Factory audit

Li & Fung Group originated from a Chinese-owned trading business in Guangzhou (1906–1949), making it one of Hong Kong's oldest export trading firms. After 100 years and three generations of deliberate management, the group has evolved into a large international multinational trading enterprise, operating in three core businesses: export trading, retail, and wholesale distribution. 

Lifung factory audit, as a client-side standard review (Code of Conduct), is based on international labor standards and requires suppliers to fulfill defined obligations regarding labor standards and workers' living conditions. 

1. Factory rules and regulations, employee welfare handbook (including dormitory)

2. Business license

3. Export license

4. Payroll records, attendance records, and social insurance certificates for the past 3 months

5. Employee personnel files and labor contracts

6. Fire safety compliance certificate, fire drill records, fire extinguisher training records, first aid personnel training records

7. Work injury records

8. Certificates of qualification for special equipment (boilers, elevators, lifting vehicles), as well as operator certification and electrician certification

9. Environmental project approval documents, factory canteen hygiene certificate, and health certificates of canteen staff

10. List of machinery and equipment, maintenance and repair records

11. Daily production reports (3 months), production planning schedules, weekly production reports, production flowcharts

12. Internal quality inspection manual, incoming material inspection reports, raw material and packaging material inspection reports

13. In-process inspection reports, semi-finished product inspection reports, final product inspection reports (3 months)

14. Product-related test reports, broken needle policy and broken needle records (3 months)

15. Security manual, anti-terrorism procedures and training, control of factory keys, security patrol logs for doors, windows, and walls 

Starting October 1, 2017, Li & Fung will enhance its review rating and approval timelines, with the following review ratings: 

Suitable for all factories 

A/B Grade 

When a factory is rated as A or B, the approval period is 24 months. 

Grade C 

When the factory is rated as Class C, the approval period is 12 months. 

Grade D 

When a factory is rated as D, the approval period is 6 months. 

F Grade (Zero Tolerance) 

Once a factory is rated as F-level, it will be deactivated within the Li & Fung system. 

Most Li & Fung requires factories to pass a full on-site audit and achieve at least a C rating or higher, depending on customer requirements. 

2. Benefits of passing the Li & Fung factory audit: 

Establishing a management system that meets international standards enables global recognition and enhances the ability to compete effectively with well-known brands. 

2. Encourage consumers to develop positive feelings toward the product; 

3. Strengthen cooperation with buyers and expand into new markets to lay a solid foundation for long-term development; 

4. Enhance the management system, improve relationships with employees, thereby increasing productivity and boosting profits; 

5. Developing new markets and customers: Companies with social responsibility will stand out from their competitors.