China Factories VS China Trading Company-Which Do You Need?

By justchinait
January 25, 2021

Good products have a good market, and poor quality products also have their markets. Some people say: Choosing a good product is not as good as choosing a good market. Maybe that’s how it should be in business. But some China factories will not do that, because they are factories, not just doing business, but manufacturers of products. The starting point for the positioning of factories and traders is different. Different positioning determines that the products delivered to consumers are different. Perhaps to be precise, factories are positioning products, and traders are positioning markets.
China Trading companies and China factories can also do foreign trade and do business with foreign companies. But they have similarities and have their own advantages and disadvantages. And because of their respective characteristics and differences, they have different living spaces in market competition.

Characteristics and advantages: of China trading companies:

1. China trading companies generally have more market acumen than factories and understand customer needs better than factories.
2. The products produced by the factory in China are relatively single, while the products of traders are much more extensive. Many Middle Eastern and African countries do not have their own industries, and many necessities of life are purchased from abroad. Therefore, many merchants rarely only import a single product, but mostly engage in a certain type of product, such as air-conditioning accessories, clothes and shoes, and household appliances. Classes and so on,
While China factories generally only engage in one or a few of these types of products, it is impossible to meet all the product needs of foreign businessmen. At this time, foreign businessmen need traders to play a coordinating role in the middle and even arrange the corresponding consolidation of goods, ( Generally, container cargo is used during transportation. If the quantity of a certain aspect of the product is small, and it is not enough for one container, it needs to be put together with other products to make a whole container to ship). Another example is Wal-Mart. As the leader of the retail industry, it should sell thousands of products. If it deals with each factory one by one, I am afraid that the purchasing department does not know how many people it needs.
So I can only deal with some major traders, which can save a lot of manpower and time. In the same way, for other importers who need to purchase multiple categories, there are also benefits in this respect. He does not have to deal with objects in different factories every day, but a China trading company can help him purchase a package of products and solve a lot of problems.
3. The market is changing rapidly. A China factory may be in an advantageous position in the market at this stage, but it does not mean that it will always be at an advantage. However, foreign businessmen generally choose carefully before cooperating, and will not replace them for a long time after choosing, and maintain stable cooperation.
Traders will always compare the most advantageous factories to help customers check the quality. Moreover, it’s easier for traders in mainland China to compare, update market information, find the best China trading companies, and change China factories. However, if foreign merchants directly deal with factories, once the China factory transaction price is too high, The period is too long, or the quality is unstable, etc., there are some phenomena that are not satisfactory to foreign businessmen, and foreign businessmen will not easily change because before he chooses a China supplier, he often has to go through a long period of observation and come to China Direct detection, whether it is labor cost, time cost or money cost, is high.
Therefore, if a China trading company has established his own credibility and treats himself as a brand to operate, generally if foreign businessmen recognize him, even if he knows that he will make a certain profit from it, he will still be committed He cooperates.
Of course, there are exceptions to the above situation. After all, the factory in China also has its own advantages:
The first is that it has an advantage in price.
Secondly, the China factory is more professional in terms of products and understands the products better. Based on these two reasons, coupled with the factory’s continuous self-improvement, many foreign businessmen prefer to do business directly with the factory.
Therefore, many people often ask when they meet whether they are China factories or China trading companies. However, due to the irreplaceable role of traders, foreign businessmen are unlikely to rely entirely on factories for transactions. Therefore, in recent years, there has also been a phenomenon of foreign agents, that is, assisting foreign businessmen to purchase in China, find factories, inspect goods, deliver goods, etc., But instead of earning the difference as traders do, they still earn points, that is, withdraw a certain percentage of commissions based on the total transaction volume. This method is also more popular with foreign businessmen. Therefore, many foreign businessmen have been attracted to China to set up such agents.
After analyzing its own characteristics, let’s analyze the advantages and disadvantages of factories and trading companies. You can compare and choose the companies you are interested in.

Advantages of the China factory:

1. Get closer to know the product
2. The cost is more transparent, and the quotation is more flexible. Compared with foreign trade companies, the product price is more favorable.
3. With the R&D department, we can improve and develop products according to customer needs
4. The China factory can provide OEM and ODM services.
5. The factory’s ability to resist attacks is relatively strong, and the business is relatively stable.

Disadvantages of the China factory:

1. Insufficient experience. Many foreign trade departments are newly established, and foreign trade salesmen are only newbies who can only speak English. They lack experience and lack foreign trade leaders with rich foreign trade experience. There is a shortage of talents in the promotion of foreign trade.
2. The ability to judge risks is poor. Of course, everyone is afraid of things like scams, but they are even more afraid than factories, because they have no experience. People who can make decisions often do not speak English, and those who can speak English often cannot Make a decision, this cumbersome communication process hinders the smooth trading of the factory.
3. Low investment. Although factories want to export, they are often afraid/unwilling or do not know how to invest. Foreign trade requires investment. And if there is no input, how can there be output?
4. The single product of the factory cannot meet the diverse needs of some customers.

Advantages of the China trading company:

1. High integration of resources: diversified products to meet the diverse needs of customers. Because all the factories in China are our factories, and the needs of customers are often diversified and individualized. Generally, a single factory is often difficult to meet customer needs. Our advantage lies in the ability to integrate the advantages of domestic factories to the greatest extent to achieve customers Needs.
2. Rich trading resources: Through abundant resources, we can better analyze customer needs and maximize strengths and avoid weaknesses.
3. Analyze our advantages by analyzing the purchasing characteristics of international buyers and the disadvantages of factory foreign trade.

Disadvantages of China trading companies:

1. More and more international buyers tend to purchase directly from Chinese manufacturers in order to obtain price advantages;
2. Domestic manufacturers have increased their awareness of developing foreign customers. Many China factories have gradually begun to develop themselves while cooperating with foreign trade companies. Coupled with the adjustment of national policy, the export right of foreign trade changed from the original approval system to the registration system, and factory export gradually became a climate in China.
3. We don’t have a factory ourselves, we have no advantage in price, and our competitiveness with other domestic China suppliers is weak.

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