; this article is the checklist an auditor works through.

2. The Four Kinds of Audit

3. The On-Site Checklist

1. Identity: the name on the gate, the business licence on the wall and the invoice match; the address matches the licence; the person who negotiated with you is on the staff.
2. Production: the machines present can make your product; their number and age; the production lines in operation; other customers' products on the lines (what else they make tells you what they are good at).
3. Capacity: monthly output by product type, shifts worked, current order book, and how your quantity fits in the time promised.
4. Materials: where raw materials come from, how they are received and checked, how they are stored; for your product, whether the specified material is in the stores.
5. Quality system: incoming, in-process and final inspection points; written procedures and records; test equipment and its calibration records; how defects are recorded and what the defect rate is.
6. Engineering and tooling: who makes the moulds, where they are kept, who owns them, how samples are approved.
7. Workforce: headcount, skilled operators, attendance records, basic safety (exits, guards, protective equipment), accommodation where provided.
8. Packing and dispatch: packing area, carton standards, export marking, loading bay, records of past export shipments.
9. Management: who makes decisions, who speaks English or has an export team, how complaints are handled, references from export customers.

4. The Paperwork Checked Against the Register

Documents are checked, not collected. The business licence number is verified on China's National Enterprise Credit Information Publicity System, which shows the registered name, legal representative, registered capital, business scope and any administrative penalties. The business scope must include manufacturing of your kind of product; a scope limited to "trading" or "sales" means a trading company, whatever the showroom suggests. Export records are checked for consistency with the claimed customers. Quality certificates such as ISO 9001 are checked against the certification body's register and for the site and scope they cover; a certificate attests to a management system, not to the quality of any product. Product certifications matter for India: electronics and toys under BIS compulsory registration, for example, need a valid licence for that model and that factory, and an audit confirms whether the factory holds one or has made such products for Indian customers.

5. Red Flags on the Day

• The meeting is moved from the factory to an office or a restaurant; the factory shown is "a partner's".
• The licence name differs from the company you were quoted by, with an explanation.
• No current production of anything like your product; machines idle or covered.
• No test equipment, or equipment without calibration records.
• Moulds for your product are elsewhere and cannot be shown.
• The bank account for your deposit is a personal account or a company with another name. The supplier scam red flags article lists the payment traps in detail.

6. What an Audit Costs and How Long It Takes

A background check is a day's desk work. A capability audit takes one auditor one day on site plus travel, and the report follows within a few days; social compliance audits to a scheme take one to two auditor-days and are priced by the scheme's rules. Fees are set per auditor-day plus travel, and vary with the region and the auditor's qualifications; our factory audit service page states the current fee for Guangdong, Zhejiang and Jiangsu. Set against a production deposit of 30% of the order, an audit is a small fraction of the money it protects.

7. Reading the Report and Deciding

A useful report is specific: photographs of the licence, the lines, the stores and the test room; the output and capacity figures as stated by the factory and as observed; a list of findings graded by seriousness; and a recommendation with conditions. "Approved subject to a pre-shipment inspection and payment against the inspection report" is a common and sensible outcome. "Trading company presenting as a factory" is not a failure if the price and the service are right, but the order should be structured for a trader, with the actual factory named. The supplier verification guide explains how the background check and the audit fit together, and the China sourcing guide where the audit sits in the order process.