You may be looking for suppliers in China or another low-cost country. And if you`ve searched for Alibaba and other platforms, you`ve probably realized at some point that not all the suppliers you find are factories — some of them are trading companies. This allows you to create unique products that match the brand you`re creating and stand out from your competitors. With a trading company, you sell the same products as other sellers. The Chinese trading company acts as a source to provide a variety of products to customers who produce in different units. They are also known as intermediaries who act as a bridge to bring buyers and sellers closer together. They choose the companies` products and sell them to customers under their name. The rate charged by the trading company is higher than the factory rate because they include various costs they incur for the purchase of the goods. A commercial company may work with manufacturers to create custom products for you, but they will make a cut, the MOQ will be high, and you might as well communicate directly with the factory itself. I understand that most people who search on Alibaba want to avoid middlemen as much as possible and go straight to the source. Although a trading company usually has higher prices than a manufacturer, a trading company offers several advantages. If you are an absolute beginner and looking for a supplier from Alibaba for the first time, I suggest you work with a trading company.

A commercial company will offer a service better suited to someone who is still working on a relatively small scale and needs better communication. I`m just wondering if the trading company can offer less MOQ as a factory if I want products with my own label and logo? So, how to choose between the trading company and the manufacturer, it depends on two factors, one is the volume of business of the importer, and the other is their acquisition of knowledge in China. These are also disadvantages if you decide to work with a trading company in China. Commercial companies usually have lower MOQs (minimum order quantity) than a manufacturer. This is especially important for your first order with a new supplier, as you want to reduce your risk and test how the supplier works before placing a larger order. Of course, you want to get the lowest price, whether you`re working with a trading company or a factory. You might assume that since trading companies add a markup, they will give you a higher price. Compared to trading companies, manufacturing companies can be much more capital-intensive.

It can cost a lot of money to start these businesses, leading to the question of whether you should seek funding. Other important considerations are: Dear Sir, I run a trading company and supply various types of industrial equipment to my customers in Europe. Now I want to find a supplier from China.raw for example materials, equipment, copper, sheets, etc. etc. The main one is the tender and delivery of the l.c. base. If anyone is interested, please contact us. L9lol Yes, many factories operate at a certain level of trade. Can a company be both a manufacturer and a commercial company? I asked this question because some companies write «manufacturers, trading companies» on their status. If so, what does that mean? Thank you very much.

Commercial companies are intermediaries between manufacturers and buyers. They specialize in sourcing products from various factories and reselling them to international retailers. They offer many advantages over manufacturers, which is why buyers often choose them over manufacturers. You will build a network with different manufacturing companies and work with multiple manufacturers and suppliers to maximize sales. More important than cooperation with a manufacturer or trading company is what the supplier likes to work with. Are they reliable, trustworthy, honest and transparent? Below are screenshots of vendors on Alibaba that have been verified. Custom manufacturer on AlibaBaMulti Specialized supplier on Alibaba If the importer has a small volume of business, he usually chooses a trading company instead of a production company due to the MOQ limitation, and his orders with the factory are not enough to negotiate, and a trading company is a good choice. In my experience, it`s generally wise to work directly with a factory if you`re ordering a 20-inch or more container of a single product at the same time. You should also try to work directly with a factory when customizing a product or inventing a completely new product.

For importers who purchase small quantities of products and/or need a variety of products, working with a trading company is also a wise decision. Many medium-sized or small factories tend to place more emphasis on production and cooperation with local trading companies. These factories may also have overseas sales, but they are not good at communicating in English and are generally slow to respond to customer emails (the Chinese mainly use Wechat and phones for daily contacts and rarely emails). In addition, most qualified sales representatives prefer to work in commercial companies because they gain more work experience there. When companies pay an inspection company to verify that it is a legitimate business, it adds an extra layer of trust to the buyer and gives them a slightly more professional-sounding business name. Sometimes trading companies are good, especially if they have a long relationship with the factory. However, this only adds another layer of potential misunderstandings, especially when it comes to customizing products. There are fewer overall benefits to working with a manufacturer, but they outweigh many of the benefits of working with a commercial company.

There is no right or wrong answer and it really depends on what you are looking for as a business owner. It`s more important to know who you`re working with so you know your supplier`s strengths and weaknesses. Some commercial companies may in fact claim to be a manufacturer when in reality they are a commercial company. In China, commercial enterprises are sometimes more popular than factories, so the number of commercial enterprises is three times higher than that of factories. IKEA, Walmart and other major customers are also supplied by various retail companies. Li & Fund Ltd, a well-known company in Hong Kong, is one of the most successful trading companies, serving countless international companies in various sectors. Of course, you need to qualify the trading company: knowledge of your industry, reference customers, etc. And I always recommend treating them as service providers (following certain procedures, sending certain notifications…) and not as product suppliers. It is not essential that you work with a verified supplier, but if you simply know that a custom manufacturer and a multi-specialty supplier are simply a new business title, but essentially the same company.

In this article, I will call them trading companies and manufacturers to avoid confusion. Unlike trading companies, manufacturing companies are actually involved in the production of material products from raw materials or partially finished materials. These companies use a combination of computers, machines, and skilled workers to develop products, sometimes from scratch. Unlike exclusive distributors appointed by manufacturers in other parts of the world, manufacturers in China are open to everyone, but their conditions are strict. Chinese trading companies offer flexibility in terms of delivery, shipping and simpler methods. Most manufacturers do not have a wide range of products because they can only make products for which they can source the materials, for which they have the right machines and shapes, and for which their employees are trained.