Overseas factory audit

1、 Background of Factory Inspection in Vietnam

1.1 What is Vietnam factory inspection

Vietnam Factory Inspection, also known as Vietnam Factory Compliance Audit, is an international brand purchaser, industry alliance, or third-party professional audit organization (SGS, BV, Intertek, etc.) that conducts comprehensive on-site compliance inspections of OEM factories and production-oriented suppliers in Vietnam. The core purpose is to identify labor risks, safety risks, environmental risks, quality risks, and anti-terrorism logistics risks in the supply chain, avoid negative brand public opinion, customs penalties, and order breach risks, while ensuring that factory production complies with both local Vietnamese laws and regulations and international supply chain double standards.

In recent years, Vietnam has undertaken a large number of textile, electronics, furniture, auto parts, and hardware foreign trade orders. European, American, Japanese, and Korean brands have continued to tighten their supply chain audits in Southeast Asia, and factory inspections have become a hard threshold for Vietnamese factories to accept, renew, and enter the global supply chain. The vast majority of foreign trade orders require factories to pass corresponding types of factory inspections.

1.2 Two core audit criteria for factory inspection in Vietnam

Local laws and regulations in Vietnam: Vietnam's Labor Law, Occupational Safety and Health Law, Environmental Protection Law, Fire Protection Law, and Regulations on the Safety Management of Import and Export Goods are the minimum compliance thresholds for factory inspections, and serious non conformities are directly judged for violating local laws;

International general supply chain standards: SA8000, SMETA (SEDEX), RBA, C-TPAT, ISO system, and exclusive inspection standards for Disney, Wal Mart, Target and other brand customers.

1.3 Mainstream factory inspection types in Vietnam (choose as needed)

Factory inspection type

Applicable scenarios

Core audit direction

Social responsibility factory inspection (human rights factory inspection)

Textile, clothing, footwear, toys and other light industries, as well as customers of European and American supermarkets

Working hours, wages, child labor, forced labor, employee benefits, union freedom

Quality system factory inspection

Electronics, auto parts, precision machining, and machinery industries

Production control, incoming material inspection, process quality inspection, finished product testing, equipment maintenance

Environmental&Fire Inspection

Industry wide demand, mandatory sampling by the Vietnamese government+synchronous customer review

Three wastes discharge, hazardous waste treatment, fire-fighting facilities, emergency access, workshop safety

Counter Terrorism Supply Chain Factory Inspection (C-TPAT/TAPA)

Export to the United States, high-value goods, FCL sea freight orders

Factory access control, goods sealing, logistics traceability, personnel security, access control

Brand exclusive factory inspection

Direct procurement by major customers (Wal Mart, Decathlon, Lego, IKEA)

On the basis of universal standards, add customer specific compliance requirements

2、 Complete validation project for Vietnam factory inspection (six core validation modules, including local special requirements)

Vietnam factory inspection is different from domestic factory inspection, as there are significant differences in local labor laws, minimum wage, social security, and environmental pollution requirements. The following are all the verification contents that must be checked on-site, verified documents, and interviewed personnel:

Module 1: Legal Qualification and Business Document Verification (First Entry Inspection Item)

The auditor first verifies the legitimate business qualifications of the factory, and if there are no valid documents, it will not be approved directly. A complete set of Vietnamese local official documents needs to be prepared:

Enterprise Business License, Tax Registration Certificate, Import and Export Operation Right Filing Documents

Fire acceptance certificate and annual fire inspection report (issued by the Vietnam Fire Department)

Environmental Impact Assessment Report, Pollutant Discharge Permit, Daily Monitoring Report on Wastewater and Waste Gas

Factory leasing contract, building safety acceptance documents

Previous factory inspection reports and rectification closed-loop materials (mandatory for re examination of factories)

Module 2: Labor and Human Rights Compliance Verification (Vietnam's highest deduction point for factory inspections)

Strictly follow the 2019 version of Vietnam's Labor Law, focus on verifying the entire employment process, and prohibit any form of illegal employment:

Verification of child labor and underage workers: All employees must register their ID cards, and child labor under the age of 15 is strictly prohibited; Underage workers aged 15-18 are prohibited from night shifts and high-risk positions, and must be separately registered and undergo regular medical examinations;

Labor contract verification: All employees shall sign bilingual labor contracts within 30 days of employment, retain the original signed documents of the employees, and shall not withhold their ID cards or passports;

Compliance verification of working hours (mandatory red line in Vietnam): The standard weekly working hours are 48 hours, including overtime, and the total working hours per week shall not exceed 60 hours; Overtime shall not exceed 4 hours per day and 30 hours per month; Employees must be guaranteed at least one day off every 7 days, and continuous work without rest is strictly prohibited;

Salary and overtime pay verification: Strictly implement the latest minimum wage standards in various provinces of Vietnam; Overtime on workdays is 1.5 times the hourly wage, overtime on weekends is 2 times the hourly wage, and overtime on statutory holidays is 3 times the hourly wage; Pay in full on a fixed date every month, provide complete salary slips, bank statements, and attendance records for 12 months, and prohibit cash payment without records or salary arrears;

Welfare and vacation verification: Full payment of local social security in Vietnam; Granting paid annual leave, marriage leave, maternity leave, and sick leave in accordance with the law; The employee dormitory must not be locked, not crowded, and have complete basic living facilities;

Prohibition of Violation Verification: Eliminate forced labor, corporal punishment, verbal abuse, gender/religion/regional discrimination; Protect employees' freedom of association, establish employee representative committees, and establish anonymous complaint channels.

Module 3: Occupational Health and Safety and Fire Protection Verification (mandatory on-site visual inspection)

3.1 General Workshop Safety Verification

Install safety protection devices and emergency stop buttons on production equipment, and keep complete records of regular equipment maintenance;

Regular occupational hazard testing for workshop noise, dust, and high-temperature positions, providing qualified PPE (masks, earplugs, protective shoes, etc.) to employees, and keeping records of their use;

Establish an independent medical room, equipped with emergency drugs, emergency personnel, and a complete work injury accident handling ledger.

3.2 Fire Protection Special Verification (Vietnam's audit is extremely strict)

The emergency passage and safety exit are fully unobstructed, and it is strictly prohibited to lock or stack goods to block them; Emergency indicator lights and escape signs are intact;

Regular inspections of fire extinguishers and hydrants, normal pressure, complete records of all staff fire training and annual fire drills;

The workshop circuit is explosion-proof, the wiring is not aging, and flammable and explosive materials are stored separately in designated areas.

3.3 Special verification of hazardous chemicals

Ink, glue, cleaning agents and other hazardous chemicals are equipped with new MSDS chemical safety instructions;

Double person and double lock management of hazardous chemical warehouse, segregated storage in different areas, and proper registration of incoming and outgoing inventory;

Hazardous waste liquids and residues shall be collected and processed by Vietnamese official qualified institutions in compliance with regulations, and recovery documents shall be retained.

Module 4: Environmental Compliance Verification (Key Inspection Focus in Vietnam in Recent Years)

The Vietnamese government continues to tighten environmental control measures, and factories that do not comply with environmental regulations are directly shut down. Factory inspections must include the following:

Wastewater: Production wastewater must be connected to sewage treatment equipment, discharged after meeting standards, and daily water quality monitoring records must be complete. Direct discharge is strictly prohibited;

Waste gas: collection and treatment of waste gas from injection molding, spraying, and welding processes, in compliance with Vietnam's national waste gas emission standards;

Solid waste: household waste, general industrial solid waste, and hazardous waste are stored in three categories with traceable records;

Energy consumption management: Install sub item electricity meters in high energy consuming workshops, collect energy consumption data, and meet customer low-carbon supply chain requirements.

Module 5: Production Quality System Validation (QA/QC Full Process Verification)

System documents: equipped with a complete quality manual, operation instructions, and process control documents, in compliance with ISO9001 system requirements;

Incoming material control: raw material supplier audit records, incoming material inspection reports, and rejection of non-conforming raw materials;

Process control: production line inspection records, process defect control, rework and repair process records;

Finished product control: Factory inspection records, product samples, test reports, and regular calibration of measuring instruments;

Traceability system: Full chain batch traceability from raw material storage to finished product shipment, meeting customer product recall requirements.

Module 6: Counter terrorism Security and Business Ethics Verification

6.1 Supply Chain Counter Terrorism Verification (C-TPAT Essential)

The entire factory area is enclosed by walls and fully covered with video surveillance, with surveillance footage retained for no less than 90 days;

Personnel and vehicle separation access control management, real name registration for employees, visitors, and trucks entering and exiting;

Supervise the entire process of cargo loading, verify the uniqueness of container seals, and prevent the exchange of goods or the inclusion of prohibited items.

6.2 Business Ethics Anti Bribery Verification

Establish anti bribery and anti-corruption systems, prohibit bribery and gift giving to auditors, purchasers, and public officials;

Prohibit commercial fraud, false ledgers, and false factory inspection materials;

Archive of complete supplier integrity cooperation agreement.

3、 Complete audit process for factory inspection in Vietnam (1-3 days)

First meeting (30 minutes): The audit team will explain the scope, standards, and process of the audit, and the factory manager will provide a Q&A session;

Document review (4-8 hours): Verify the complete set of personnel, salary, attendance, safety, environmental protection, and quality records for the past 12 months item by item;

On site inspection of the entire factory: covering workshops, warehouses, dormitories, canteens, hazardous chemical rooms, and sewage treatment stations for photography and evidence collection;

Anonymous employee interviews (core process): Randomly select 10% -15% of frontline employees for one-on-one private interviews, verify whether the working hours, salary, dormitory environment, and written records are consistent, and prioritize the interview results over paper documents;

Final meeting: Announce on-site non conformities, classify them into serious, major, and minor issues, inform the deadline for rectification, and issue a preliminary audit report.

4、 Classification of audit results and rectification requirements

Zero issues passed: no non conformities, direct certification, no need for re examination within 1 year;

Minor non-compliance passed: A small number of minor issues can be closed by the factory submitting a written rectification plan, without the need for re examination;

Conditional approval: If there are major non conformities, they must be rectified within 30-60 days. Only after passing the auditor's document review or on-site review can they be qualified;

Serious failure: If red line issues such as child labor, forced labor, major fire hazards, and direct sewage discharge are discovered, the direct judgment will fail, and all customer orders will be suspended. Re application for review can only be made after 3-6 months.

5、 High frequency failure points and pit avoidance tips for factory inspections in Vietnam

Excessive working hours: Vietnamese factories generally rush orders and work overtime, with excessive weekly working hours and no fixed rest days being the top deduction points;

Salary accounting error: Overtime pay was not calculated at the legal rate in Vietnam, and the salary records did not match attendance;

Fire safety issues: blockage of emergency passages, missing records of fire drills, expired fire extinguishers;

Inconsistent employee interviews: Frontline employees are unclear about overtime pay, vacation policies, and discrepancies with ledger records;

Missing environmental ledger: incomplete records of sewage treatment operation and hazardous waste recycling documents.

6、 Summary of the core differences between Vietnamese factory inspections and domestic factory inspections

The upper limit of working hours is more relaxed: the maximum weekly total working hours is 60 hours (53 hours in China), but the monthly overtime limit of 30 hours is more strictly controlled;

Official documents must be in Vietnamese or bilingual version, pure Chinese documents are not recognized;

Environmental protection and fire protection should be coordinated with local government agencies in Vietnam, and testing reports must be issued by local compliance agencies in Vietnam;

Employee interviews have a higher weight, and auditors trust frontline employees' oral content more.