Purchasing skill | Why do buyers choose to cooperate with trading companies at high prices instead of manufacturers?

By justchinait
October 12, 2020

In many cases, foreign buyers are more willing to spend money to cooperate with trading companies instead of directly cooperating with factories. What is the truth?

The biggest advantage of the factory is the price. When working directly with the factory, the purchase price is definitely relatively low. The factory can directly communicate with foreign buyers by hiring translators. It stands to reason that this form of trade without intermediate links should be more popular with buyers.

Now, analyze this problem:

1. Cost

Although the price of purchasing directly from the factory will be lower than purchasing through a trading company, a customer often needs a variety of products, and it is difficult to get a variety of products from a single factory. So in order to meet the needs of customers, customers must be equipped with enough human resources to deal with different factories, which actually increases the labor costs of customers and offsets the benefits from low-cost procurement.

2. Risk

Customers need a stable supply channel. After all, the customer is not a direct consumer, so they must be able to purchase normally at any time to ensure normal supply (to his customers). If they purchase directly from the factory, once there is a problem with the factory, they will face the problem of how to find a replacement. Finding an alternative factory is not a simple matter, it also takes time, which leads to the problem of disconnection in the overall supply chain. Cooperating with trading companies, the supply chain must be much more stable. Because trading companies not only cooperate with one factory.

3. Market order

Everyone knows that the balance of the ecosystem can only maintain development, otherwise major problems will occur. Many customers purchasing from China are not direct users but middlemen. Then why do foreign direct users fail to purchase domestically? Mainly because of the above two reasons. At the same time, because a stable chain of factories-foreign trade companies-middlemen-direct users has been formed in the long business history, the customers themselves do not want to destroy this structure and produce unstable factors. After all, the form of a new chain requires time and money.

4. Service awareness

Because trading companies have been engaged in foreign trade for a long time, they have accumulated a lot of experience in this area, and these experiences are precisely what the factory lacks. The most common mistakes the factory makes are the following:

(1) Being stingy in supplying samples.

The factory’s MOQ is usually very high, so they are unwilling to provide a small number of samples to customers. The factory cannot provide customers with enough samples for them to select and sell to the end-users, and the customers are naturally unwilling to cooperate with the factory

(2) Slow response: The factory is slow to do things.

When receiving an inquiry from a customer, sales need to find an engineer to check the price, and the engineer is usually too busy to give a quotation quickly. And the factory’s style of doing things is slow. The market changes rapidly and competition is fierce. Customers usually make inquiries from several suppliers at the same time. If the supplier responds slowly, the customer will lose business opportunities. At the same time, customers will feel that they are not taken seriously.

(3) Quick success and instant benefits.

When inquiring the factory, the factory’s first reaction is that you have an order? How big is the order? This reflects that the factory only considers their income when considering inquiries, but ignores how to communicate and is unwilling to pay the communication price. In fact, many orders must be obtained through good cooperation between the two parties. This is a long process. If they work under such an eagerness for quick success, they will undoubtedly not be able to gain the trust of customers.

(4) Poor consideration.

Customers often encounter such situations and ask for samples from the factory, and the factory soon sends samples. When customers received it, they found that there was no price, no specification, no serial number, and it was not even clear who sent it. In this way, the time and energy of both parties are actually wasted.

All of the above are why foreign buyers choose trading companies with high service quality instead of purchasing directly from factories. In addition to prices, many trading companies are better than factories in terms of intermediate costs, supply risks, supply deadlines and types and quantities, market order, service quality, and business communication capabilities.

Through this comparison, better competition can be formed, the overall quality of all parties can be improved, and the market can develop better.

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