Eliminating the middle man from your interactions with Chinese manufacturers will give you more competitive pricing, better control over the communication/production and a chance to introduce necessary product modifications quickly.

 

Whether you’re looking for sourcing partners on Alibaba or on another platform, it’s very likely that you’ll run into the so-called Chinese trading companies.

 

Some Shopify and Amazon FBA business owners prefer the interactions with trading companies because they come across an array of manufacturing opportunities that wouldn’t have been uncovered otherwise. In addition, these companies offer time saving procedures and potentially enhanced communication in English.

 

For most entrepreneurs, however, the costs and the cons far outweigh the benefits.

 

So, what does it take to identify the middle man? How can you make sure that you’re dealing with Chinese manufacturing entities? A few simple steps will give you the desired answers.

 

Differences in Process

Working with a middle man and direct interactions with factories carry distinctive differences.

 

Whenever you’re interacting with a trading company, you’ll have to go through a pretty streamlined process:

 

  • You agree to partnering up
  • You give the middleman all of your specifications
  • They handle all aspects of product manufacturing and sourcing
  • You pay to the middleman who handles the payment to the factory

 

Direct work with an overseas factory, on the other hand, requires much more of a hands-on approach on your behalf. Here’s what would typically happen:

 

  • You will be the one who’s going to choose the factory, not the trade company
  • Usually, you’ll interact with several Chinese manufacturers and you’ll receive quotes from all of them before signing a contract
  • Negotiations are up to you
  • Controlling the manufacturing process is up to you
  • Modifying arrangements is up to you

 

As you can see, work with a manufacturer necessitates much more but it also puts you in complete control.

 

Check Out the Product Range

One of the first things you can do to find out if you’re dealing with an overseas factory or a middleman is to check out their product portfolio.

 

Factories tend to specialize because producing many different types of items will require a wide selection of molds, machinery, assembly lines, etc. Thus, a company that has the equipment to produce plastic home goods (bowls, containers, cups, plates, etc.), isn’t very likely to start making stainless steel tubes and fittings.

 

It’s very difficult for a single factory to produce a very wide range of goods because there will be significant linked expenses.

 

Trading companies, on the other hand, can easily pick and choose an array of different suppliers to offer potential business partners everything but the kitchen sink.

 

Pay Close Attention to Alibaba Profiles

If you’re looking for Chinese manufacturing partners on Alibaba, you can check out their profile on the platform. It will give you some idea about the type of entity you’re interacting with.

 

The information is available under business type on the profile page.

 

This company, for example, has labeled itself as a manufacturer and a trading company at the same time. On the other hand, this entity has registered itself solely as a trading company. This means it sources products from different factories and acts as an intermediary.

 

Finally, this company has registered itself solely as a manufacturer and you can see its product range confirms the fact. The company makes solely hair dryers, hair straighteners and other small electric appliances used for hair styling.

 

Alibaba profile pages are also quite beneficial because they give you an idea if a manufacturer is certified and what types of certificates it holds. In the above example, the hair styling appliance manufacturer holds ISO certification, it has registered trademarks and EU certifications. These can be quite beneficial when you’re trying to establish your business on a certain international market.

 

Ask for Samples

Requesting a sample is another practical way to find out if you’re dealing with Chinese manufacturers.

 

Factories usually have samples available and these can be provided immediately.

 

Whenever the product isn’t that customized and you’re relying on the general manufacturing process already established in the facility, you will have your sample shipped on the same day. For more sophisticated and tailored samples, you’ll usually have to wait a couple of days.

 

If the entity you’re dealing with tells you that they need a week or even longer to ship samples, chances are that you’re communicating with a trading company.

 

Pop the Question Directly

Are you reluctant about going through all of these trials and tribulations when identifying potential business partners?

 

Asking direct questions may be the right approach for you if you don’t want to approach the process in a circumvent way.

 

Be direct and inquire whether they’re a trading company in your first email.

 

Trading companies will typically avoid providing a straightforward answer to such inquiries because they know exactly what such questions mean. Terms like “partner factory” suggest you’re dealing with a middleman.

 

You can also inquire about technical aspects of manufacturing. Intermediaries aren’t going to be very knowledgeable and you’ll probably get generic/mediocre answers once again.

 

Trade Fairs and Face-to-Face Meetings

If you can afford to, you should opt for an actual meeting with the Chinese manufacturer’s representative.

 

Trade fairs provide wonderful opportunities for getting in touch with potential partners and inquiring about the aspects of the collaboration that interest you the most. The answers you get and their specificity will let you know if you’ve come across an actual factory or an intermediary.

 

Asking to visit the factory itself is also a very reliable approach you can employ to sift through the opportunities.

 

An actual Chinese manufacturer will never be opposed to letting you see how the production process goes. If you want to source products from China and turn that into a reliable, long-term business, investing in a visit will often be the best way to go.

 

Trading companies, on the other hand, will postpone or evade the opportunity to schedule your visit. This is an obvious red flag and unless you want to work with an intermediary, you should begin seeking another option for sourcing products from China.

 

Even if you do all of this preliminary work, it can be difficult to spot a Chinese trading company. The good news is that the Chinese production base is extensive. Thus, if you don’t get lucky the first time around, you can continue seeking a partner.

 

A final thing to keep in mind is that good English and a functional website don’t indicate production quality. In fact, many good factories have a limited online presence and there could be a language barrier. You shouldn’t pay attention to digital presentation itself but rather go through the steps mentioned above. Chances are that you’ll be surprised by the quality of the sample received and the ease of getting started with manufacturing.