Imports From China In 2021, 10 Shocking Untold Secrets to Avoid Chunks Of Hassles And Save You Lot Of TIME And MONEY!

Imports from China are increasing day after day, however, not every company registered on sourcing platforms such as Alibaba, or even booth at a trade show is a factory. It appears that some companies may pose as factories when you place orders and will turn out to have higher costs than factories while not owing to a factory on their own. How do you make a difference?

When planning your imports from China, you need a reliable and trustworthy supplier and you will usually encounter three types, trading companies, manufacturers, and Manufacturing & Trading Companies. This article will serve as your guide in knowing the difference between the different business structures and how they can help your business, their difference, advantages, and disadvantages.

Let’s dive right away into the characteristics of those different companies:

• Trading companies

Before trading companies were the only way to import products from China, nowadays, customers can have direct access to manufacturers depending on their needs and their business nature.

A trustworthy trading company should let their potential customers know their true business nature the first time around and avoid posing as manufacturers to entice customers. It’s crucial to avoid such companies, because If those companies have managed to lie to you about their business nature, then it may most likely happen again in the future. It is more important to deal with an honest and reliable company than an established and popular one. Trading companies have the following characteristic and advantages:

• depends on direct makers wherever they supply their merchandise from
• additionally referred to as “wholesalers” or “distributors”
• Sell several merchandises as they are in contact with multiples factories simultaneously
• Accept lower MOQ (minimum order quantity)
• Do product sourcing and quality inspections for purchasers
• Might have a better understanding of the quality level,
• Might have a better understanding of the delivery terms

Disadvantages

• Offer higher product costs than direct manufacturers, usually (5 – 10%)

More than the manufacturers, because they add additional cost to the products they source from direct manufacturers.

• They are the middleman between you and your supplier and have a long-established relationship with them, in case of disputes and complaints your refund or remake depends on them. In some cases, they will prioritize the relationship with the manufacturer over the buyer
• Your communication goes through the trading company and some critical information as regard to quality requirements and product specifications might be lost along the way thereby increasing the risk of misunderstandings and quality issues.
• You will have difficulties verifying the original manufacturers’ capabilities, resulting in an extension to future product developments time.

When should you consider buying from a Trading Company?

• If you need to select among multiples product options
• If you have a small Minimum Order Quantity (MOQ)
• If your product is not very price sensitive
• If you do not necessarily need certification for your products
• If do not need custom made or branded products

• Manufacturers

On the opposite hand, a producing company has the following traits and advantages:

• Owns a factory and the end product is create or produced directly by them
• Gives the importer more options when ordering custom made or branded products (OEM / ODM)
• Offers lower product prices
• Has a lot of management over their merchandise
• needs higher MOQ
• provide mostly solely what they manufacture
• in case of a dispute, negotiation and compensation request is handled directly with the manufacturer instead of relying on an intermediary to handle the negotiations.
• Manufacturing companies are often larger than trading companies and may have more resources to compensate or remake a failed order

Disadvantages

• They have a higher Minimum Order Quantity  (MOQ) Requirement since they have to produce in great quantities to be cost-effective and also need to buy lots of raw materials to offer lower prices to the customer
• Many manufacturers do not have an export license that is a must to export products from China and might not assist you with the export procedure.
• Large manufacturing enterprises tend to neglect small buyers putting the buyer in a weaker negotiating position
• Manufacturers can only offer a limited product selection since there are specialized in their industry

When should you consider buying from a Chinese manufacturer?

• If you have extensive knowledge in a certain field of products
• If future product development is a high priority
• If you need custom made and/or branded products
• If you need product certification
• If you need a cost-effective product
• Manufacturing and Trading Company

Some manufacturers in China will not limit their products only to those they produce themselves, they will include other products in the same category but will outsource the production of those products to other manufacturers. This can be beneficial to your Imports From China as well as can expose you to the same disadvantages and risks as if you were dealing with a trading company.

Advantages

Besides all the advantages of a manufacturing company, this type of structure can also have the following traits and advantages:

• Being already in the manufacturing field and producing products of the same or similar category gives them the advantage to have product certification knowledge and they might have a decent product
• They might apply their quality management system directly to their subcontractors to ensure the products is of the same quality and standard as the leading products

Disadvantages

Besides all the disadvantages of a manufacturing company, this type of structure can also have the following Disadvantages:

• The fact that the supplier is an industry leader for their own product they produce doesn’t guarantee that it is the same for the products they subcontract

When you should buy from a Manufacturing and Trading Company

• If you are unable to locate any qualified manufacturer
• If the manufacturer is willing to share his sub-contractor’s information with you
• If the manufacturer’s quality management is not only applied to himself but also the outsourcing factories

Conclusion

As much as it is true that going directly to the source presents many advantages such as cutting the middlemen conducing to getting better prices and saving a great deal of time which make full sense, small businesses that have lower MOQ and are looking for a wide selection of products in fairly small quantities might not benefit from those advantages.

Direct manufacturers have a certain advantage over trading companies as a result of their low production cost. Nevertheless, the attractive cost offered by manufacturers still depends on the buyer’s order quantity and is sometimes only limited to one or two products.

However, trading companies can come really handy to help your Imports From China in some instances. For example, if you do not always order in bulk as commonly required by manufacturers, then a trading company as a supplier is a good choice. Also, a trading company offers more choices, unless you want to deal with several manufacturers which can be stressful. But before choosing a trading company, it is important to do extensive research about the company to make sure that the company is reliable and trustworthy, something easier said than done since you cannot know upfront what is the quality of their services despite all the promises they give you.

Finally, choosing your supplier type between a direct manufacturer, a trading company or a Manufacturing & Trading Company depends on your order quantity, your needs, your requirements, and the nature of your business. Nevertheless, knowing the difference between all these types of suppliers will help you make a more informed decision for your business.