What is the concept of a trading company? A trading firm, also known as a vendor, acts as an intermediary between buyers and sellers, but it is not involved in the ownership or production of the goods sold. When searching on websites such as Alibaba and Global Sources, you may discover that the majority of the companies mentioned are not the factories that make the products shown.

Many of these are trading firms, some of which are associated with a single factory and others with several factories. 

Many consumers don’t mind working with a trading firm or a retailer as long as the price and quality match their standards. In reality, many customers prefer to work with a trading company rather than directly with a factory.

Is it possible to tell the difference between a trading firm and a factory at first glance? It’s true that being 100 percent certain can be challenging. However, using these four trading company metrics to differentiate one from the other, you can get a pretty good idea. 

Variety of Products 

Is there a variety of product lines that involve different manufacturing processes? how to tell the difference between a factory and a trading firm. Let’s say you have a business called “Golf Product Manufacturing Company.” This business is most likely not a manufacturer if they sell golf clubs, golf shoes, and golf bags.

In most cases, Chinese manufacturers will concentrate on a single product form or manufacturing process. This is due to the high cost of the equipment needed to manufacture various types of components. As a result, a company that makes golf clubs is unlikely to produce golf bags or shoes, as the two items require entirely different manufacturing processes.

The company’s name

Trading firms have much more creative and marketable brand names than producers. The explanation for this is that their company is centered on attracting international buyers, while producers are typically focused on producing goods. To draw a broader customer base, trading firms must become more consumer-friendly.

Manufacturers’ business names almost always include the name of the city or town where they are based. “Dongguan Plastic Products Company,” for example, may be the name of a Dongguan company that produces rulers or cups. But does a name like this appeal to international buyers? To pass as a retailer, a trading firm would also use a more appealing brand, such as “Home Products Manufacturing Company.” In China, a factory will rarely have a name like that.

Business address 

What’s the address of the company? Put their address into Google Maps to see if they’re in Hong Kong, Shanghai, Shenzhen, or another densely populated metropolis. It’s unlikely that they’re producing in a downtown city. 

That doesn’t rule out the possibility that they aren’t the actual manufacturing company; some big factories have sales offices in the area. However, a closer look at the actual production site always shows that the office is unrelated to the business that is making the products.

Website of the company

Is the company’s website attractive and easy to navigate? Is it all in English? how to tell the difference between a factory and a trading firm. If that’s the case, you’re most likely looking at a trading firm. Unless the business is a large and well-known brand, the website is typically the best predictor.

This is particularly true in the case of Chinese trading firms. Even some of China’s largest factories have rudimentary websites with limited English and a clumsy design. Many factories do not place a high value on having a visually pleasing website. Part of the reason that trading firms have taken hold in China is due to a lack of decent promotional campaigns from Chinese factories themselves.

Conclusion

These four signals will point you in the right direction, whether you prefer communicating directly with the manufacturer or don’t want anything to do with them. Consumers have a wide range of choices when it comes to purchasing inexpensive products from other countries thanks to trading firms. However, for consumers interested in more technical aspects of a product’s manufacturing, they are often not a choice.

Ask yourself the following questions the next time you’re having trouble distinguishing between a manufacturer and a trading firm: 

• Is it true that they market a variety of goods? 
• Is the name memorable or generic? 
• What city are they in? 
• Is their website really easy to navigate?