How to tell if the other party is a China factory or a trading company?
Question
I contacted a supplier in Zhejiang on 1688, and the other party claimed that it had a factory and could do OEM. But in fact, there are a large number of shops on 1688 operated by trading companies. I wonder if there is a relatively simple way to judge whether the other party is a real factory without placing a large order.
Answers (1)Write Your Answer ↓
In China, it is very common for trading companies to pretend to be factories on B2B platforms, but it is not impossible to tell the difference. The key depends on the combination of several actions.
The first trick is to look at the business scope and establishment time on the business license. The business scope of a formal factory usually includes words such as "manufacturing, processing, production, and self-production", and there will be corresponding industry descriptions, such as "garment manufacturing" and "electronic component manufacturing."
If the business scope is written as "wholesale, retail, trade, e-commerce" but the other party keeps saying that it is a factory, this is a noteworthy signal. If it was established for nearly one or two years, but the other party claims to have been working for some big brands for several years, we should also pay attention to those that don't match the time.
The second trick is to look at the address. The corporate credit report will display the company's registered address. Go to Baidu maps or Gaode maps to search for street views. If the registered address shows an office building, commercial and residential building, or a shared office space, it is likely that it is a trading company. The registered address of a real factory will generally be in an industrial park or suburban area, corresponding to the factory building. If the factory and the trading company operate separately, the other party will usually be willing to provide the factory address for your video inspection.
The third measure is to see whether the other party has export performance. Trading companies often do not have their own export capabilities and will use foreign trade agents or borrow the reputation of other companies. If a factory exports for a long time, the customs will have its import and export consignee record. If you search the company name or unified social credit code in the customs declaration unit filing and inquiry system of China Customs, you can see whether there are any records of exporting in your own name.
The number of people under social security is also a hidden indicator. Real factories usually pay social security for some workers in China. Even if there are only about ten people with social security, it is better than leaving zero. Of course, some factories use labor dispatch in large quantities, and the number of social security personnel may not be high. This must be judged in conjunction with other information.
From our experience, it is difficult to distinguish a factory from a trading company purely by chatting and certificates. It requires comprehensive judgment from multiple indicators. If the supplier does not meet the precautions I just mentioned, it is basically a trading company.
People Also Ask
Is there a big difference between the quotation prices of trading companies and China factories?
Generally speaking, the factory's price will be lower, so there will be less price increases from middlemen. However, trading companies will integrate multiple sources of goods, and small orders may not be expensive. Don't directly determine the identity of the other party based on price alone.
Will China trading companies pretend to be factories to receive orders?
It is true that many traders will disguise themselves as factories to collect customer orders. They will borrow pictures and videos from other factories to fool overseas buyers, and must verify more before cooperating.
Looking for China suppliers, is it better to choose a factory or a trading company?
For large orders, direct factories are preferred if you want to reduce costs. For small orders and many categories, trading companies are suitable. Factories are better at production, and trading companies are good at customs declaration and docking of various miscellaneous services.