Four Reasons Why Trading Companies Are Better Than Manufacturers
Four Reasons Why Trading Companies Are Better Than Manufacturers
Most people looking to import products from China often say, "I want to find a factory," because they believe factories offer the lowest prices. This is not always true. Sometimes, trading companies offer prices lower than factories. There are also various other hassles when sourcing from factories, such as quality issues and delayed deliveries.
In China, trading companies are sometimes more popular than factories, which is why there are many more trading companies than factories. Big clients like IKEA and Walmart are also supplied by various trading companies. Li & Fung Ltd, a well-known Hong Kong company, is one of the most successful trading companies, serving countless international groups across different industries.
Trading companies provide professional and better services. I will outline their advantages with the following four reasons:
1.Trading Companies Are Easier to Communicate With
2.Trading Companies Offer More Product Choices
3.Trading Companies Have Lower Minimum Order Quantities
4.Working with Trading Companies Is Safer
1. Trading Companies Are Easier to Communicate With
Compared to factories, the sales staff at trading companies often have a higher and better understanding of English. Therefore, they don’t face communication issues with customers. They also respond promptly to customer emails. If there are any issues in production, shipping, or inspection, the sales staff of trading companies always inform their customers at the first opportunity.
Many small to medium-sized factories tend to focus more on production and collaboration with local trading companies. While these factories may have foreign trade sales, they are not adept at communicating in English and usually respond slowly to customer emails (as Chinese people mostly use WeChat and phone calls for daily communication, and rarely use email). Additionally, most qualified salespeople prefer to work at trading companies where they can gain more work experience.
Our filling machine suppliers are the best in the Chinese market. Although they have foreign trade sales, they spend more than 90% of their time dealing with trading companies. Therefore, inquiries on Alibaba might take two to three days to get a response, and in some cases, you might not get a response at all.
2. Trading Companies Offer More Product Choices
Trading companies typically source each product from multiple factory suppliers, giving them a broader range of designs and types. Even for a single item, trading companies can offer different quality levels according to customer requirements.
Factories usually focus on one type of product, which results in significant limitations—they cannot offer a wide range of choices.
For example, if you need filling machines and choose a trading company, you will have the option to select different types of filling machines, such as food filling machines and cosmetic filling machines, suitable for various production needs. If you choose a factory, you might need to contact up to 5 to 10 different factories because each factory typically only offers one specific type of filling machine.
3. Trading Companies Have Lower Minimum Order Quantities
Minimum Order Quantity (MOQ) refers to the smallest amount of a product that a supplier is willing to sell. Trading companies usually have smaller MOQs, yet they can cater well to both small and large businesses. Even for small orders, the quality is strictly controlled.
Factories have much higher MOQs, so they prefer customers who can place large orders, such as a full container of a single product. For small orders, they prefer to work with trading companies, saving the time required for complex communication with overseas customers. They deliver the goods to the trading company, which usually places the order with them.
4. Working with Trading Companies Is Safer
Trading companies are cautious in selecting their suppliers. They tend to choose stable factories that produce high-quality goods so that they can establish long-term cooperation.
If customers have concerns about product quality, trading companies are always ready to help and willing to offer assistance. If necessary, they will ensure you receive refunds for defective parts from the factory. Since it’s the trading company that brings business to the factory, the factory must meet the trading company’s requirements.
If you usually do not purchase in large quantities directly from factories, they will not be as willing to help with quality issues as trading companies would be.
Tips for Those Who Prefer to Buy from Factories
Focus on a single type of product and only need one supplier for it.
You are familiar with the factories located locally or in other cities and can easily find them. Even for native Chinese, finding factories can sometimes be challenging. It's often better to focus on the variety of products offered by trading companies rather than spending too much valuable time searching for factories.
