Locating a Factory and Missing the Middle Man out.

Discussion in 'International Business' started by mrka, Apr 29, 2019.

  1. mrka

    mrka UKBF Contributor Free Member

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    Hi. In the process of setting up a business, I will act as a bridge between my customers and factories in China, getting products made (nothing new). I have done about 8 jobs now, and the work has been excellent, website is soon to launch.

    I want to know - how do I know if I am dealing with a middle-man/women myself? I am competant to get the work done, but did see a video saying that these trading companies are not always a bad thing, but is there anyway to know if I am going through one? Wouln'd make much sense if I was paying more money than needed.
    Posted: Apr 29, 2019 By: mrka Member since: Jul 11, 2013
  2. Mr D

    Mr D UKBF Legend Free Member

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    Visit the factory?
    Posted: Apr 29, 2019 By: Mr D Member since: Feb 12, 2017
  3. WaveJumper

    WaveJumper UKBF Enthusiast Free Member

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    And if you attend a trade show and meet lots of lovely people showing off their wares, before you commit to anything ask them for a tour of their factory in the morning. You might be surprised at how many don't have one. So Mr D's advice is sound.
    Posted: Apr 29, 2019 By: WaveJumper Member since: Aug 26, 2013
  4. GraemeL

    GraemeL Pain in the neck? Full Member - Verified Business

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    I have never bought from a Chinese factory that I have not visited.

    I always use an agent in China who has visited the factory with me and without me.

    Saving a few percent is absolutely nothing compared to receipt of a container of duff product. You say "and the work has been excellent" so you should be very happy.
    Posted: Apr 29, 2019 By: GraemeL Member since: Sep 7, 2011
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  5. 28one - DC

    28one - DC UKBF Contributor Full Member

    32 2
    just be careful you dont get a factory that isnt socially compliant. its all well and good going direct etc. but if you dont do any due diligence in terms of how their employees work, live and get paid. That the product is sustainable and that there is actually a factory and they can produce the same quality as the sample that they give you then it only takes one duff order, a customer asking for documentation that you cant produce, etc and thats it profit gone.
    Posted: Apr 29, 2019 By: 28one - DC Member since: Apr 16, 2019
  6. Mr D

    Mr D UKBF Legend Free Member

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    Yes, important to ensure social compliance if those qualities are important to the customers. Or just want to be colonial.
    Media reports about working conditions do not always appear to make much difference to brands in demand, brands not in such demand may make bigger impact.
    Posted: Apr 29, 2019 By: Mr D Member since: Feb 12, 2017
  7. 28one - DC

    28one - DC UKBF Contributor Full Member

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    Yes it is more for big brands as its a PR thing. Although dont assume that consumers dont care and it only takes one litigious one to be a pain in the backside. But if you dont care about all that do what you want. I dont know who the OP clients are.
    Posted: Apr 29, 2019 By: 28one - DC Member since: Apr 16, 2019
  8. Mr D

    Mr D UKBF Legend Free Member

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    Depends how well you know the demographic.

    And whether you have any choice. You want something produced by one place in a country to the required quality then your choice is more limited than if you can choose between a half dozen places.

    And of course no way of enforcing what you want.
    Posted: Apr 29, 2019 By: Mr D Member since: Feb 12, 2017
  9. dan19900

    dan19900 UKBF Regular Free Member

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    Why does it matter if they're the factory or not if the quality and price is good? Chinese trade companies are much cheaper in my niche unless I want to be spending over a million dollars with each manufacturer.
    Trade company orders $1-5 million per month from all the main manufacturers and gets it for $9 per piece then they sell $50-100k of products from different manufacturers to me for $9.5 or less per piece. If I order $50k from the manufacturers it would be $10-11 per piece.
    Posted: Apr 29, 2019 By: dan19900 Member since: Mar 2, 2018
  10. Mister B

    Mister B UKBF Ace Free Member

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    Historically we've used a combination of both factories direct and trading companies.

    In my experience, a good trading company can actually save you money as they have access to a whole plethora of other factories that you may never have heard of who are actually cheaper. Factor in the fact that you will only be dealing with the trading company on multiple projects and you'll also be saving time and energy by not dealing with factories independently.That being said, when I visit China I still visit said factories just to keep them sharp.

    We also find that if we have a rush job on, the trading company can also find us a new factory that can deliver to our timescales without compromising on quality or offering materially different products.

    Mister B
    Posted: Apr 29, 2019 By: Mister B Member since: Aug 31, 2007

    MY OFFICE IN CHINA UKBF Big Shot Full Member

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    As above.

    A trading company can often have better prices as they have regular orders with the factory from multiple customers.

    Dealing directly with a factory has it's own risks. A trading company can oversee all the elements of the order process to minimise risk.

    Generally, a factory with a SEDEX social compliance certificate will be more expensive, some customers will be happy to pay extra, depending on their moral compass (or their customers), some will not.

    A SEDEX report has to be inspected closely to ensure that the results satisfy the customers specific requirements, as all questions and answers are graded and do not have a pass/fail assessment.
    Posted: Apr 29, 2019 By: MY OFFICE IN CHINA Member since: Nov 16, 2011
  12. CHUKTC

    CHUKTC UKBF Contributor Free Member

    96 14
    It is very difficult to be sure who you are dealing with. We have had customers taken round a factory by the supplier claiming it was his factory - when in fact it was just a random factory he was walking round. Unfortunately for him when the owner turned up and challenged him (in Chinese) our client who could also speak Chinese also found out!
    As commented above using a an agent can be good and bad - if the quantity is small it may be the best way, but for larger quantities you are always better dealing direct with factories - you have much better control over quality and less likely to get the 'golden sample' treatment.

    We always check out who we are dealing with very carefully and as a rule will only deal with factories direct but in order to be be sure of who we are dealing with requires quite a lot of investigation - you need to be able to speak and read Mandarin to do all the checks properly. As others have suggested it's probably easier and cheaper to pay an expert to do it for you than trying to do it yourself - they may actually save you money too !
    Posted: May 3, 2019 By: CHUKTC Member since: Jan 2, 2019
  13. MBE2017

    MBE2017 UKBF Ace Free Member

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    Further to the above comment, plenty of factories will allow any trader to take you around claiming it is theirs, they want the orders, they don’t really care how they get them on many occasions. It takes time and effort to find out the truth.
    Posted: May 3, 2019 By: MBE2017 Member since: Feb 16, 2017
  14. josef yuan

    josef yuan UKBF Newcomer Free Member

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    There is a APP named 天眼查(Tian Yan Cha), totally free of charge. Through it you can check whether this man is the owner of a manufacture or company. Almost all business man in china are using it to do business, to check the background of trade partners.
    Posted: May 15, 2019 By: josef yuan Member since: Mar 7, 2019
  15. josef yuan

    josef yuan UKBF Newcomer Free Member

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    to check whether this man is the owner of the specific company. Sorry for my poor english.
    Posted: May 15, 2019 By: josef yuan Member since: Mar 7, 2019
  16. CHUKTC

    CHUKTC UKBF Contributor Free Member

    96 14
    Tian Yan Cha is free for basic information only - to get anything useful you have to pay. We don't actually use it as there are much better ways to check who you are doing business with.
    Posted: May 18, 2019 By: CHUKTC Member since: Jan 2, 2019
  17. sophiacai23

    sophiacai23 UKBF Newcomer Free Member

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    I think you don't need focus on if you are working with a factory or middle man. Actually, many inporters prefer to work with agent or middle man, because it can save more communication time, and agent/middle man can provide the professional, efficiency service. Many factories in China don't build the sales department with English speaking sales man, because they would like to focus on their product production, quality, and share the profit with the middle man or agent.
    Posted: Jul 3, 2019 By: sophiacai23 Member since: Jul 3, 2019