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FACTORY PLANNING · EVIDENCE BEFORE COMMITMENT

Factory Site Selection in China

Move from a regional shortlist to a specific, viable factory site. Verify the process, property, utilities, costs and delivery conditions with evidence.

15 detailed topicsComplete Excel workbook18 September 2026
Define needs, Screen constraints, Inspect sites, Compare options, Agree conditions

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01 Select a site that can sustain production and delivery

The best factory location in China depends on the product, process, customers and supply chain. No city offers the lowest cost, fastest opening, strongest workforce and best logistics for every manufacturing project. A multi-storey standard building suitable for electronics assembly may be unsuitable for heavy machining, hazardous-material storage or a water-intensive process.

Site selection should deliver verifiable conclusions: whether the project is admissible, the property can support the process, applicable procedures have a feasible route, people and utilities can be available, suppliers can support delivery, and risk-adjusted costs are acceptable. Helpful investment-promotion contacts or low rent do not establish feasibility.

This guide covers an investor’s own production base, manufacturing facility, assembly plant or expansion in China, rather than the search for a contract manufacturer. The sequence is to eliminate infeasible options, compare qualifying sites and turn the evidence into enforceable contract conditions.

02 Assess the region, industrial park and property separately

LevelMain questionRequired result
Region and cityDo customers, suppliers, labour, logistics and operating conditions fit?A regional longlist with documented reasons
Industrial park or districtDo industrial positioning, planning, infrastructure and administrative interfaces fit?A shortlist capable of accommodating the actual process
Plot or factory buildingDo use, rights, engineering, capacity and handover meet requirements?Specific sites suitable for a contractual decision

The right park can contain the wrong property. A central wastewater facility does not prove that a particular building can connect. Adequate regional power does not prove that the required capacity can reach your building before the opening date. Higher-level screening reduces investigation effort but cannot replace site-specific evidence.

For expansions, include the existing base in the comparison. Expansion on the current site, a neighbouring lease and a new distant factory can have different strengths. Lower rent elsewhere may be offset by duplicate management, inter-factory transport, replicated quality systems and the relocation of key staff.

03 Step one: issue a measurable project brief

The headquarters project lead should confirm products, major processes, initial and future capacity, customer regions, supply dependencies, shifts and the target operating date. Engineering should translate these into measurable requirements: production and warehouse areas, clear height, loads, column spacing, equipment access, vehicle types and utility demand.

Environment and safety inputs should identify raw materials, hazardous substances and safety data sheets, air emissions, wastewater, noise, solid waste, occupational hazards and intended controls. Labels such as “light industry” or “high technology” are not enough to assess suitability. Different cleaning or surface-treatment processes can change the requirements even for the same final product.

InputHow to express itConfirming role
CapacityInitial, ramp-up and future output, with shiftsOperations and process leads
SpaceFunctional areas, height, point loads and storageEngineering and equipment teams
UtilitiesContinuous and peak demand, quality, pressure and backupProcess and facilities engineers
Emissions and risksMaterials, generating stages, quantities and proposed controlsEnvironment and safety lead
Opening milestoneWork backwards from customer deliveries and the latest acceptable dateProject lead and sales
Commercial limitsBudget, lease term, expansion, tenure and exitFinance, management and legal

Use a process summary that protects core formulations, and share sensitive details only where needed. Version the brief and ask every candidate to respond to the same version. Otherwise the comparison will lack a common basis.

04 Step two: screen hard constraints before scoring

Foreign-investment access, market access, industry conditions and project construction requirements are different assessments. Changes to manufacturing foreign-investment restrictions do not mean every manufacturing process can operate at every location. Map the actual product and process against applicable negative lists, industry requirements and local site conditions. [S01][S02][S03]

Hard constraints include incompatible use or planning, a process that cannot be implemented in the area, critical capacity unavailable on time, unresolved environmental or safety conditions, and unacceptable property rights or handover problems. Mark insufficient evidence as pending verification, rather than treating unknowns as passes to complete a scorecard.

Use three outcomes: pass, pending verification and fail. Failed candidates stop participating in the overall ranking. Pending candidates may remain under investigation but should not enter the final signing recommendation. Any proposed acceptance of a correctable risk needs an action, owner and deadline. A commercial score cannot override a legal prohibition or an objectively unachievable condition.

05 Step three: build the regional longlist around the real supply chain

Map critical suppliers, customers, ports, airports, maintenance services and outsourced processes together. Record shipment frequency, goods value, delivery timing, processes requiring on-site cooperation and available alternatives. A supplier’s ability to attend quickly during a disruption may explain a site difference better than map distance alone.

Initial investigations may include the Yangtze River Delta, Pearl River Delta, Bohai region and relevant inland manufacturing centres. These are possible search areas, not a predetermined ranking. Verify actual conditions against your customer and supplier list rather than treating an industrial-cluster brochure as a supply guarantee.

Create a manageable longlist and narrow it to a small number of sites worth visiting. There is no mandatory candidate count; choose based on regional differences, investigation budget and urgency. Retain an executable fallback site to reduce reliance on one landlord or a single handover promise.

06 Step four: request evidence that answers project questions

Start with more than a brochure. After sharing the brief, request specific plots or buildings, current use and planning, handover scope, availability, utility connections, applicable service interfaces and the underlying documents. An investment-promotion response is a useful lead. Conclusions about permissions and engineering still need confirmation from the competent body or professional adviser.

Information requestedWhat it verifiesIf evidence is insufficient
Address and drawingsThere is a specific asset to investigateKeep the option at park-level screening
Use, planning and ownership recordsBasis for occupation and transactionRefer to legal and planning specialists
Power, water and drainage connectionsCapacity, quality, timing and responsibilityObtain a provider’s written confirmation or implementation plan
Process and procedure discussionsIssues still requiring reviewRecord unresolved matters; avoid relying on oral approval guarantees
Lease or sale quotation and handover listCost and engineering interfacesClarify taxes, chargeable area and exclusions
Policy documents and application conditionsWhether support is available conditionallyExclude unconfirmed support from base cash flow

Record discussions and ask the relevant parties to check key facts. Minutes do not replace permits, but they expose different understandings of power, handover and responsibilities before signing.

07 Step five: investigate the building at process and equipment level

The site visit should involve project, process, engineering, environment and safety, logistics and relevant specialists. Compare drawings with actual conditions and record measurement methods, locations, photograph references and issue owners. A good facade and tidy offices do not establish manufacturing suitability.

AreaDetailed checksCommon mistaken assumption
Rights and useOwnership, authority to lease, mortgages, seizure restrictions and usePossessing keys establishes a lawful right to lease
Structure and spaceClear height, columns, slab loads, foundations and liftingA uniform-load rating proves a heavy machine’s point load is acceptable
Access and logisticsDoor width, turning radius, unloading, goods lifts and docksEquipment that enters the park can enter the workshop
Fire provisions and alterationsExisting records, layout and use changes, interfacesOriginal building records automatically cover a tenant’s new process
UtilitiesConnection boundary, capacity, backup, construction and outage windowsTotal park capacity is reserved for your project
History and environmentPrior industries, contamination indicators and investigation or remediation recordsAn empty building has no historical risk
Expansion and exitAdjacent space, alteration rights, removal, reinstatement and renewalAn oral reservation creates enforceable expansion rights

Use specialist investigations for potential contamination, structural concerns and complex rights. Mark missing documents as unverified and make obtaining evidence or completing corrections a condition of the next step. “Looks suitable” cannot replace a structural calculation or confirmation by an authorised party.

08 Step six: establish the environmental, safety, energy and construction route

Assess environmental suitability from actual processes and emissions, local requirements, park and property conditions, the applicable environmental assessment category, treatment facilities and discharge management. Park acceptance is not project approval, and leasing an existing building does not automatically remove applicable procedures. [S08][S09]

Identify energy-conservation review and carbon-emissions assessment requirements before ordering equipment. The framework connects these assessments; project applicability, processing and acceptance requirements should be checked against current measures and local implementation. [S11]

Check fire requirements, safety facilities and occupational-disease protection separately. Allocate responsibility for the original building, tenant alterations, process information and design/construction interfaces. If special equipment is involved, include installation and use-management interfaces before the trial-production stage. [S10][S12][S13][S15]

Create a dependency schedule for applicable matters: required information, implementing party, competent or service interface, prerequisites, expected window and completion evidence. This is a project-management schedule, not a claim that every project needs identical procedures or a fixed number of approval days. A candidate with an unexplained critical path retains a material schedule risk.

09 Step seven: compare total ownership cost and production timing

Use the same capacity, floor-area basis, comparison period and service scope for all sites. Include premises, alterations, equipment interfaces, utilities, labour, logistics, inventory, maintenance, duplicated management, exit restoration and delay effects. Identical machinery can still require different foundations and services.

Do not compare the full purchase and construction price with a single year of rent. Start with cash flows over the comparison period, then have finance assess discounting, residual values, deposit recovery and tenure. Confirm tax treatment separately. Show both early cash pressure and long-term cost rather than only a net present value whose assumptions obscure the cash requirement.

Timing questionEvidence required
When is the property handed over?Handover standard, milestones and contractual mechanism
When can construction begin?Design inputs, applicable procedures and work interfaces
When are utilities available?Connection schedule and confirmation of responsibility
When can equipment run?Access, installation, integrated testing and acceptance plan
When can good products be delivered?Staffing, quality, customer qualification and ramp-up plan

Distinguish building handover, installation start, operating readiness, trial production and stable output. The important date is the one supported by real prerequisites and customer delivery needs, not merely a claim about how quickly a company can be registered.

10 Step eight: score only after hard constraints pass

Illustrative weights are supply chain and customer response 25%, total cost 20%, engineering and opening conditions 20%, people 15%, logistics 10%, and expansion and continuity 10%. They total 100%. Decision-makers should set project-specific weights before seeing candidate scores, rather than changing the criteria until a preferred city wins.

Score each dimension from 0 to 5 with evidence. For engineering and opening conditions, 5 might mean critical requirements are substantiated and meet the target; 3 indicates a feasible route with manageable corrections; 1 depends on major unresolved actions. Missing information remains pending verification rather than being assigned a middle score.

Illustrative candidateSupply chain 25%Cost 20%Engineering 20%People 15%Logistics 10%Expansion 10%Total
A, hypothetical43544378/100
B, hypothetical54335480/100

The total is the sum of weight multiplied by score divided by 5, expressed out of 100. A two-point difference does not prove that B is better. If B has an unresolved power constraint, return it to the pending group. If small changes in weights or assumptions repeatedly reverse the ranking, report a close comparison needing further evidence.

The Excel workbook separates hard conditions, evidence and weighted scores. Candidates that have not passed all hard conditions do not receive a recommendation score. Scoring makes trade-offs visible but does not replace due diligence, professional judgement or the signing decision.

11 Step nine: make feasibility conclusions enforceable in the contract

Before material non-refundable payments, clarify the contracting party and rights, delivery scope, technical schedules, milestones, alteration rights, utility connections, rent commencement or payment triggers, maintenance, insurance and exit. Legal advisers should structure suitable effectiveness, delivery, termination or liability mechanisms for unresolved critical conditions.

A promise should identify who can perform it, when, what proves completion and what happens if it is not delivered. “Sufficient power” should become a confirmed capacity, connection point, date and cost allocation. “Expansion possible” should identify actual space, duration and enforceable rights.

For land and new construction, check planning and industrial land control conditions, together with contractual investment, construction, utilisation or other performance obligations. Relevant constraints can appear in land-supply and supervision documents; the land purchase price alone is insufficient. [S18]

Update the budget and implementation plan when negotiations close. Changes in handover, rent-free periods and alteration scope affect funding. If the contract differs from the due-diligence assumptions, return the difference to the investment decision instead of leaving it for the implementation team to absorb.

12 Adapt priorities to the industry and actual process

ProjectAdditional investigation prioritiesUnsafe shortcut
Electronics assembly and precision manufacturingESD controls, cleanliness, temperature, humidity, stable power and talentEqual floor area means equal fit-out cost
Machinery and heavy processingFoundations, point loads, lifting, noise and transportA slab-load sign alone proves machine suitability
Food and related productionWater, drainage, hygiene zoning, cold chain and applicable licensingAny ordinary building can operate after decoration
Medical-device manufacturingClean conditions, quality systems, validation and product requirementsA suitable registered address establishes production suitability
Surface treatment or chemical processesMaterials, emissions, safety, park conditions and treatmentA low-risk product name means all its processes are low risk

These are starting points for requirements analysis, not complete sector compliance lists. Product class, materials, outsourced processes and target markets can change conditions within the same industry. If an unsuitable process is outsourced, evaluate quality, supply continuity, transport and regulatory responsibilities rather than simply deleting it from the brief.

13 Define deliverables and responsibility throughout selection

StageDeliverableLeadDecision
RequirementsProcess and facility brief, assumptionsHeadquarters project leadReady for external screening?
Regional screeningSupply-chain map, candidate reasons, hard conditionsSelection coordinator and operationsWhich regions merit investigation?
Park discussionsResponses, specific properties, document registerLocal coordinatorIs a site visit justified?
Site due diligenceIssues, professional findings, corrective scopeEngineering and environment/safetyFeasible, pending or excluded?
Commercial comparisonComparable costs, timing, scores and stress casesFinance and project managerPreferred and fallback options?
Investment approvalDecision, open matters and conditionsInvestment decision-makersAuthority and hold points?
Contract implementationTechnical schedules, handover and exitCommercial and legalConditions for signing and payment met?
Handover to executionEvidence, procedure route, risks and ownersProject managerHas the delivery team accepted the brief?

Appoint a headquarters lead able to coordinate engineering, finance, procurement and legal. Local consultants and park contacts can shorten information cycles but cannot make the company’s process, funding and strategy decisions. Closing the few uncertainties that change the investment decision is more useful than continually adding candidates.

14 Questions to ask before recommending a location

Is a national-level industrial park automatically better?

Its designation is useful background but does not establish that a specific building fits your process. Assess the actual property, capacity, people, cost and implementation route. Different buildings within the same park require separate checks.

Is a park’s statement that “the project is possible” sufficient?

Not for an irreversible payment. Clarify whether it refers to industrial interest, property use, process capacity or a specific procedure. Different questions require evidence from different competent parties. Match the response to the actual brief version.

Does the lowest rent mean the lowest cost?

No. Alterations, energy, logistics, labour, inventory and delays can outweigh rent differences. A cheap building that cannot obtain essential capacity in time is not an executable low-cost option.

When should a candidate be stopped?

Stop or downgrade it when a necessary condition cannot be met, critical evidence remains missing, corrective responsibility is unclear, delivery cannot support the business or risk exceeds the approved limits. Time already spent investigating is not a reason to sign.

15 Start a site-selection assignment with clear outputs

For the first discussion, provide products and major processes, expected capacity, area, heavy equipment and utilities, main customer and supplier regions, budget range and target dates. Mark unknowns explicitly; do not invent precise numbers merely to fill the form.

Yipu Consulting can help translate requirements into material parks and property owners can answer, organise candidate information and local discussions, coordinate site investigations and compare costs and timing. Relevant professional firms provide legal, environmental, safety, structural, engineering-design and tax opinions. The final output should include reasons for the recommendation, a fallback, evidence, unresolved risks and implementation conditions.

Test the selected site against both the cost budget and the factory setup plan: can it be funded, executed on time and exited under workable conditions? Those conclusions need to agree before a site moves from worth considering to investable.

Download the complete Excel workbook

China factory site selection and due diligence

Six worksheets covering a site overview, 10 hard conditions, three-candidate scoring, 46 due-diligence checks, comparable site costs and a 12-stage action register.

Download Excel workbook (.xlsx)

Yellow fields are editable. The workbook includes instructions, formulas and evidence requirements. Budget amounts are clearly marked teaching assumptions, not supplier quotations. Replace them with supported project inputs before making a decision.

Official sources and references

Prepared 18 September 2026. References support the associated regulatory statements. Checklists, weights, schedules and monetary examples are project-management guidance, not official prices or rankings.

  1. S01 · Foreign Investment Negative List (2024)
  2. S02 · Explanation of manufacturing foreign-investment access changes
  3. S03 · Market Access Negative List (2025)
  4. S08 · Construction Project Environmental Impact Assessment Classification Catalogue
  5. S09 · Pollutant Discharge Permit Regulations
  6. S10 · Amendment to Construction Project Fire Design Review and Acceptance Rules
  7. S11 · Fixed-Asset Investment Energy Conservation Review and Carbon Emissions Assessment Measures
  8. S12 · Construction Project Safety Facilities: simultaneous design, construction and use
  9. S13 · Construction Project Occupational Disease Protection Facilities: simultaneous design, construction and use
  10. S15 · Special Equipment Safety Law of the People’s Republic of China
  11. S18 · Industrial Project Land Use Control Indicators (Ministry of Natural Resources, 2023)

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