Difference Between Chinese Trading Company and Factory
Hello! It’s good seeing you again! As you know, it’s my pleasure discussing business tips with my customers and friends. This is another important post you can’t afford to miss.
Here I will explain the difference between a Trading company and a Factory in China and why the latter should be your only option if you want to maximize profit as an importer.
It’s simple; the former trade stuff while the latter makes stuff.
So with thousands of Chinese companies listed online, how would you tell if you’re dealing with a Trading company or a Manufacturing company. Almost every company you find online will quickly tell you they are factory. They manufacture the products. This truth is perfectly disguised because you cannot tell who is on the other side.
A factory is an industry where stuff is produced while Trading companies form a liaison between you and the factory. They are the middlemen, the mouthpiece of the factory. and because factories don’t pay them, they mark up prices for every item you’re buying from them. A lot of Chinese factories don’t know where, to begin with when dealing with foreign because of the language barrier, so Trading companies help them in this regard.
Unlike Factories that focus on a niche, trading companies deal with virtually everything.
They don’t manufacture anything rather they roam from one factory to the other looking for items, overstocks, and leftover items for sale. The good thing about the trading company is that they can locate any factory for you, even factories you never know to exist.
Trading companies can negotiate lower prices with factories than you may be able to. So even though the trading company may add on their 10-20% markup, if they can negotiate 30% lower costs with the factory, you’re still better off (although you’ll never know the true cost they are getting from the factory).
- They don’t care about product quality or have good knowledge of the product.
- They don’t care about the long-term business relationship.
- All they want is to make a profit and move forward.
- Trading companies are not proactive in product development and offer no warranty scheme. Of course, it’s not their product.
From my experience with both companies, I’ll recommend trading company on your first and second orders. Then subsequently, look for a factory. Factories are looking for true and faithful foreign customers to partner with. They can grant you credit facility like releasing products to you on credit; if you’re faithful in your first to fifth dealings. A Trading company can never grant you credit because they have to pay for the items before sending them to you.
Let me know if this help by leaving your comments.