Why Are Trading Companies Still Alive?

Getting a supplier as factory is never being so easy in history as nowadays. Internet tools like Google, Alibaba, Global Sources bring countless factories to you. But there are still many trading companies. Why are they still alive in such a high competition times?

To explain this problem, let us see the advantages of the factory first:

A factory is unbeatable in price and quality control. It is easy to understand these two points: no margin adding of middle player, direct communication with factory staffs.

So these buyers who do business with trading companies should pay more attention to other sides. Then what would be those sides? First of all, we should keep this point clear in mind: trading companies are making values. These values are not visible profit like price gap, but they will create profits for you in other way finally:

1.Good Communication

Direct communication does not mean good communication. Different cultures, different languages and different thinking modes may set traps between you and the factories. A factory always focuses on manufacturing, so their sales department won’t be so strong as the trading company.

2. Professional services

Professional services come from not only the good understanding of the international trading rules but also the knowledge of market quality regulations.

In 2007, I worked in a factory manufacturing small size TV set. I found something very strange at the beginning: our direct buyers always place order with small quantity but big orders come from trading companies of Hong Kong and Taiwan. They order for buyers from Europe and Japan. Why these buyers act so? Can’t they see the price gap?

I began to understand during the cooperation process: these trading companies know market regulations like CE and PSE very well. To be honest, I also began to know these regulations at that time.

These trading companies also send their engineers to monitor the whole manufacturing process. With the participation of them, our products can also be accepted by buyers with high standard from EU, US and Japan.

What’s more, trading companies can also offer you more choices of reliable suppliers. Some of them may even give you better payment terms. These all help trading company survive.