When importing from China, a common question is whether you are dealing directly with the China trading company or the factory.
Many importers believe they can often get the best price from a Chinese factory. In fact, this is not right. Sometimes you should choose China trading company.
If you want to establish some valuable contacts with a China trading company, you have to know everything about them. In this article, I will explain what a trading company is and how it differs from a factory.
In addition, to help you find reliable trading companies in China, we compiled a “DIRECTORY” of the Top 20 Best China Trading Companies that you may inquire from.
What Is a China Trading Company?
China trading company does not produce any goods. Instead, it buys products from different Chinese factories and resells them to its customers.
In other words, a China Trading Company is often referred to as an intermediary, acting as a middleman between you (the buyer) and the factory (the seller).
However, not every China trading company purchases goods from factories because these factories may have too high MOQ to meet.
Some smaller China trading companies source their products from other large trading companies. But, even a small trading company may have a stable supply chain.
In some cases, it makes sense to work with a China trading company. While in other cases, it does not. The important thing is to consider your specific situation and whether the trading company can add any value.
8 Types of China Trading Companies
China trading companies can be divided into different types based on various business models. When you find different trading companies, you should choose an appropriate type to fit your business.
The following are 8 different types of China trading companies:
1. Hong Kong Trading Company
Hong Kong was one of the many places used to manufacture goods. In the 1980s, manufacturing was moved to the mainland, but trading companies still kept their offices in Hong Kong.
Most of these companies set up large manufacturing joint ventures, operating factories in mainland China, Vietnam, Malaysia, and Cambodia.
Many smaller trading companies also operate single factories on the mainland and offer expertise and transparency that you will be hard-pressed to find elsewhere.
2. Factory Group Trading Companies
Factory group trading companies are businesses that a parent company wholly owns. They can include multiple factories, offices, and logistics branches throughout China.
In contrast to multiple manufacturing units that produce a single product, factory group trading companies cover different types of materials and products.
Different Chine companies join together to form a large manufacturing unit to streamline the invoicing and exporting process in this business setup.
3. Joint Manufacturer and Trading Company
A joint manufacturer and trading company is a joint venture with two divisions: one division focuses on manufacturing goods, and the other division focuses on trading goods.
The manufacturing division has its production lines, while the trading division works directly with supply chain management, logistics, marketing, and sales.
In this trading setup, the company assumes production control, produces the goods, and then supplies them to the final customer.
The trading company uses its own resources to produce the goods and handle the trade.
4. Some form of trading company
This type of trading company focuses on a certain niche product. They have a long history in this particular market.
They operate successfully with a highly established and experienced team and can offer a better bid than production units.
Surprisingly, sometimes you may find that their prices are better than what you would get if you were dealing directly with the manufacturing company.
5. Grocery-type trading companies
This type of trading company deals with various products and relies on the resources of the factories around them.
A typical grocery-type trading company uploads items these manufacturers produce to their website.
For example, if they have a hat factory nearby, they will upload a hat. Or, if they have a friend who makes stationery, they will quickly upload that too.
6. Hot-selling Trading Company
As evidenced by the name, this type of trading company focuses on products that sell well in the market.
The company initially identifies these items through extensive market and trend research and then creates a production unit.
They have a keen sense of the market and how it works and maintain a high level of interest in the products sold in the Chinese market.
Hot-selling trading companies have a strong sense of identifying market trends. They have a good insight into hot factory resources and sell them for 2-3 months to earn quick cash.
Once the demand drops, they opt out of that product and jump to the following hot-selling product.
7. SOHO Trading Company
SOHO refers to a small office or home office. It is a type of trading company with a small number of employees.
Most former employees of a factory or other trading company start their own business and become founders of a SOHO after winning a few loyal repeat customers and creating their company.
The basic operation of a SOHO company involves registering the company and opening an account on Alibaba, portraying oneself as a factory or trading company to win customers’ trust.
8. Sourcing Company
This trading company acts as an intermediary between the importer and the Chinese factory. In other words, they act as a middleman to help their customers find the right suppliers.
Once you have decided, the sourcing company will purchase, supervise, perform quality control and ship your product. They are well known in China for providing comprehensive China sourcing services.
A reliable sourcing company will be able to meet your needs skillfully. Even if you need a custom product, the company is responsible for finding the right factory for you.
Moreover, new importers with little market experience can also use them. You can expect to find a cheaper supplier with them than your own prices.
You may learn more on our blog for Sourcing Company vs. Trading Company for details below:
Sourcing Company vs. Trading Company: What is the Difference?
What Is the Difference Between China Trading Company and Chinese Factory?
It may be challenging to determine if your supplier is a China trading company or Chinese factory. Some will even blatantly pose as manufacturers when they are not.
The following are some key characteristics that distinguish a China trading company from a Chinese factory:
1. Diversity of products
Does the business sell multiple product types that require different production methods?
For example, suppose there is a basketball manufacturing company. If this company sells basketballs, sports shoes, and bags, it is certainly not a manufacturing company.
2. Name of the company
The company name of a trading company is more appealing and bankable than the name of a factory.
The trading company seems designed to get foreign buyers, while factories usually focus on manufacturing goods.
So, the trading company name should have market value to gain access to a broader customer base.
On the other hand, manufacturers usually use the name of the city or town where they are located and the products as their company name.
For example, “Shanghai Plastic Products Manufacturer” might be considered a company that manufactures chairs or buckets in Shanghai.
3. Location of the company
Where is the company located?
Type their address into Google Maps and see if it is in the city like Beijing, Shanghai, Guangzhou, Shenzhen, Hong Kong, etc.
And if they are located in a commercial area, which is likely not a manufacturing place.
However, that doesn’t mean they aren’t actual factories. Some large manufacturers with distribution offices are located in these major cities.
So, more often than not, a little asking about the exact manufacturing location will find that the office may not be related to manufacturing the product.
4. The company’s website
You should pay attention to whether the company’s website is attractive and easy to operate? Is it all in English? If so, then most certainly you are dealing with a trading company.
In contrast, most Chinese factories’ sites look very simple due to the near absence of English and poor interfaces. Creating an attractive platform is not the primary goal for many of these factories.
Which Is Better Between China Trading Company and Chinese Factory?
There are no hard and fast rules for choosing between a Chinese factory and a China trading company.
While many people prefer a factory to a trading company, in our experience, both business structures can work fine.
A China trading company will usually be more expensive than a Chinese factory, but a good China trading company should add additional value through sourcing, quality checks, customer service, etc.
Working directly with a Chinese factory allows for a more direct line of communication. It’s easier to communicate with the factory when problems arise or when you’re trying to customize a product.
Working with a Chinese factory also gives you the potential for the lowest price, especially if you order a reasonable quantity.
So how do you decide whether you should work with a China trading company or a Chinese factory?
If you are a large buyer, can meet the factory’s MOQ, and have a good understanding of the import process and compliance requirements.
Also, have the time and resources to manage the communication back and forth, you may consider working directly with a Chinese factory.
If you want to buy various related products within the same industry, but quantities are small, China trading company is a good option.
China trading companies specializing in a particular industry often develop a broad product line with several factories.
It gives you the chance to carry multiple products in the same niche while being able to import smaller quantities.
Top 20 Best China Trading Companies
| Company Name | Products /Service | Location |
|---|---|---|
| Yansourcing | All products and services needed | Guangzhou, China |
| Nexfar Trading company | Pharmaceutical products | Hangzhou, China |
| Yiwu Trading Company | Consumer goods | Yiwu, China |
| Chaopi Trading Company | All products and services needed | Beijing, China |
| Young &Young Trading Company | Consumer goods | Canada |
| Cheung’s Trading Company | Nutritional supplements | Canada |
| Soto Imports | Consumer goods, electronics, cleaning supplies | US |
| Maxfit Trading Company Ltd | All kinds of products | Nanjing, China |
| Tai Yick Trading Company | Porcelain and ceramic items | US |
| EL-Hashem Trading Group Co. Ltd | Chemicals, agricultural products, motor parts | Guangzhou, China |
| Gaode Trading Company | Electric magnetic locks | Shenzhen, China |
| ITG Group | General, real estate and Financial services | Xiamen, China |
| Orient International Enterprise Ltd | Textiles, IT products and product inspection | Shanghai, China |
| MrSourcing | Machine parts, Kitchen parts, bathroom parts | Foshan, China |
| Chinabrands | General except for products | China |
| Sinergia Trading Company | All kinds of products, quality control, inspection | Yiwu, China |
| Willing Foreign Trading Co. Ltd | Instant food, tea, medicinal products | Hangzhou, China |
| Chinese Mineral Trading Company | Non-metallic products | Jinan, China |
| Haoran Trading Company | Party products, promotional items | Hongkong, China |
| Bright Trading (Foshan) Co. Ltd | Sanitary ware supply business | Foshan, China |
3 Tips When Working with a China Trading Company
No matter what type of trading company you need, you should compare them to get the best prices, products, and services.
Here are some tips to consider when working with a China trading company:
1. Is it worth working with a China trading company?
When you work with a China trading company, they usually get paid by adding a price to what the factory charges, which increases the cost of your product.
However, if they have a long-term relationship, they may get preferential treatment from the factory.
So, they may get better pricing terms than you would as a first-time factory customer and when doing small quantities.
2. Does China trading company offer a lower MOQ?
Since China trading companies usually forward orders to local factories, they must meet the factory’s MOQ requirements.
If they require an order quantity of 500 pieces, then the trading company must pass this MOQ on to you as the buyer.
That is why it often doesn’t make sense to buy from a traditional trading company. However, there are exceptions.
Some China trading companies buy inventory from factories and then sell it to their customers in lower quantities but at higher prices.
3. Is there a product compliance issue with the China trading company?
Suppose you buy a refrigerator compressor from a China trading company, and they can provide you with test reports, but the name listed on these documents is almost certainly the name of the factory.
So, this is a big problem. Authorities in the US and EU require product SKU and invoice to match the test reports.
If you pay a China trading company and present a test report that specifies a different company name, that company may be the factory or not the factory.
In other words, there is nothing to indicate that the test report is valid for your product.
China Trading Company FAQ
1. What is the difference between China trading companies and Chinese wholesalers?
Chinese wholesaler is different from a China trading company.
They have the product in stock and can sell it at any time in a lower quantity, while trading companies must place orders with factories and wait 30 to 60 days for products to be shipped.
2. How can I identify a China trading company on Alibaba?
You can identify China trading companies by the words “trade” or “export”, which are displayed next to their names. Some companies in China also list their export licenses online.
In addition, you can see various products without any test reports or QA standards. They will also lack the ISO standard 9001.
3. When should I choose a China trading company?
Beginners who import from China lack experience and are not familiar with the whole process, such as samples, orders, payments, logistics, etc. Choosing a China trading company can help you a lot in the entire process.
China Trading Company Conclusion
China trading company acts as a bridge between factories and buyers. They often have good experience with the Chinese market.
Before you think that a trading company is just another middleman stealing pennies from your profits, understand the great benefits they can bring.
We have come to the end of this guide. I have thoroughly reviewed the different types of China trading companies. I’m sure you now know which trading company is best for you.
I am Yan, the founder of Yansourcing, the best sourcing agent in China, who can quickly and safely help you buy and import from China. If you have any questions about importing from China, don’t hesitate to contact us.
