When it comes to importing goods from China, buyers have the option to work with manufacturers directly or through a China trading company. While manufacturers in China are open to everyone, their terms and conditions can be strict. This is where a China trade company can provide flexibility in terms of delivery, shipment, and other methods of import.
In this article, readers will learn about the different types of China trade companies, the benefits of working with a trading company or agent, and how to choose between a trade company and a factory supplier. Additionally, the article will provide a list of the best 15 Chinese trading companies and address potential issues that may arise when working with a China trade company.
Key Takeaways
- China trade companies can provide flexibility and easier methods of import compared to working directly with manufacturers.
- Buyers may be more willing to purchase non-capital goods from trading companies rather than capital goods due to warranty and after-sales issues.
- When choosing between a China trade company and a factory supplier, buyers should consider factors such as quality control, pricing, and communication.
What Is a China Trading Company?
A China trading company acts as a mediator between the buyers and sellers by sourcing products from the factories and selling them to customers under their name. They have a vast network of manufacturing companies and suppliers to maximize their sales.
The rate charged by the trading company is higher than the factory rate as they include various expenses they bear for acquiring the goods. These expenses may include transportation costs, import/export duties, and other fees.
Trading companies have extensive experience in the imports and exports field, making them well-versed in the laws and rules regarding imports and exports of goods.
To be a successful trading company in China, they have to add hard-to-find products and factories to their product range. However, for all the hard work these companies do to find exclusive products for their clients, they charge higher rates than the actual factory rates.
How to Identify a Trading Company or a Factory?
If you intend to do business in China, it is essential to know the type of company you are dealing with. To identify between a manufacturing factory and a trading company, the most straightforward way is to ask them directly. For instance, a supplier’s profile on Alibaba may state that they are a trading company.
To audit a qualified trading company in China, it is crucial to ensure they are well-organized. Since all communication goes through them, it is essential to check their degree of organization.
A checklist based on the ISO 9001 standard is a good start. The review checklist consists of four parts, including quality management system, management responsibilities, provide resources, and product realization.
The following are some checkpoints from the checklist:
Quality Management System
- Is there an overall picture of procurement-related processes and quality-related processes?
- Are there standard procedures for company employees to follow? If so, are these programs easily accessible to employees?
Management Responsibilities
- Does the company measure customer satisfaction? For example, surveys, repeat rates, etc.
- Does the company write a job description for each position?
- Does the job description include the skills, education, and experience required for each position?
Provide Resources
- Does the company have a formal training program and can produce records? If not, is it a good way to give the necessary competencies to the right employees?
- Does the company have a formal employee evaluation program? Can you show the record?
- Are samples adequately identified, stored, and protected?
- Is there test/measurement equipment in the office? Are they sufficient for the product?
Product Realization
- Does the China trading company prepare/have perfect pre-production samples for each product?
- If the customer’s requirements are changed, is there a clear record (on the identification of the sample, on the version of the specification sheet…)?
- At the end of the pre-production development phase, does the China trade company have a document that includes criteria for accepting mass production (eg: a spec sheet with expected results and tolerances)?
- In the case of duplicate orders, does the company require customer approval if a part of a process is modified in the new batch? (Ask for an email representing this situation).
- If a batch of products does not meet customer requirements, does the company notify the customer and ask what to do next? (Ask for an email representing this situation).
By following this checklist, you can ensure that the trading company you are dealing with is well-organized and can manage development and production properly.
8 Types of China Trade Company
Sourcing Company
Sourcing companies are the most common type of China trade company. They act as intermediaries between manufacturers and end customers. These companies source, supervise, inspect, and ship products to their destination. By doing so, they ease the purchase process for clients by arranging high-quality products on their behalf.
Hong Kong Trading Companies
Hong Kong trading companies are those that have their offices in Hong Kong, even though most of the manufacturing process has shifted to mainland China. These companies have formed large joint manufacturing ventures that operate from Malaysia, Cambodia, Vietnam, and China, importing from China for foreign trade companies.
Factory Group Trading Companies
Factory group trading companies are those that compare multiple manufacturing units that produce various types of products. They offer quality and variety by having different Chinese companies join together to form a single large manufacturing unit. This simplifies the invoicing and export procedures in this form of business setup.
Combined Manufacturer and Trading Company
In this trading setup, the company undertakes production control and produces the goods, which are then supplied to the end customer. The trading company utilizes its own resources to produce the goods and handle the trading.
Certain-Field Trading Company
Certain-field trading companies offer competitive prices as compared to manufacturing units. In this setup, the company prefers a specific niche and focuses its entire efforts there. The company chooses a team of trained, professional, and experienced individuals and offers competitive pricing to clients.
Grocery-Type Trading Company
A grocery-type trading company is a typical setup of a trading company where the company relies on the manufacturing unit entirely for the products. Here, the company deals in all kinds of products that are manufactured near it and uploads them on the website for selling purposes.
Hot-Selling Type Trading Company
As the name indicates, a hot-selling type trading company has a keen interest in products that are hot-sellers in the market. The company first identifies the products by in-depth market and trend study and then arranges the manufacturing unit. They make quick cash by selling the products with greater demand in the market and promptly shift to another product as the demand declines.
Soho China Trade Company
Soho China trade company is an abbreviation of a small office or small home, where a trading company initiates the business practice with a minimum number of people. To start a Soho company, one needs to register their company and make an account at Alibaba.
Best 15 Chinese Trading Company List:
Supplyia
Supplyia is a China-based trading company that provides a wide range of products and services, including quality control, to meet the needs of its clients.
Chinabrands
Chinabrands is a general trading company that offers a variety of products except for specific items. It is one of the top international trading companies in China.
Nexfar Trading Company
Nexfar Trading Company is a China-based trading company that specializes in pharmaceutical products. It provides high-quality products and services to its clients.
Soto Imports
Soto Imports is a China-based trading company that offers a variety of consumer goods, electronics, and cleaning supplies. It is one of the most reliable trading companies in China.
Cheung’s Trading Company
Cheung’s Trading Company is a China-based trading company that specializes in nutritional supplements. It is known for its high-quality products and services.
Tai Yick Trading Company
Tai Yick Trading Company is a China-based trading company that specializes in porcelain and ceramic items. It provides a wide range of high-quality products to its clients.
Nanjing Maxfit Trading Company Ltd
Nanjing Maxfit Trading Company Ltd is a China-based trading company that offers all kinds of products. It is one of the most reliable trading companies in China.
Yiwu Trading Company
Yiwu Trading Company is a China-based trading company that specializes in consumer goods. It provides high-quality products and services to its clients.
Beijing Chaopi Trading Company
Beijing Chaopi Trading Company is a China-based trading company that offers all kinds of products and services needed. It is known for its reliable and high-quality products and services.
Young & Young Trading Company
Young & Young Trading Company is a China-based trading company that specializes in consumer goods. It provides a wide range of high-quality products to its clients.
EL-Hashem Trading Group Co. Ltd
EL-Hashem Trading Group Co. Ltd is a China-based trading company that specializes in chemicals, agricultural products, and motor parts. It provides high-quality products and services to its clients.
Xiamen ITG Group
Xiamen ITG Group is a China-based trading company that offers general products, real estate, and financial services. It is one of the most reliable trading companies in China.
Amada Enterprise Ltd
Amada Enterprise Ltd is a China-based trading company that specializes in textiles, IT products, and product inspection. It provides high-quality products and services to its clients.
MrSourcing
MrSourcing is a China-based trading company that specializes in machine parts, kitchen parts, and bathroom parts. It provides a wide range of high-quality products to its clients.
Sinergia Trading Company
Sinergia Trading Company is a China-based trading company that offers all kinds of products, quality control, and inspection. It is known for its reliable and high-quality products and services.
Why Buy Through a China Trading Company or Agent?
For small importers, China trading companies can be a viable option when it comes to finding new suppliers. The decision to work with a trading company depends on several factors. For instance, if importers lack the time to track development and production, they can rely on trading companies to handle these tasks. Additionally, if they cannot come to China to visit the factory and get to know the people they work with, trading companies can act as intermediaries.
Importers who lack the basic technical understanding to make informed judgments about their product and market requirements can also benefit from working with trading companies. This is because trading companies have a better understanding of customer demands and latest market trends, and can provide more suitable products to clients compared to factories, which mainly specialize in a single product and cannot entertain multiple customer demands.
Furthermore, if importers are operating in a risky legal environment, such as selling children’s products in Europe, they can rely on trading companies to help them understand their supply chain and take all necessary steps to reduce risk.
Another advantage of working with trading companies is that they can help importers find interested manufacturers. Large factories are often reluctant to work on very small quantities, but trading companies can often find small factories that are interested in small orders. These small factories cannot deal directly with export customers, making trading companies the ideal intermediaries.
It is important to qualify the trading company before working with them. Importers should check their knowledge of the industry, reference clients, and treat them as service providers rather than product suppliers.
There are multiple advantages associated with buying products from trading companies operating in China. For instance, trading companies are more market-aware and have reliable customer care services. They also offer a wide range of products from small-scale manufacturers who do not have enough resources to sell their products to multiple markets. Additionally, trading companies can help importers buy products in bulk, which is not suitable for small-scale buyers who depend on trading companies to buy the product in bulk and then sell to them.
Marketing is also a crucial factor involved in establishing a trading company. As the company needs sales to achieve its business goals, it has to build a strong marketing network to promote its products. Overall, working with a China trading company or agent can be a beneficial option for small importers who lack the time, technical understanding, or resources to work directly with factories.
How to Choose Between the China Trade Company and a Factory Supplier?
When it comes to importing products from China, one of the most important decisions that a buyer has to make is whether to work with a factory or a China trade company. Both options have their advantages and disadvantages, and the decision ultimately depends on the specific needs and preferences of the buyer.
Advantages and Disadvantages of a Factory
One of the biggest advantages of working with a factory is the lower price that they offer. Since factories are the ones who manufacture the products, they can offer a lower price compared to trading companies. Another advantage of working with a factory is the more controlled and customized product experience. With direct communication, buyers can figure out problems and alter the products according to market trends. However, one of the disadvantages of working with a factory is the less variety of products they offer. Moreover, factories usually have higher Minimum Order Quantities (MOQ), meaning that buyers have to order a large quantity of products.
Advantages and Disadvantages of a China Trade Company
On the other hand, a China trade company offers more variety of products and lower MOQ. Most trading companies prefer to buy products and resell them without any value addition, but some good trading companies add value to the products before reselling them, like quality checks, sourcing, customer service, etc. Another advantage of working with a China trade company is good communication. However, the products from these companies are expensive compared to factory rates.
Choosing Between a Factory and a China Trade Company
There is no hard and fast rule for choosing between a factory and a China trade company. If the buyer is planning to buy products in large quantities or wants to customize a product, then working with a factory is the best available solution. But if the buyer wants to purchase multiple goods on a small scale, then the trading company in China would be an ideal choice.
It is important to note that some factories also do a certain degree of trading. Therefore, it is possible for a company to be a manufacturer and a China trading company at the same time.
Examples of Working with a China Trade Company
A good example of working with a China trade company is having Chinese employees. The local presence of the trading company could provide a more continuous follow-up, and there is a deeper connection to the factory. Good trading companies also provide technical supervision.
However, a negative example of working with a China trade company is when the trading company is pretending to be a factory and has little control over the factory’s quality. Some trading companies are not professional and avoid direct problems from a customer. Moreover, small trading companies are not able to take full responsibility for quality problems because of little money they have.
In summary, choosing between a factory and a China trade company depends on the specific needs and preferences of the buyer. Both options have their advantages and disadvantages, and it is important to weigh them carefully to make an informed decision.
The Big Trouble in Little China Trade Company
China Trade Company Clash of Interests:
China Trade Company faces a significant clash of interests while working with small-scale manufacturing units. These units lack the resources to reach international clients and need proper guidance to handle the quality and delivery expectations of the clients. The trading companies work to sell products at competitive rates without losing their margins. As a result, they tend to work with small factories that face a language barrier. This situation becomes an advantage for trading companies as they can provide coaching to the factories and ensure the products meet international standards.
Trading Companies Hide the Quality Issues:
Most China Trade Companies work with importers and need to deliver products globally. In case of any quality or service issues, these companies tend to keep quiet to avoid losing their customers. However, hiding the quality issues can lead to a loss of customer trust. To avoid this, most companies offer importers the option to check the product quality themselves, while the trading company handles the purchase and shipping of the products.
China Trade Company Has No Control Over Factory Products:
China Trade Company works with factories on a goodwill basis, and there is no contract involved. If something goes wrong, the trading company has no control over the factories. Only a small proportion of trading companies have a stake in the factories and can influence the quality. The lack of control over factories can lead to financial strains for trading companies, as they prefer to lose some money over losing customers. Factories prefer foreign clients over local traders, as they invest more effort in foreign businesses. In contrast, trading companies, residing in China, have more options to switch to other suppliers.
In conclusion, China Trade Company faces several challenges while working with small-scale factories. The clash of interests, quality issues, and lack of control over factory products can lead to financial strains and loss of customer trust. Trading companies need to ensure that they maintain transparency with their customers and work towards building long-term relationships with reliable suppliers.
Trading Company in China Conclusion
When it comes to choosing between a trading company and a manufacturer in China, importers need to consider two factors: their business volume and their knowledge of sourcing in China. Small importers with limited business volume may prefer trading companies due to the MOQ limitations and the ease of communication. On the other hand, large and medium-sized importers may choose manufacturers to maximize their profit margins.
Another important consideration is the knowledge of Chinese business rules and practices. While trading companies may have more experience in foreign trade, more and more manufacturers are supplying goods directly to overseas customers.
It is important to qualify the China trade company by assessing their knowledge of the industry and reference clients. Importers should treat them as service providers rather than just product suppliers, following certain procedures and sending necessary notifications.
In conclusion, the choice between a trading company and a manufacturer in China depends on the importer’s business volume, knowledge of Chinese business practices, and the reputation and qualifications of the potential trading partner.