If you are an importer, you probably know that there are two ways you can get goods from abroad. One is to get in touch directly with the manufacturer viz. the factory. The other way is to get in touch with a trading agency or company that acts as a representative on your behalf to deal with the supplier. There is a lot of difference between these two methods. When you are getting in touch with the manufacturers, you are dealing directly with the party that is responsible for making the goods. There is no middle man in this dynamic.
However, dealing with a trading company, or agent, is different. In this sort of dealing, you are not getting in touch directly with the manufacturers. Rather, you are obtaining the services of a person or party who acts as an intermediary between you and the manufacturer. This can be easy for a variety of reasons, and if given the choice, people may opt to go for a trader.
But here comes the twist. Normally, if it was clear that a certain company is a factory or a trader, it would be easy for the importer to make a choice and take his pick from either of the two options. The conundrum can arise when it is not clear whether a company is a trader or a factory. When such a situation arises, when you are unsure about whether the company is a trader or a factory, you need to ascertain the truth of the situation before conducting your business. While it is easy to simply get in touch with the respective party to make sure what their role is in the buying/selling process, there are some signs and indications that you can look for which show if a company is a trader or a factory.
In this article, we are looking at some signs which you can look out for to identify whether a company is a trading agency or a manufacturer.
The Business Portfolio
A factory usually deals with the manufacturing of a specific product or commodity. There are different factories for plastic bags, hair bands, hair clips, and hairbrushes. There are not a lot of chances where you would see one factory going all around making a bunch of products altogether. There are different stages in a factory where different parts and components of the final product are assembled. Basically, this means that a factory focuses on ONE product that it produces in bulk.
If you are dealing with a factory, you will be able to see that their business portfolio will contain just one or two products. These products may be two different items produced in the course of a single manufacturing chain. If you are dealing with a factory that makes phones, chances are that you can get the full phone from the manufacturer as well as the battery or the screen etcetera.
But, on the other hand, if you are dealing with a trading company, you will see that they will probably have a vast array of items for sale. Since they are not a factory and they are the middle stage between the manufacturer and the consumer, they will have more items to offer. Take the example of a retail store. A store will stock in a whole bunch of stuff like laptops, phones, bags, stationery, medicine, edibles, and meat etcetera. But a factory will only provide one product since that is the only thing it is making.
If the party who you are dealing with has a meager number of offered items, you can take it as an indication that it is a factory.
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The Website of the Company
A factory does not necessarily need to have a big and elaborate website. Since it already has a defined reputation and clientele that it serves and caters to, a factory does not need any sort of attraction to pull in the masses. Its business is with one or two large companies that buy in bulk with the occasional retailer buying a big order.
For this reason, it can be assumed (and can probably be seen) that in most cases, a factory will have a very basic website with just the essential information displayed in a straightforward way. Most probably, it will not have a lot of styling and fancy animations.
On the other hand, a trading company or a retailer relies on the website/platform to attract customers. As a result, you will see that most companies who offer a large number of products to the end consumers (masses) will have extravagant and glamorous websites. This is done so that the people can understand that the company is legit. Think about it: you probably won’t buy anything from a shady, flickering, creepy, and basic website. But such a site won’t be very damaging to the business of a factory since it is not their purpose to attract people.
Therefore, another indication that you can look out for that can show you whether a company is a trader or a factory is their website.
The Name of the Company
One of the most eloquent and vociferous factors of a company that can tell if it is a trader or a manufacturer is its name. Just like websites, the name generally plays a part in attracting customers.
A trading company, or a retail store, will have a real fancy name with a motto written under it. The company which does not produce the commodities but rather sells a range of different products (like a retail store) will have a complicated name to attract and impress the customers since that is what their business relies on.
However, a factory will not have a very flashy name to it. Just like websites, it does not really need to appeal to the public, hence it will have a straightforward name like ‘Johnathan & Co.’ or something similar. The name, in the case of factories, is an identifier more than a marketing tool.
But, then again, these factors are some set-in-stone rules-of-thumb to go by. Some factories have integrated sales departments for client outreach. And similarly, some trading companies may have some boring, dull names.
Location
Where the company is found is also of importance. Just by looking at where the premises are situated, you can get an idea of whether the company is a manufacturer or a retail store/trading company.
Once you have acquainted yourself with a certain company, go ahead and look at the address. If the address is someplace in a very populated area or cities such as Hong Kong or Shanghai, go ahead and further ascertain exactly which part of the city the company is situated in. If it is found right smack-dab in the center of a shopping district or in the middle of downtown, then it is understandable that it won’t be a manufacturer. What business does a factory have in the middle of a bunch of shops? However, if it is a retail store or a trading company, it will be situated someplace in the center of the city, or if not, in the vicinity of a shopping district.
Check the Certificate/License
Alternatively, instead of going all-detective, you can simply ask the company for their business certificate or license. Whether or not the company is a manufacturer will be clearly stated in the certificate. Plus, you can get other useful information about the company from the certificate.
If you can, the best way to go is to simply get the bona fides of the company in question. If for some reason, you are unable to do so or you simply are not that intimate yet, you can try checking the previously given factors to determine whether the company is a trader or a manufacturer.
Conclusion
When you are doing an importing business from China, it is best to know all about your supplier. There is a glut of wholesale suppliers and manufacturers in China, and in between all the firms, there are trading companies mixed in with actual manufacturers. Unlike manufacturers, trading companies are only agents that act as the middle party between the seller (the factory) and the buyer (the importer).
In order to verify whether the company you are dealing with is a trading firm or a manufacturer, there are some things you can check and look for. Some things, which are mentioned above, include the name of the company, the location, the website, and the product portfolio.
The nature of these factors can indicate if the company is a manufacturer or a trader. It is better to deal with manufacturers directly. Among other reasons for doing so, they can give you better deals for less money. The middle-party, while providing some degree of ease, is a liability on your business. Hence, before you start importing from China, check and see whether the company you are about to start dealing with is a trader or a manufacturer.