Many traditional customers know about the trading company and place order, but they are cheated head was broken and bleeding. They want to try Chinese sourcing but, because do not know clearly dare not start. Today we will help you comprehensively analyze the differences between Chinese sourcing and trading company.
1. Chinese sourcing VS Trading company
Most amateur entrepreneurs don’t understand clearly and end up dealing with a trading company. This is because it is difficult to detect the subtle differences between trading companies and Chinese sourcing.
However, this does not mean that these two agents are similar and can be used interchangeably. It is unwise to deal with trading companies only. As an importer, you need to know the difference between the trading company and the Chinese sourcing. Below we will show you their respective strengths and weaknesses.
The above is a list of the differences between Chinese sourcing and trading company.
They have their own advantages and disadvantages. Trading companies are traditional agents with stable suppliers in specific product areas. They provide a set of standard services to help customers negotiate and follow up orders. They are directly facing the factory, so they also represent the interests of the factory. When dealing with disputes between customers and factories, they tend to prefer factories.
Besides, the trading company will add their own profit on the factory unit price, so the foreign sellers’ unit price will be higher.
Concerning trading company, Chinese sourcing is an emerging agency, their products in all areas are very professional, can provide customers with one-stop service, even according to customer requirements to provide customized services. The purchasing agent team are all elites, they are good at negotiation, quality inspection, logistics arrangement and so on. They represent the interests of customers, and more often than not, they are mainly concerned with customers and strive for the maximum profit.
Different from trading companies, purchasing agents charge commission, so they provide customers with direct factory price, which is very good for customers and saves costs.
2. What are the benefits of Chinese sourcing
The main benefit of using Chinese sourcing to find suppliers around the fact that, the Chinese sourcing lives in the supplier’s home country.
They come from the country of the supplier — they know how to handle it better than you.
Do you know the Chinese sourcing?
Chinese sourcing help companies find products and sources of supply at lower prices so that customers can save production costs. Chinese sourcing can represent a single employer or run a business to serves multiple companies.
They help with price negotiation, supplier identification, logistics, supply chain management, quality control management, and shipment. A good agent company from China will act as your eyes, ears, and nose. They would visit the factory, run background checks and ensure that what you receive what you expect. Furthermore, even the best factory can have delayed or made mistakes. Then your sourcing agent in China should keep effective contact with vendors frequently to ensure your goals will be met.
Some benefits from Chinese sourcing you will get
- Sourcing new products and suppliers.
- Supplier evaluation & factory audit
- Manage negotiations
- Sign contract & draft agreements.
- Perform factory inspection and quality control.
- Manage transportation and logistics.
- Cost Reduction
- Quality Suppliers Recommendation
- Customized Packing
3. What is the benefit of the Trading company
The trading company is traditional agents. Relying on their historical experience, they provide customers with a set of standardized services, with high efficiency and negotiation skills, helping customers to follow up orders and saving time and energy.
Do you know the Trading company?
A trading company is a middleman. This is a company that exists for trade. Customers place orders with trading companies, which can place orders with multiple customers, and then trading company turns the orders over to another factory or factories for production.
There are basically two types of trading companies, and you need to be aware of them.
A. The trading company that tells buyers they are not a real factory. There is a chance this type of trading company offers better services and adds value to your business experience in China.
B. The trading company that tells buyers they are a real factory when they are not. These kind of trading companies are just middlemen, they buy and sell, profiting heavily from the information asymmetry, and their services are sometimes shady.
Some benefits from the Trading company you will get
- Orders are kept up to date
- Provide amazing term like the term of payment. To effectively reduce your risk they even handle the order with their own cash flow.
- Specific products will be sourced in low MOQ from manufacturers
4. When to choose Chinese sourcing or Trading company?
So how do you decide whether you should be working with Chinese sourcing or a trading company?
When to choose Chinese sourcing:
If you want to buy multiple “related products” from a different platform.
You can choose Chinese sourcing, they can help you source products from Amazon, Alibaba, Taobao, 1688 etc.
If your order with small quantities hard to meet MOQ.
You can choose Chinese sourcing, they can help you negotiation with supplier and place order, sign contract with factories.
If you are a new sellers lack of experience.
You can choose Chinese sourcing, they will provide you one-stop services to help you process everything that importing from China.
More situation that you choose Chinese sourcing, you can visit our article: When To Hire A Chinese Sourcing Agent?
When to choose a trading company:
If you have larger orders that can meet the MOQ but lack experience.
You can choose a trading company, they will help you find factory, place order, and follow bulk production.
If you purchase specific products or different styles in the same area.
You can choose a trading company, they are very professional in it and know the knowledge, they will follow the factories well. You don’t need to worry about the products’ quality.
If you have regular order want to find the stable supplier.
You can choose a trading company, they will accompany you to visit factories and provide you standard services.
When working with a trading company, you can also use a sourcing and quality control company to manage risks, due-diligence, project management, quality control, and logistics requirements. In a good relationship, you need them and they need you. It’s not about dictating terms or demanding compliance, it’s about working together, respecting each other and maintaining good relationships is a long-term strategy.