Nintendo recently discussed how it conducts on-site factory visits in China: There are morning interviews with managers, paperwork checks, multiple manufacturing line checks, and checks into the lives and welfare of the factory workers.
Explains Nintendo, "Our on-site inspections are more than just mere surveys of facilities; we regard this time as an opportunity for direct communication with our partners and to conﬁrm the current situation with our own eyes."
Here is a more in-depth list of the standards to which Nintendo holds the factories.
Nintendo does not own these factories, and the labored is outsourced. Critics of the labor situation point out that while companies such as Nintendo (or Apple, Sony, or Microsoft, for that matter) do their best to inspect these factories, they obviously aren't there for the day-to-day operations.
Factory inspections in China are a far cry from the days when dudes with cigarettes, robots, and old Japanese ladies made Nintendo consoles.