There are many different channels for importing from China, including trading companies, manufacturers, suppliers (who obtain private labels or designed products made by manufacturers), and sourcing agents. Among them, I think purchasing agents and trading companies are the most similar types of suppliers. This article aims to compare the two and hopefully give you an idea of ​​how to make your choice.

1. China Sourcing VS Trading Company

Most amateur entrepreneurs don’t know and end up dealing with trading companies. Due to the subtle differences between trading companies and Chinese sourcing, it is difficult to detect them.

However, this does not mean that the two drugs are similar and can be used interchangeably. It is unwise to deal only with trading companies. As an importer, you need to understand the difference between a trading company and China sourcing. Below we’ll show you the pros and cons of each of them.

China Sourcing Agent and Trading Company

Above is a list of differences between Chinese sourcing companies and trading companies.

They have their own advantages and disadvantages. A trading company is a traditional agent with a stable supplier in a particular product area. They offer a standard set of services to help customers negotiate and follow up on orders. They face the factory directly, so they also represent the interests of the factory. When dealing with disputes between customers and factories, they often give priority to factories.

In addition, the trading company will add its own profit to the factory unit price, so the unit price of foreign sellers will be higher.

For trading companies, Toopus is an emerging institution, their products are very professional in various fields and can provide customers with one-stop services and even provide customized services according to customer requirements. The purchasing agent team is all elite, good at negotiation, quality inspection, logistics arrangements, etc. They represent the interests of their customers, and most of the time they mainly care about their customers and strive to maximize profits.

Unlike trading companies, purchasing agents charge commissions and therefore provide customers with direct factory prices, which is very beneficial to customers and saves costs.

The difference between a Chinese purchasing agent and a trading company is actually very small:

2. What they have in common

The following are the common points between Chinese sourcing agents and trading companies.

1) They all make money by leaving a little profit on the cost of each product

Most purchasing agents may provide you with a pricing structure that indicates they charge a larger percentage for smaller transactions and a smaller percentage for larger imports, but in most cases, this is not the case. These figures are set up simply to give importers the impression that their cost breakdown clearly distinguishes between what they pay for the goods and what they pay for the agency’s services.

As an experienced Shenzhen purchasing agent who has visited several other competitors, I can assure you this is just a marketing technique. So if you look at it purely from a monetary perspective, you still need to get data from multiple trading companies or suppliers or some other sourcing agents to make a good comparison.

However, another important tip is that when you import from China, price is definitely not the only factor you need to consider when setting up or optimizing your supply chain, you will find that many other factors are more important (important to remember when choosing a supplier housing factor).

Always remember there is no such thing as a free lunch, if you are importing into a multi-million dollar business over a period of years or decades and you are dealing with a supplier, will you feel completely safe if the agent charges you just say $500 per month or just say 1-2% as commission? Are you really confident that agents are really capable of making exports go smoothly at minimum wages? If so, using a Toopus agent may be a better option for you, but they may send you a list of “best suppliers” without any liability.

China Sourcing Agent and Trading Company

2) They can all provide a one-stop portal for global buyers to purchase goods from China

To provide a one-stop export portal, they need to have the ability to find and connect with Chinese factories and ensure that the factories understand their customers’ needs and are willing to meet those needs; they need to have strong connections with a range of trusted shipping companies that Ability to ship goods overseas with favorable prices, acceptable delivery times and smooth customs clearance. Most importantly, they need to be able to accurately understand the buyer’s needs and communicate them to you without big mistakes.

3) Both parties have English proficiency, and both can have bank accounts to smoothly receive overseas funds and be able to export to other countries

Some agents may not have international bank accounts, so they have to make money by getting commissions from factories or other types of suppliers, in this regard their financial gains are not as guaranteed as other better-equipped agents because of their supplies Merchants may cut off their sources of funding. If the value of an agent bringing in more orders fades over time, the relationship between them will suffer.

Having said that, many global buyers may insist that they only want to deal with manufacturers, but most genuine factories simply do not have a proper international sales department, no one can communicate in English, and may not even have someone to help them deal with overseas. Bank Account. So even though they may think they are dealing with a manufacturer on Alibaba, they may never find out that they have actually been dealing with a trading company for years or decades.

3. They differ in the following aspects

The following are the differences between Chinese purchasing agents and trading companies.

1) How they get customers

Sourcing agents typically acquire clients by having a website that is indexed by Google, and clients typically find them by searching for keywords on Google, such as China sourcing agents, or <city name> sourcing agents (eg, Shenzhen sourcing agents).

Trading companies are more likely to gain customers by having a presence on Alibaba or having a website that is also indexed by Google, but typically they position themselves as manufacturers.

China Sourcing Agent and Trading Company

2) What products do they make?

A purchasing agent may produce all possible products, but a trading company may only operate in one fixed product niche or industry.

However, a trading company may sell the same product to other different customers, and they are constantly exposed to new customers who may “learn” from your own products. But a purchasing agent is more likely to only offer 1 product to 1 customer, so your product ideas are safer from being stolen.

3) Organizational setup

Trading companies can be large or small, but purchasing companies are usually small. But in both cases, you’re likely dealing with one company if it’s too small, so you’ll have to do your due diligence ahead of time if you’re concerned about the vendor’s setup.

4) Their honesty

Obviously, trading companies are more likely to lie, and their first lie happens during your first conversation with them: We are a manufacturer. But at the same time, they’re probably all telling the same lie: We have the best prices you can find. It’s a business and a fact of life, you just have to sing along.

5) Although they are not factories, they can all be your excellent suppliers

Essentially, after doing your due diligence (making sure they can somehow get the factory to take your business seriously and deliver your products with high quality and acceptable delivery time), if you give them enough patience understanding, and trust, if you have good communication with them, they may gradually become your excellent suppliers, and they are great ambassadors for you to convey your positioning and strategy in China.

4. What are the benefits of using a Chinese purchasing company?

The main benefit of using a China sourcing company to find suppliers is that the China sourcing company is located in the supplier’s home country.

They come from the supplier’s country – they know how to handle it better than you do.

China Procurement helps companies find products and supply sources at lower prices, allowing customers to save production costs. China Sourcing can represent a single employer or run a business that provides services to multiple companies.

They help with price negotiations, supplier identification, logistics, supply chain management, quality control management, and transportation. A good Chinese agency will act as your eyes, ears, and nose. They’ll visit the factory, conduct a background check, and make sure you’re receiving exactly what you expected. Additionally, even the best factories can experience delays or make mistakes. Then your purchasing agent in China should always maintain effective contact with suppliers to ensure that your goals are achieved.

Some benefits you will get from sourcing from China

  • Find new products and suppliers.
  • Supplier evaluation and factory audit
  • management negotiation
  • Sign contracts and draft agreements.
  • Perform factory inspections and quality control.
  • Manage transportation and logistics.
  • cut costs
  • Recommended quality suppliers
  • Customized packaging

China Sourcing Agent and Trading Company

5. What are the benefits of a trading company?

The trading company is a traditional agent. They rely on their historical experience to provide customers with a complete set of standardized services, with high efficiency and negotiation skills, to help customers follow up on orders and save time and energy.

The trading company is a middleman. This is a company for trading purposes. Customers place orders with trading companies, trading companies can place orders with multiple customers, and then the trading company forwards the orders to another or multiple factories for production.

There are basically two types of trading companies and you need to know about them.

A. Trading companies tell buyers that they are not real factories. Such trading companies have the potential to provide better services and add value to your business experience in China.

B. Trading companies tell buyers that they are real factories, but they are not. Such trading companies are just middlemen. They buy and sell, taking advantage of information asymmetry to make huge profits, and their services are sometimes shady.

Some of the benefits you will get from a trading company:

  • Orders stay up to date
  • Offer amazing terms like payment terms. To effectively reduce your risk, they even use their own cash flow to process orders.
  • Specific products will be sourced from manufacturers with low minimum order quantities

6. When to choose a Chinese sourcing or trading company?

So, how do you decide whether you should work with a Chinese sourcing company or a trading company?

When to choose China sourcing:

If you want to buy multiple “related products” from different platforms. You can choose Chinese sourcing, and they can help you purchase products from Amazon, Alibaba, Taobao, 1688, etc.

If your order quantity is small, it will be difficult to meet the MOQ. You can choose Chinese sourcing, they can help you negotiate with suppliers place orders, and sign contracts with factories.

If you are a new seller and lack experience:

You can choose Chinese sourcing and they will provide you with a one-stop service to help you handle everything imported from China. For more situations when 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 a larger order you can meet the MOQ but lack experience. You can choose a trading company that will help you find factories, place orders and follow up on mass production.

If you are shopping for a specific product or a different style in the same area. You can choose a trading company, they are very professional and knowledgeable, and they will follow the factory very well. You don’t need to worry about the quality of the product.

If you have regular orders and want to find a stable supplier:

You can choose a trading company who will accompany you to visit the factory and provide you with standard services.

China Sourcing Agent and Trading Company

7. Conclusion

When working with a trading company, you can also hire a procurement and quality control company to manage risk, 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, but working together, respecting each other, and maintaining good relationships is a long-term strategy.