Why would anyone want to buy through a trading company when they can cut out the middleman? Can’t I save money by going factory direct?
It’s easy to find a factory online. So if going factory direct is the best option, why are there still so many trading companies out there?
Most people seem to hold onto the common misconception that it’s always better to go factory direct. And sure, it’s great if you can find that perfect factory and you don’t need the benefits that a vendor or trading company can offer. But in reality, you’ll find that most factories will have issues and the prices you can get if you buy through a trading company are often lower. So you may want to think about if you and the factory actually have the resources to work together. Here are three great reasons why many importers continue to buy through a trading company:
1. Supplier Verification and QC
Trading companies operate as the go-between for you and a factory. They work with a factory to manufacturer your order, and in exchange, they earn a profit by charging you back a percentage of the order. A good trading company will make sure all the products made in the factory are up to your standards, so they can continue to earn your business.
Many trading companies have a long-standing relationship with the factories, so they’re aware of the capabilities of each. Trading companies are able to reasonably ensure the quality of the finished products. They might visit the factory to carry out product inspections and check up on an order. They may even go a step further and bring in a 3rd party QC professional to inspect if they don’t have their own people. It can be very troublesome, and costly in the end, to leave this responsibility in the hands of the factory.
2. Favorable Pricing
Buyers often assume they’ll get a better price when dealing with factories directly, but that’s not always the case, particularly for smaller-time buyers. If a factory and a trading company have been working together for a long time, they might be able to get you better prices and payment terms. Even if a trading company is dealing with a new factory, they’ll likely be offered a lower price by buying many products in bulk.
3. Better Communication
Chinese education is getting better and better. Most factories currently have their own sales staff capable of communicating with overseas clients. But even with bilingual staff, there are still culture differences and communication gaps which sometimes can lead to disastrous results.
For example, when a Chinese sales rep talks to the factory manager, cultural norms dictate that the employee listen to the boss without questioning. A trading company is technically the client of the factory. So it’s often easier to have a trading company communicate your product requirements and expectations to the boss instead of a sales rep.
You may have a very unique product that requires you to communicate the specifications directly with the factory. Otherwise, chances are good that a trading company has already dealt with that or a similar product. Many buyers can benefit from better communication if they buy through a trading company.
Going factory direct can definitely have its advantages for some buyers. But each buyer should consider their own situation before deciding to go that route. Many buyers continue to buy through a trading company because:
- Trading companies often help to ensure they’re working with a quality factory that will make a quality product.
- Trading companies often offer lower prices, especially for smaller orders.
- Trading companies help to ease communication between the buyer and the factory.
Next time you think about switching to buying from a factory directly, consider the benefits your trading company is currently offering you. If you’re new to the buying game and you’re starting out small, consider these reasons why you might want to buy through a trading company!