What is a trading company? A trading company – sometimes called a vendor – works as an agent connecting buyers and sellers without having any involvement in the ownership or manufacturing of the product sold. And when searching on websites like Alibaba and Global Sources, you might find most of the companies listed are not actually the factories manufacturing the products shown. Many of these are trading companies, some of which are affiliated with one particular manufacturer and others which deal with several factories.
As long as price and quality meet expectations, many buyers don’t really care whether they are dealing with a trading company or a manufacturer. In fact, many buyers benefit from dealing with a trading company instead of working with a factory directly.
So is there a way of differentiating a trading company from a factory at first glance? The truth is, it can be difficult to be 100 percent sure. However, you can get a pretty good idea by using these four indicators of a trading company in order to distinguish from one or the other.
1) PRODUCT VARIETY
Does the company offer several lines of products that require different manufacturing processes? how to tell a trading company from a factory For instance, say there is a company called “Golf Product Manufacturing Company.” If this company offers golf clubs, golf shoes and golf bags then they are probably not a manufacturing company.
Manufacturers in China, in most cases, will focus very specifically on one product type or manufacturing process. This is due to the high cost of machinery required to produce different kinds of components. Therefore, a company that manufactures golf clubs will typically not make golf bags and shoes, since those products entail completely different manufacturing processes.
2) NAME OF THE COMPANY
Trading companies tend to have much more savvy and marketable company names than actual manufacturers. The reason for that is their business is trying to obtain customers from overseas, whereas manufacturers are usually focused on making products. Trading companies need to be more consumer-friendly in order to attract a larger client base.
Manufacturers also normally have the name of the city or town they are located in within their business name. For example, a company that makes rulers or cups in Dongguan could be called “Dongguan Plastic Products Company”. But a name like this doesn’t sound very appealing to foreign buyers, does it? A trading company, on the other hand, will often have a catchier name like “Home Products Manufacturing Company”, in order to pass off as a manufacturer. A factory would rarely have a name like that in China.
3) COMPANY LOCATION
Where is the company located? Put their address into Google Maps and see if they are located in the middle of Hong Kong, Shanghai, Shenzhen or another densely-populated metropolitan location. If they’re located in a downtown area, chances are that is not the manufacturing location.
That doesn’t necessarily mean they are not the actual manufacturing company – some large factories do have sales offices based in the city. But quite often a little investigation into the actual manufacturing location reveals that the office is not related to the company that is producing the goods.
4) COMPANY WEBSITE
Is the company website appealing and easy-to-use? Is it all in English? how to tell a trading company from a factoryIf so, it is very likely you are looking at a trading company. Unless it is a huge and well-known manufacturer, the company website is usually the biggest indicator.
This is especially true of Chinese trading companies. Even some of the largest factories in China have very basic websites, with very little English and a poor layout. Having an appealing website simply isn’t a high priority for most factories. The lack of decent advertising efforts coming from Chinese factories themselves is part of the reason why trading companies have taken hold in China.
CONCLUSION
Whether you prefer dealing directly with the manufacturer or want nothing to do with it, these four signs will steer you in the right direction. Trading companies provide consumers with a large array of options in order to purchase affordable goods abroad. Nevertheless, they are often not an option for buyers looking into more specific aspects within the manufacturing of their product. Next time you find yourself having trouble differentiating between a manufacturer and a trading company, ask yourself:
Do they sell more than one type of product?
Does the name sound catchy or generic?
Where are they located?
Is their website unusually user-friendly?
Next time you’re manufacturing in China, look for these four signs to help determine if that company you’ve just started working with is actually manufacturing your product.
If you prefer to maintain contact directly with the producer or want nothing whatsoever to do with it. In order to buy cheap commodities overseas, exporting firms provide customers with a wide variety of products. However, they are also not a choice for consumers looking at more technical aspects of the design of their product.
Whenever you find yourself experiencing difficulties determining between a producer and a trading company, ask yourself the following questions:
Are they selling a diversified range of items?
Is the name of the company enticing and marketable, or bland?
Where are they situated?
Is the web presence particularly consumer-friendly?
From now on if you’re producing in China, aim for these four indications to better determine whether your goods are actually made by the company you’ve just started working with.
Does the business sell multiple product types that demand different methods of production? For example, say there is a company named “Tennis Manufacturing Company.” If this company sells tennis rackets, running shoes, and sports bags, then they are definitely not a manufacturing business. If this company provides tennis rackets, running shoes, and sports bags, it would not be a manufacturing company.
Manufacturers in China, in most cases, will focus very specifically on one product type or production process. This is owing to the huge price of machines needed for different types of parts to be manufactured. As such, as these products require entirely separate production methods, a company that makes tennis balls would usually not produce backpacks and footwear.
Do you wish to source or contract directly with a factory to produce your goods through a trading company?
Ever found yourself wondering, what is a trading firm? A trading firm, also referred to as a vendor, acts as an intermediary that links consumers and businesses without any interference in the possession or development of the product offered for sale. And you may discover that several of the sites registered are not actually the factories producing the goods displayed while searching on websites such as Alibaba and Global Sources.
Most of these are trading firms, several of which are associated with a single supplier including those that work with several factories. So far as price and performance reach standards, whether they are working with a trading firm or a retailer, many consumers really do not mind. In reality, many customers profit from engaging with a trading company rather than personally dealing with a plant.
So, is there a characteristic that distinguishes a trading firm upon first sight from a factory? The fact is, being 100 percent confident could be challenging.
Trading firms prefer to have names of their companies that are much catchier and more bankable than individual suppliers. The explanation seems to be that their organization aims to gain foreign buyers, while producers typically concentrate on manufacturing goods. In an attempt to acquire a wider customer base, trading firms ought to be somewhat marketable.
Manufacturers also usually use their company name as the name of the city or town in which they are situated. For instance, “Shanghai Plastic Products Manufacturer” may be considered a business that manufactures chairs or buckets in Shanghai. However, such a name might not appear quite enticing to international investors, would it?
Manufacturers also usually use their company name as the name of the city or town in which they are situated. For instance, “Shanghai Plastic Products Manufacturer” may be considered a business that manufactures chairs or buckets in Shanghai. However, such a name might not appear quite enticing to international investors, would it? However, a trading firm would very likely have a much more eye-catchy name, such as “Personal Care products Technology Company,” in order to come across as a maker. Very seldom in China does a plant get a label like that.
Working with a sourcing and trading company has advantages
1- They are easier to communicate with
Most Chinese factories focus on production, leaving the sales part to trading companies. Factories speak Chinese mainly and are not interested in investing in hiring excellent English speakers as much as putting all their focus on manufacturing. On the contrary, trading companies hire English-speaking employees to communicate with the factory and the client. easier communication
Minimum Order Required
2- No minimum order quantity required
Due to the trustful trading company-factory relationship, Trading companies can negotiate the MOQ (Minimum Order Required) with the factory, this is something that individuals cannot achieve by themselves since confidence is not a factor when making a first-time deal with a new supplier.
3- Expanded product line
Usually, factories offer their clients only one kind of product, while trading companies can offer several types. For bottles, for example, the factory will offer you the one type that they produce, which is a plastic average bottle. A sourcing or trading company will propose to you the plastic one, the stainless one, and the heat retention one, including different sizes and colors. That way, you can choose what suits your purpose of use best. ensuring transportation
4- Transportation is ensured
Transportation is a major part of any trading process. From factory to warehouse and from the warehouse to the port, loading and unloading.
A trading company can handle these setbacks easily due to its connections with inland trucks, port exports, and forwarding companies.
5- Put the customer first
Trading companies pay great attention to their customer service department, whereas most factories do not have one. So, when mistakes happen, whether in production or shipping, it is hard to hold the factory responsible and the client is the damaged party. But a trading company would solve the problem either with the factory due to their frequent partnerships or by refunding the client’s money and taking charge of compensating the valued customer.
Working with a factory has advantages
1- Great for humongous orders
Factories can be a great way to get the best price, especially if your order is large. They will try to offer you an outstanding price if the quantity is remarkable. However, this point can wreck a start-up or limited business. single product rule.
2- A single product rule
If a supplier has many different and unrelated products, then it’s most probably a trading company. If factories were usually specialized in one range of products, and if your inquiry matched that one product, it would be easy for you and the factory.
Working with a factory has some disadvantages
1- Insufficient follow-up
When working directly with a factory, you will probably check your goods with an agent in the factory who might overlook the small precious details during production.
Our experts in China always visit the factory before making a deal to ensure it is genuine and during production to follow up the production timeline and catch up on any slips immediately. hard to find factories
2- Factories are difficult to find
Although you can see many Chinese suppliers online, it is not that effortless to find one in reality. Moreover, these online suppliers are, most of the time, trading companies or enormous factories that deal with major companies like Walmart.
Finding a reliable, small-to-medium company in China is also hard for Chinese residents.
3- The Importance of Trust
It is essential to earn the trust of a Chinese manufacturer in order to have the best prices. This relationship needs time and many inquiries to be built. Therefore, even if you know about dealing with a Chinese supplier, we can offer you more options throughout every stage of the supply chain.