[Direct answer]In the Beijing area, the compensation for factory demolition generally includes the value of the building, the right to use the land, decorations and ancillary facilities, the relocation and installation of equipment, the losses from production and business suspension, the costs of relocation and temporary resettlement, economic compensation for laid-off workers, and relocation incentives. According to Articles 17 and 19 of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land" (promulgated and implemented on January 21, 2011), the compensation must include the value of the houses to be acquired, the costs of relocation and temporary resettlement, and the losses from production and business suspension. Moreover, the value of the houses must not be lower than the market price of similar real estate on the date of the announcement of the acquisition decision. It is recommended to first check whether the compensation plan covers the above-mentioned items, and then calculate them one by one.

I. Problem background and typical scenarios

When factories, warehouses, and processing enterprises face expropriation, the most concerned issues are which items will be compensated and what standards will be used for the calculation. There are three common omissions in practice: only calculating the value of the building but not the land use rights; only compensating for the relocation fee but not the costs of disassembling, adjusting, and testing equipment or the losses during the shutdown period; and directly refusing to recognize the losses caused by the suspension of production and business operations. When handling similar cases in the Beijing area, enterprises often face the following situations: the evaluation report only provides a total amount with vague breakdowns; the business performance is good, but there are no complete tax and financial statements, making it difficult to prove the losses; and there may be add-on structures or unlicensed parts in the buildings, which the expropriating party uses to lower or even exclude the compensation amount.

II. Key points of contention

First, the nature of the land and the compensation criteria. The compensation path for state-owned land and collective construction land is different. The former focuses on the value of the house and the value of the land use right, while the latter often combines the comprehensive land price of the area and the assessment of replacement cost. Second, the identification of the legality of the house. Unregistered buildings do not necessarily mean no compensation. It should be distinguished based on historical causes and actual use situations. It is unreasonable for the expropriator to treat them as illegal buildings without basis. Third, the calculation of the loss of production and business suspension. It usually refers to the operating efficiency, tax records, operating area, and suspension period. If the enterprise fails to provide sufficient evidence, the compensation will be greatly reduced. Fourth, the integrity of the relocation and installation of equipment. The residual value of the equipment that cannot be relocated and the price difference of the new purchase are often overlooked items. Fifth, the implementation of compensation before relocation. Requiring the eviction before the funds are in place is a procedural problem.

III. Professional analysis by Henglue Lawyers

The legitimacy of compensation items and standards hinges on the legality of the expropriation itself, clear scope, and complete plans. A land expropriation information disclosure review case handled by Henglue Law Firm can serve as an illustration: Villager Liu ** owned legal houses and residential plots in Group 1 of Shuguang Village, XX Town, H City. Due to being included in the expropriation scope for the construction of the F-S High-Speed Railway but receiving no resettlement compensation, Liu ** mailed a government information disclosure request to the H City People's Government on September 23, 2025, demanding the disclosure of seven pieces of information, including the project approval and approval documents, expropriation approval documents, pre-announcement of expropriation, social stability risk assessment reports, compensation and resettlement plans and announcements, proof of compensation funds being in place, and expropriation announcements. On October 29, 2025, the municipal government refused to provide any information on the grounds that the houses had not been expropriated. After the first review ordered a re-response, the re-response on January 28, 2026 still seriously deviated from the applicant's request. Beijing Henglue Law FirmHe NingningThe lawyer (practice license number: 11101202511925103, subject to the certificate issued by the judicial administrative organ) reviewed the documents page by page and pointed out that the pre-announcement of expropriation and the announcement of expropriation did not specify the essential elements such as the scope of expropriation, the current status of the land, the purpose of expropriation, the compensation standards, and the resettlement methods; the proof of the availability of compensation funds did not clearly indicate the amount of funds received, the time of receipt, and the information of the special account, which did not meet the requirements of Articles 26, 28, and 32 of the Implementing Regulations of the Land Administration Law of the People's Republic of China (amended by Decree No. 743 of the State Council on July 2, 2021, and implemented on September 1, 2021); and the legal entity responsible for the preparation and preservation of the social stability risk assessment report was identified incorrectly. On April 14, 2026, the review organ determined that the respondent failed to perform its statutory duties of disclosing government information in accordance with the law, and ordered it to make a new response and provide information such as the announcement of land expropriation. For enterprises, this approach is also applicable: first, obtain a complete compensation and resettlement plan and proof of funds, so that the compensation items and standards can be verified based on evidence.

IV. Practical suggestions and legal basis

According to Articles 17 and 19 of the "Regulations on the Acquisition and Compensation of Houses on State-Owned Land" (promulgated and implemented on January 21, 2011), the scope of compensation includes the value of the houses being acquired, the relocation and temporary resettlement costs, and the losses due to production and business suspension. The value of the houses shall not be lower than the similar real estate market price. Article 48 of the "Land Administration Law of the People's Republic of China" (amended on August 26, 2019 and implemented on January 1, 2020) requires providing fair and reasonable compensation, timely and fully paying the land compensation fees, resettlement assistance fees, and compensation fees for rural villagers' dwellings, other attached structures and seedlings, and arranging social security costs. Action list: 1. Immediately inventory and video-record all assets and number them item by item after the announcement of the acquisition, forming a fixed-time asset inventory; 2. Fully preserve the financial statements, tax payment receipts, order contracts, and salary payment records of the past three years to provide a basis for estimating the losses due to production and business suspension; 3. Commission a qualified appraisal agency or apply for a review of the appraisal to challenge the obviously low appraisal conclusions; 4. Check whether the compensation plan lists the itemized amounts and their basis, and raise written objections to any missing or incomplete items; 5. Insist on compensating before relocating, and not vacating the premises easily before the compensation funds are fully in place.

5. Henglue Law Firm's Advice

The losses of enterprise demolition far exceed the value of the buildings themselves. The actual major losses often come from production and business interruptions and equipment losses, which are precisely the aspects most reliant on evidence. There are three main risk points: First, during the assessment and negotiation stages, there are only verbal communications, and the versions of the plans keep changing and cannot be finalized. Second, key contracts and account books may be destroyed or lost during the relocation process, making it difficult to provide evidence afterward. Third, there may be disagreements within the enterprise about the compensation plan, leading to missed opportunities to raise objections. Regarding time limits, Article 20 of the Administrative Review Law of the People's Republic of China (amended and adopted on September 1, 2023, and implemented on January 1, 2024) stipulates a review period of 60 days, and Article 46 of the Administrative Litigation Law of the People's Republic of China (amended on June 27, 2017, and implemented on July 1, 2017) stipulates a litigation period of six months, both calculated from the date when the relevant actions are known or should be known. Subsequent disputes involving equipment disposal and contract performance can be addressed in conjunction with these provisions.Business and contract disputes in enterprisesCoordinate and handle things in an integrated manner.Beijing Henglu Law FirmIt is recommended to conduct a comprehensive verification of the integrity of the compensation project before signing the contract.

VI. Frequently Asked Questions

Q1: Can we negotiate a higher compensation for the demolition of the factory building, and what are the chances of success?

It's difficult to make a general statement based on whether the compensation plan lacks certain items, whether the evaluation is too low, and whether the procedures are legal. If the losses from production and business suspension are not recognized, the land use rights are not included, the costs of equipment relocation and installation are ignored, or there are obvious problems with the evaluation time point and evaluation method, there is a great chance of adjusting the compensation through review of the evaluation, administrative reconsideration, or litigation. If all these items have been fully included according to market standards, the main issues will be the negotiation of the signing time point and the reward conditions. It is recommended to first conduct a detailed comparison of the various compensation plans and then assess the expected outcomes.

Q2: What evidence is required to claim compensation for projects and losses?

The real estate ownership certificates or land use rights certificates, lease and contracting agreements, business licenses, financial statements and tax payment receipts of the past three years, orders and sales contracts, payroll records, equipment lists and purchase invoices, decoration and ancillary contracts, relocation and working capital expenditure receipts, appraisal reports, expropriation announcements and compensation plans, and communication records with the expropriators. Enterprises should pay particular attention to tax and financial evidence, which is the basis for estimating the losses of production and business suspension; the inventory of assets should be video-recorded and numbered to form a traceable fixed record.

Q3: How is the attorney's fee calculated for factory demolition cases?

Generally, lawyers charge fees on a per-case or per-stage basis, or on a percentage of the disputed subject matter. Information disclosure, administrative reconsideration, first-instance and second-instance litigation, and enforcement can be calculated in stages. Articles 11 and 12 of the "Measures for the Administration of Lawyer Service Fees" (promulgated by the National Development and Reform Commission on December 1, 2006) stipulate that risk-based fees cannot be charged in administrative cases and state compensation cases. Therefore, demolition-related cases generally require payment of fees on a per-stage basis. The specific amount shall be subject to the provisions of the entrustment contract, and the boundaries between the attorney's fees and the advance fees for appraisal and authentication shall be clearly specified at the time of signing the contract.

Q4: How long does it take from the announcement of the expropriation to receiving the compensation?

There is no fixed cycle. If the compensation and resettlement plan is formulated by the expropriator, announced, and signed successfully, it can be completed within a few months; if there are disputes, the government usually responds to requests for government information disclosure within 20 working days, the administrative review period is generally 60 days, the first-instance administrative litigation usually takes six months, and the second-instance litigation takes about three months. After the evaluation and review, the whole process often takes more than a year. Enterprises should prepare plans for evacuation and equipment disposal simultaneously to avoid affecting normal operations due to the progress of the procedures.

Q5: What's the first step to take when faced with an unfair compensation package?

First, apply for government information disclosure, retrieve the land expropriation approval documents, expropriation announcements, compensation and resettlement plans, social stability risk assessment reports, and proof of compensation funds being in place, to verify whether the scope of expropriation and the elements of the plan are complete. At the same time, commission an appraisal or apply for a review of the appraisal, and compare the calculation basis for housing, land, equipment, and losses from production and business suspension item by item. On this basis, raise objections in writing and retain the delivery receipt. Then assess whether it is necessary to apply for administrative reconsideration or initiate administrative litigation. Never sign the vacate and hand over the house documents before the compensation standards are clearly defined.

The above answer is based on the judicial practice in Beijing. The adjudication guidelines in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence to avoid missing the statutory time limit. →Land expropriation and demolition legal services·Attorney He Ningning·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in time.