Foreign Enterprises Renting Factory Space in China: 7 Checks Before Signing

When renting a factory in China, a suitable rent and floor area only mean the site is worth further investigation. Before signing, you must also confirm: whether the lessor has the right to lease, whether the specific building can be used for the intended production, whether renovations and approvals are feasible, and what costs the company will bear while these conditions remain unconfirmed.

For foreign investors, a safer approach is to first screen sites using a clear production requirement statement, then have legal, engineering, and environmental professionals verify key issues, and finally incorporate mutually agreed conditions into the lease. This article discusses leasing existing factory buildings and does not cover purchasing land, building a factory from scratch, or acquiring an existing company.

1. Specify What You Will Produce Before Judging Factory Suitability

Prepare a one-page project description before viewing properties, listing at least the product, main processes, equipment, expected capacity, shifts, electricity and water usage, raw and auxiliary materials, storage, and transportation needs. Spell out specific processes such as spraying, cleaning, heating, and surface treatment—do not just write “manufacturing” or “assembly.”

For example, for a metal parts project, simple assembly versus adding a spraying process may have different requirements for ventilation, exhaust gas treatment, raw material storage, and site conditions. This is an example of process differences, not a judgment on approval categories for a specific project.

Ask the park or lessor to respond based on the same statement, and note which department or professional institution still needs to confirm each item. The overseas headquarters, site selection personnel, and technical team should use the same version to avoid discussing assembly during site visits and then adding other processes only after equipment arrives.

2. Verify Property Rights, Leasing Authority, and Actual Delivery Scope

Request verifiable property and use documents, and check whether the registered address, building, floor, and area match the actual site. If the signatory, lessor, and payment recipient are different entities, clarify the relationship and authorization basis—do not make payments solely based on an intermediary's introduction.

For subleasing, focus on reviewing the original lease, the lessor's consent to sublease, and the remaining term of the original lease. Articles 716 and 717 of the Civil Code address sublease consent and the validity of subleases exceeding the remaining term, so you cannot rely solely on a long-term sublease from a second landlord to confirm usage security. View relevant provisions of the Civil Code

Mark workshops, warehouses, loading areas, offices, parking spaces, and common passages separately on an attachment map. If there are mezzanines, extensions, or partition modifications on site, further verify their documentation and usability conditions; do not assume they are usable just because the area is included in the quoted price.

3. Verify Registration Address, Building Use, and Production Conditions Separately

“Company registration is possible” answers an address registration question, but it does not replace judgment on building use, specific processes, and production approval procedures. It is recommended to check separately:

• Registration arrangements: What documents are needed for the proposed Chinese company to use this address, and who will provide them.
• Site use: Whether land, building, and planning documents match the intended area and purpose.
• Production conditions: Whether park management requirements, industry conditions, and actual processes align, and which items remain to be confirmed.

If the Chinese company is not yet established, have legal counsel verify the contracting entity, signing authorization, and how the future lessee entity will be assumed, and agree in writing with the lessor. Do not assume that the overseas parent company or an individual can sign and pay first, then unconditionally transfer the contract to a new company later.

4. Verify Environmental and Fire Safety Matters Based on Your Project

The fact that a previous tenant produced goods or that the park holds certain documents is not sufficient evidence that a new enterprise's new process can be put into production directly. When collecting existing documents, check the entity, address, use, process, and renovation scope covered by each document.

Environmental impact assessment is subject to categorized management; verify the applicable procedures based on the actual content of the proposed project and local conditions—do not classify all factories as “all requiring approval” or “all exempt.” Start with the Classification Management List of Environmental Impact Assessment for Construction Projects published by the Ministry of Ecology and Environment, and verify the applicable revised regulations and local requirements at the time of application.

For fire safety, review and acceptance of special construction projects differ from filing and spot checks for other construction projects. Relevant professionals should verify applicable requirements based on the building, use, and renovation content. View the Regulations on Fire Protection Design Review and Acceptance of Construction Projects

Ask the responsible party to list “item, required documents, responsible person, prerequisites, and estimated cost,” and specify which issues would prevent decoration, equipment installation, or production. A contractual agreement for the landlord to assist does not mean the company's own legal obligations are transferred.

5. Verify Power Supply, Structural Load, and Logistics Using Equipment Parameters

Provide the equipment list to engineering personnel for verification, rather than just asking whether the park’s “total capacity is sufficient.” Confirm the actual power available to the proposed unit, expansion conditions, connection points, costs, and expected delivery time.

Also check floor or slab load capacity, ceiling height, equipment transport routes, freight elevators, fire escape routes, ventilation and drainage, and loading/unloading conditions. For heavy equipment or structural modifications, obtain appropriate professional opinions.

For lease renovation projects, require that the engineering work promised by the lessor, delivery standards, and acceptance methods be specified in writing. If equipment supplier installation requirements do not match the factory’s available conditions, determine the renovation plan before arranging shipment.

6. Compare Total Usable Costs, Not Just Unit Prices

Ask each candidate site to quote on the same basis: rentable area, tax-inclusive and invoicing arrangements, rent escalation, deposits, property management fees, utilities and related service charges, renovation periods, equipment entry conditions, and make-good requirements at the end of the lease.

Prepare two budgets: one for pre-production cash requirements, including deposits, prepaid rent, renovations, equipment transport and installation, and approval fees; another for ongoing operating expenses. Refundable deposits typically tie up cash but should not be treated simply as a cost identical to rent.

Additionally, run scenario calculations for rent commencement, project delays, capacity expansion, and additional renovations. Unconfirmed incentives or subsidies should be listed separately and not deducted from the base budget.

7. Link Unresolved Issues to Payment, Delivery, and Exit Conditions

Before signing, discuss specific executable arrangements with legal counsel and the lessor:

• Which documents must be delivered before signing or before making significant payments, and how they will be verified.
• Which engineering work the lessor will complete, and to what standard before delivery.
• When rent commences, and how the renovation period and delayed delivery are handled.
• Whether the lease can be terminated if a key condition is not met, and how paid amounts are settled.
• How equipment removal, decoration ownership, repair scope, and deposit return are handled at lease end.

These are clauses to negotiate, not automatic refund rights for the company. For bilingual contracts, verify the entity names, addresses, figures, attachments, and the governing text clause—do not rely on a translated summary alone being confirmed by both parties.

What Documents Should You Request from the Lessor Before a Site Visit?

Use the following checklist to build a document folder:

• Lessor entity information, signing authorization, and payment arrangement explanations.
• Property rights, use, and drawings of the proposed area; for subleasing, the original lease and consent documents.
• Existing building, fire safety, and environmental documents, with their coverage scope explained.
• Technical data on available power, water supply and drainage, structural load, and a list of items requiring renovation.
• A complete cost schedule, delivery standards, draft lease, and attachments.

Record the source, date, corresponding site, and reviewer for each document, and mark each as “verified,” “to be supplemented,” or “not applicable.” This list is for initiating due diligence, not a nationwide standard approval document list.

If leasing authority is unclear, drawings and the actual site are significantly inconsistent, key processes are required to be “rented first, asked later,” or major renovations are only verbally promised, it is recommended to delay payment, gather evidence, or compare other sites.

Common Questions from Foreign Investors

Is Renting an Existing Factory Always Faster Than Building New?

Not necessarily. Existing buildings may reduce some construction work, but use mismatch, renovations, capacity expansion, and applicable approvals can also affect the timeline. You should compare the path to achieving target production conditions for each site, not just the date you receive the keys.

Is It Sufficient If the Landlord Says Approvals Can Be Handled?

You should clarify which approval, for what project, who provides the documents, and who makes the decision. Convert verbal promises into verifiable documents and contractual arrangements, and obtain project feedback from relevant professionals or authorities.

How Can Overseas Headquarters Compare Candidate Factories Remotely?

Ask the local team to use a unified production requirement statement, document checklist, and cost basis. The report should present site observations, documentary evidence, professional judgments, and unresolved issues separately; key conclusions involving structures, equipment installation, and environmental conditions still require appropriate on-site and professional verification.

Aligning Site Selection with Your China Factory Plan

EasySail, based in Foshan, provides support for site comparison, preparation planning, and stakeholder communication for building a factory in China. You can provide an overview of products and processes, candidate cities, area requirements, expected production start date, and whether a Chinese company already exists to facilitate discussion of the scope of work.

See Foreign Enterprise Factory Investment Services in China to understand the link between site comparison and production preparation; if you also need to coordinate company, staffing, and operational arrangements, refer to China Investment Landing Consulting. Engineering design, specialized assessments, and professional legal matters are handled by the respective responsible parties, with scope and costs confirmed separately.

This article provides a preliminary verification framework. Specific leases, project approvals, and production conditions should be verified based on the location and actual project.