The Development Prospects of China Trade Company

Mar 20, 2021 Chapter 2. Supplier

In recent years, as China’s manufacturing cost has risen, many foreign buyers have purchased directly from factories to reduce costs. Against this background, what are the development prospects of the China trade company?

I have a lot of contact with China trade company and factories. In the past two years, I have been travelling to Yiwu, Hangzhou and other places. So let’s talk about how the trading company survives.

We often see the salespersons of the China trade company asking, “How do you answer the customer asking me if you manufacture?” Why do customers prefer factories? Because the factory can control costs well, achieve low prices, quick response, and strong ability to deal with problems. Now the factory also has exhibitions, B2B platforms, and foreign trade fair. In theory, the factories are making international trade by themselves. It is not challenging for the factory to receive orders. But, What about the China trade company? Do they have any advantages for customers to place orders?

Yes, the price is not everything.

Let’s see how the China trading company survives. I often learn a lot from the companies I visited before and ask them how to have more customers. They all taught me a lot. So to sum it up, it’s probably mainly these aspects.

Complete List: 50 Best Sourcing Agent in China

 

The advantage of China trade company

 

1. Abundant product categories, reducing the cost 

What do we say about cost reduction? Generally, a China trading company either acts as an agent for many brand products or sells many types of products or offers a wide range of options. 

For example, a customer said to me, “It’s troublesome to buy some products in the factory. There are no fabric patterns to be printed, no leather, and no flocking. There is only one flannel. I buy from you and I buy one from other factories. Finally, I couldn’t ship them together in the container. Most factories do not have many categories, so customers find it is good to hire a China trade company.

Although purchasing directly from the factory is lower than through a China trade company, a customer often needs various service: bundling, inspection, shipping, packing… Sometimes, it isn’t easy to get satisfaction from a single factory.  To meet these different needs, the buyer must be equipped with enough human resources to contact with different factories. This actually increases his labour costs and offsets the benefits of low-cost purchases. This is very common in the daily necessities commodity industry.  

 

2. In stock, fast delivery, low MOQ

The goods produced in the factory have MOQ, and China trading companies generally have their warehouses to slowly digest the inventory after taking the goods from the factory. Some small customers, or these customers called retailers, they typically only have small order. The factory usually arranges production after you place the order, which will take a long time and often delays the delivery of small orders. It is a headache for customers, so they sometimes ignore the price to buy from China trade company. Although the price is higher, they don’t have to wait. Time is also a vital asset for them.

 

3. Focus on service

We all know that price is not the decisive factor for orders. Therefore, many China trade company that do well are because of their good service and credibility. The China trade company is actually a bridge between the customer and the factory. An excellent China trade company can handle the relationship between the factory and the customer very well. 

For example, a customer requests 5000 sets of goods each time and requires delivery in 5 days. It takes at least 10 days for the factory to arrange orders. Then I have seen many China trade companies like this. The products that old customers often order, they arrange the factory to make 2000 sets in advance and then arrange the remaining 3000 after the customer places the order. They will skillfully handle the relationship between the factory and the customer, and sometimes there will be inevitable losses. As long as they don’t care about gains and losses too much, their company will get bigger. 

 

4. Strong adaptability and reduced customer risk

We all know that factories generally produce specific products, and sometimes the quality control needs to be adjusted by itself, but it may not be able to meet customer requirements.

However, China trade company sometimes only need to change factories, which is more flexible, and factory problems will not fatally affect the trading company’s business. Another point is that because the China trade company is an independent entity, many customers like to find the trading company as long-term cooperation and help contact the factory for production, which is equivalent to an office of the customer in China. Such a relationship is also a model for the long-term development of China trade company.

 

5. Trustworthy

Many of the China trade company’ businesses are introduced by their clients. Not all customers are price-comparing customers. Most of them still talk about feelings and trust. 

I often receive customers who come to our factory and come to our factory with people from the China trade company. Even if some customers met at the exhibition, they can speak English and have my business card, but they also will find trade companies to accompany them.

 

supplyia

 

 

Here are 7 points to identify a suitable and reliable China trade company:

 

1. Professional product knowledge and market trends:

The import process from China can be completely different, depending on the product. Certain types of goods are very complex, like electronics and auto motives and many other bulky goods.

It is essential to involve a China trade company with the necessary knowledge of the product because this can play a decisive role in whether the delivery turns out to be profitable or failed.

 

Ask the China trade company to provide feedback from his industry customers and case studies. Of course, it is much challenging to find the China trade company with professional experience in niche products.

Still, nevertheless, you can ask for feedback from customers from related industries to understand whether this agent has sufficient qualifications or not.

 

2. Understand your needs to import items:

It is also essential that the purchasing agent be quick to understand the precise requirements of his customers. They can communicate with the supplier on behalf of the user based on product ideas.

If your China trade company agent is unable to understand your real needs very clearly, it will take longer to change the product back. The best China trade company makes sure to carry out quality checks and tests for customers.

 

3. Have good communication ability

A best China trade company must have a strong command of English in writing and language and should be able to communicate easily with you by phone and email. Also, they must be highly efficient and quick to respond to emails or Wechat. Because of the time difference between China and other countries.

 

4. Have a transparent and legal process

Finding a China trade company is easy. But to find a qualified best trade company in China, you need an effective and competently implemented strategy. A right purchasing agent acts transparently and methodically and puts customer requirements for the product and the availability of the necessary certificates in the first place, rather than established relationships with suppliers and the possibility of getting a kickback.

 

The standard procurement process:

    • Approval of specifications and certificate requirements
    • Supplier search
    • Initial price request, order samples, and selection of qualified suppliers
    • Price negotiations
    • Audit of qualified suppliers
    • Final supplier selection
    • Conclusion of a sales contract
    • Product manufacturing and quality control
    • supply

 

5. Professional import & export knowledge and experience

Any trade company in China must have a good knowledge of the legality and paperwork related to import and export. This includes the import and export process, the requirements for certificates and documents, licenses, etc.

 

What questions to ask a China trade company in an interview?

In addition to having a predefined procurement procedure, the best China trade company should be able to give a clear answer to the following questions:

 

      1. Based on what factors do they classify the supplier as qualified/unskilled?
      2. Is a purchasing agent expected to pay for the product or directly to the supplier?
      3. What is his strategy to prevent and combat fraud? (e.g., payment fraud)
      4. Will he control the procurement process entirely on his own or partially outsource it, and if so, in which part?
      5. Is the agent ready to deal with potential disputes regarding the quality of the goods during production and upon completion?
      6. How long has the agent been operating?
      7. Does he plan to request a product from an “already verified” supplier or to look for new ones?
      8. Does the agent have customer reviews from your country? (never contact an agent who refuses to provide you with feedback on his work)
      9. Willing to sign NNN Agreement?

 

Supplyia Chinese-English NNN Agreements for China Sourcing Agent Template

 

6. Territorial coverage

At a minimum, a qualified China trade company must be a registeredcompany and have an office in at least one Chinese city, including Hong Kong. A more qualified buying agent is likely to have an office not only in China but also in your country.

 

Of course, this does not affect the success of your transaction, but this is undoubtedly an indicator of how strong the agent’s position is and confirms its reliability.

 

Chinese suppliers are usually concentrated in industrial clusters on the coast. The territorial proximity of your agent to a specific industrial group, of course, can be beneficial in case something goes wrong during the production process. Besides, this will reduce the cost of transportation.

 

7. Chain supply management without any kickbacks

In Chinese firms, “communications” play a more significant role, and this can significantly affect your business. Which agent would you prefer to work with, selecting a supplier who can manufacture the product for you under your requirements, or selecting a supplier who is ready to pay him a more significant kickback? Unless you are seeking bankruptcy, I would advise you to choose the first one yourself.

 

Chinese management does not mean a wrong management style. Still, I would prefer to work with a specialist who understands my certification requirements and understands the quality requirements applicable to the e-commerce market.

 

As a trustworthy China trade company, our suggestion is that one of the most effective ways to start cooperation with a trade company in China is to discuss more details with them in a video call to check more personality.

 

 

 

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