There are many different frameworks you can use to conduct a social compliance audit. The questions these frameworks use and the areas they focus on also differ. In this article, we'll tell you about four common areas where we typically find social compliance infractions.

Regardless of the framework you use for reporting, the most common problems that arise during the audit of a Chinese factory normally have the same root causes. This is because, in the end, all social compliance audits have the same purpose: make sure the factory deals with its workers and environs in a fair and ethical manner.

In China, it is fairly easy to narrow down the causes of common infractions down to the following 4 categories:

Insufficient or Incomplete Records

Many factory managers and office staff are usually not formally educated in administration. One of the most common issues found while performing an audit is the lack of available information in general. More specifically, it can be difficult to obtain employees' records to verify they are being paid fairly and are not being overworked.

Since the only tool available to really verify this kind of information is an audit, the factory MUST be able to operate well within the audit’s system. This means if there is no documentation to prove workers are being paid fair wages and being treated well, it is the auditor’s job to assume the worst.

Specific examples of how this may appear on an audit report include:

  • Inconsistencies found between the working hour records and production records. For example, the working hour records show one worker not working on May 6th, but the production records show them working in the raw materials warehouse on that day.
  • Working hour records that do not contain sufficient information to verify hourly pay rates, overtime hours, or overtime pay rates. Workers are only marked as working with a hand-written check mark (☑), with no clock-in or clock-out times recorded.
  • Failure of the factory to provide the time records for 2 randomly selected workers

Incomplete, Insufficient or Ineffective Procedures

Again, since factory management is not commonly trained in administration, they usually see written procedures for most operations or business functions as useless or a waste of time. It is common for many operations and business functions to not take place during the time of the audit. social complianceTherefore, if there is no record of procedures, then the auditors cannot assume those operations and functions were completed in a compliant manner.

Examples of this include the factory having no written procedures, or incomplete records documenting:

  • Fire drills and evacuations
  • Analysis on the factory’s environmental impact
  • New employee selection and background checks
  • Sub-contractor screening and selection

Non-Compliant Facilities and Equipment

Building and occupational safety standards are different in China than in the U.S. Additionally, many government regulations are not enforced as strictly in China, so factory management may have never bothered to learn what the standards their facilities should meet are.

This means that it is very common for a factory to lack enough fire alarms, emergency exits, first aid kits, or safety equipment.

While these violations and their fixes may seem like no-brainers to you, they are more often caused by ignorance, rather than negligence. Simply taking the initiative to give the factory explicit instructions of where they should have these safety items and features is often enough to fix the problem. Usually, they want these problems fixed as quickly as you do, and the solutions are often easy and cheap.

Insufficient Insurance Coverage or Missing Building and Equipment Registrations

These types of violations, while important, must be taken with a grain of salt, since the sprawling and bureaucratic nature of regional Chinese government can make obtaining licenses and registrations very difficult in some areas. While factories should always get all necessary licenses and registrations required by law, there is often a very specific reason for why they don’t.

social complianceThis means that these violations must be addressed on a case by case basis, often with the help of local consultants:

  • If only a fraction of the factory’s employees have all 5 social insurances required by law, it is often because the uninsured workers are new hires and they haven’t worked at the factory long enough for their social insurance registration to be completed (employee turnover rate is very high in most Chinese factories).
  • If special equipment registration is missing for forklifts or air compressors, sometimes the factory doesn’t actually use these machines, or they came with the building when the factory owner bought the facility. Check that the factory actually needs the machine.


When you review an audit report, don’t hesitate to ask what you should actually worry about with the audit company. Regardless of how serious violations may seem to you, the auditors themselves will view them differently. They will be able to tell you:

  • What are the most critical violations?
  • Are any issues systemic enough that you should be looking for a new factory?
  • What are the easiest or cheapest things to fix?
  • Are any violations actually unavoidable for the factory?

Social compliance is a complex and deep field, and often neither you nor your factory will really understand the how’s and why’s behind every violation. Nevertheless, auditing your suppliers for social compliance is an important step to protecting your brand and ensuring you're meeting widely accepted standards for labor practices.


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