4 different types of trading companies in China, how to choose the best?

By justchinait
 / 
July 22, 2020
 / 

Many importers have a misunderstanding of Chinese trading companies, calling them middlemen, and therefore don’t buy goods from trading companies. They believe that working directly with the factory is the ideal choice to get the best price.

In fact, different traders have different characteristics and advantages. Through this article, you can understand which trading company is the most suitable!

1. Large-scale and professional trading companies, such as Hong Kong-owned foreign trade companies.

This kind of trading company has existed for a long time. They have a large supply chain team and a stable business. Unexpectedly, sometimes you may get better prices from them than the factory,

why?

1. Hong Kong has low tax rates and a few types of taxes. There is no need to pay import and export taxes on other products except for alcohol and other special products,.

2. Regardless of the registered capital of a Hong Kong company, the government allows the company name to contain international, group names, etc.; this gives the impression that it is a big company.

3. The registered capital doesn’t need to be verified, no matter how much the registered capital is, there is no need to transfer the capital to a Hong Kong bank.

4. Easy access to international credit. HK is the economic center of Asia. You can use the credit of Hong Kong banks, or you can directly issue letters of credit overseas to do large transactions with smaller funds.

The above advantages of HK companies have greatly reduced costs, and the prices will naturally be lower, and their business scope is relatively wide, which can meet the requirements of purchasing a variety of products.

We suggest that if you want to purchase 10,000 mobile phone cases, a single category, it is more reliable to find a manufacturing factory, and the price will be cheaper.

If you need to purchase products with multiple categories and a wide range of categories, a professional Hong Kong-owned foreign trade company is a good choice

2. Grocery trading company

Grocery trading companies are companies that deal in a variety of different products, and their products depend on the surrounding factory resources.

For example, there are many electronic product trading companies around Shenzhen Huaqiang North Commercial Area, and there are many small commodity trading companies around Zhejiang Yiwu.

This type of grocery trading company uploads all the products produced by its neighboring factories to its website. Similar to MINISO stores.

Usually, this type of trading company doesn’t participate in the product development process, it is not recommended that you choose this type of trading company when you need to customize products.

3. Hot-selling products company

They specialize in selling hot-selling products and they are good at sourcing hot-selling products. Once the demand for a product drops, they will withdraw from the product to develop the next best-selling product. Like the popular VR BOX, balance scooter, fingertip top, and current anti-epidemic products, masks, thermometers, etc. They sell whichever is popular.

The advantage is that they have enough factory resources for popular products to serve importers who are engaged in selling popular products and want to make money quickly. The disadvantage is that they are unstable and cannot provide after-sales service.

4. SOHO Trading Company

SOHO is a small family office. This kind of trading company with only one or two people is mostly established by the salesman who has accumulated trust and loyal customers from his previous foreign trade companies.

This kind of company requires low cost, but sometimes they are busy with insufficient manpower, resulting in very low work efficiency and unable to solve problems in time.

The above 4 types of trading companies have their own advantages and disadvantages. Select the corresponding supplier according to your own positioning and needs. If your order is large and you want to get an absolute price advantage, cooperating with the manufacturer is the best choice!

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