Why Choosing Trading Companies over than Manufacturers?

A lot of people seeking to import specific products from China often express their desire to “locate the factory” as they believe that factories offer the most competitive prices. However, this is not always the case. In some instances, trading companies can offer lower prices than factories. Additionally, purchasing from factories can present various challenges such as quality issues and delayed delivery.

In China, trading companies are sometimes more favored than factories, which explains why the number of trading companies exceeds that of factories by a significant margin. Major customers like Walmart or Home Depot are also supplied by a variety of trading companies. Li & Fund Ltd, a renowned Hong Kong company, is one of the most successful trading companies, catering to numerous international organizations across different industries.

Trading companies provide professional and superior services, and I will now outline 4 reasons why they have an advantage.

1. It is much easier to communicate with trading companies
2. Trading companies offer a wider range of product choices.
3. Trading companies have lower minimum order quantities (MOQ).
4. Trading companies provide a safer and more reliable cooperation experience.

1. It is much easier to communicate with trading companies

Sales people from trading companies generally have a higher level of English understanding and communication skills compared to those from factories. As a result, they are able to communicate effectively with customers and promptly respond to their emails. If any issues arise during production, shipping, or inspection, sales representatives from trading companies are quick to inform their clients.

Many small or medium-sized factories prioritize production and often rely on local trading companies for cooperation. While these factories may also have sales representatives for foreign trade, they may not be proficient in English communication and may be slow to respond to customer emails (as Chinese individuals primarily use WeChat and phones for daily communication, rather than email). Additionally, most experienced sales representatives prefer working at trading companies, as it provides them with more opportunities to gain valuable work experience.

For example, our factory supplier for children’s toy helmets is one of the best suppliers in China for this product. Although they also have sales representatives for foreign trade, they spend more than 90% of their time dealing with trading companies. As a result, inquiries made through Alibaba may take two to three days to receive a response, and some inquiries may not receive a response at all.

2.Trading companies offer a wider range of product choices.

Trading companies typically have multiple factory suppliers for each product they offer, resulting in a wider variety of designs and types. Even for a single item, trading companies can provide products of different qualities based on customer preferences.

On the other hand, factories usually specialize in producing a specific product, which limits the choices they can offer. For example, if you are in the cup business and choose a trading company, you will have options like stainless steel, plastic, and glass materials, as well as cups suitable for kids, sports, teenagers, and more. However, if you choose a factory, you will need to contact 5 to 10 different factories because each factory can only provide one choice.

3.Trading companies have lower minimum order quantities (MOQ).

MOQ stands for minimum order quantity. Trading companies typically have smaller MOQs and can cater to both small and large businesses. They also ensure strict quality control even for small orders.

On the other hand, factories have much higher MOQs and prefer customers who can place large orders, such as a full container for a single item. For small orders, they prefer working with trading companies to save time on complex communication with foreign customers. They can simply deliver goods to trading companies, which usually place orders with them.

4.Trading companies provide a safer and more reliable cooperation experience.

Trading companies carefully select their suppliers, typically opting for stable factories that produce high-quality goods. This allows them to establish long-term partnerships. In the event that a customer encounters a quality issue with a product, the trading company is readily accessible and willing to assist. If necessary, they will work to secure a partial refund from the factories. This is because the trading company is responsible for bringing business to the factory, thus the factory must meet their demands.

If you do not frequently purchase large quantities from factories, they may not be as willing to provide the same level of assistance as a trading company would.

Tips for Whom Prefer Buying from Factories

• You focus on a single product category and you only require it from a single supplier.
• You are knowledgeable about factories located in the local area or other cities and can easily locate them. Finding factories can be difficult even for native Chinese, so it is better to concentrate on selecting from the wide range of products offered by trading companies instead of wasting too much valuable time searching for factories.