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How do trading companies pretend to be factories?
Trading companies generally refer to companies engaged in goods and services transactions. Its business scope includes buying, selling and other business activities such as conducting business activities. It can also be used as a broker or agent to engage in activities.
Simply put, it can be understood like this:
Those that can produce, process, and sell are called production enterprises (also called factories).
Companies that have no production and processing capabilities but have import and export qualifications for trading are called foreign trade companies.
Those with production capacity and import and export qualifications are called integrated industry and trade.
But when we consult the other party during the procurement process, the other party will usually say this:
“Are you a factory?”
No supplier will answer: “NO”
Everyone says we are a factory and you don’t know whether it’s ture.
Generally these trading companies can be divided into 2 types.
- Many trading companies cooperate with factories, uploading factory pictures, videos, and certifications to their website.
Please see below pics: the company name on the video shown on the website is: Shenzhen Shenchuang High-tech Co., Ltd., but the company name on the business license is: Shenzhen Qianhai Baisheng Technology Co., Ltd.
This is an obvious foreign trade company that cooperates with the manufacturer, Uploading factory pictures and videos to disguise as a real factory. Factories are also happy to cooperate because then they can spend more time on manufacturing in this way, there will be a regular gross profit of 30-50% for trading companies and 80% of trading companies are of this type.
- The other type is that it may have been a trader before, but as the customer inquiries increases and the demand for customers like factory inspections increases. These suppliers began to invest in the cheapest factories, such as the leather factory, only need about 40,000 USD to operate it.
However, there may be more than 100 kinds of products are for sale on their website, and these products are far beyond the production range of the factory. Various certification materials of the factory do exist, and the factory does exist. But more than 90% of the products sold are outsourced, in fact, they are also traders.
10% of cases are of this type.
Look at the product category of this factory, UV sterilizer/USB flash drive/Bluetooth speaker/Wireless charger/Power bank/Mini USB fan/USB Gadgets/LED clocks/LED light, the category too complicated and unrelated.
In fact, it’s a small factory that produces U disk shells, with only 1-2 machines and 5 workers, the operation cost is less than 10,000 USD, and the monthly expenditure is less than 5,000 USD. He said he was a factory, yes, he didn’t lie to you, he really had his own factory. But most products are not produced in their own factories.
The real factory is so easy to distinguish. First of all, the certification information is the same. The company name, registered name and the factory name that appear on the website are all the same name.
The product category on the website is single, and there will be no more than 3 product categories.
Please comment below if you have any questions!