Do you prefer to import lcd display through a trading company or work directly with a manufacturer?

15-05-2020

Do you prefer to import through a trading company or work directly with a manufacturer?


What is a trading company? A trading company – sometimes called a vendor – works as an agent connecting buyers and sellers without having any involvement in the ownership or manufacturing of the product sold. And when searching on websites like Alibaba and Global Sources, you might find most of the companies listed are not actually the factories manufacturing the products shown. Many of these are trading companies, some of which are affiliated with one particular manufacturer and others which deal with several factories.

So is there a way of differentiating a trading company from a factory at first glance? The truth is, it can be difficult to be 100 percent sure. However, you can get a pretty good idea by using these four indicators of a trading company in order to distinguish from one or the other.


1. Product variety


Does the company offer several lines of products that require different manufacturing processes?  For instance, say there is a company called “LCD Display Manufacturing Company.” If this company offers lcd displays, touch screens,display module cases and driver board then they are probably not a real display module manufacturer.

Manufacturers in China, in most cases, will focus very specifically on one product type or manufacturing process. This is due to the high cost of machinery required to produce different kinds of components. Therefore, a company that manufactures lcd display will typically not make touch screens and driver boards, since those products entail completely different manufacturing processes.

Trading companies tend to have much more savvy and marketable company names than actual manufacturers. The reason for that is their business is trying to obtain customers from overseas, whereas manufacturers are usually focused on making products. Trading companies need to be more consumer-friendly in order to attract a larger client base.

Manufacturers also normally have the name of the city or town they are located in within their business name. For example, a company that makes rulers or cups in Shenzhen could be called “Shenzhen LCD display Company”. But a name like this doesn't sound very appealing to foreign buyers, does it? A trading company, on the other hand, will often have a catchier name like “TOPLCD module Manufacturing Company”, in order to pass off as a manufacturer. A factory would rarely have a name like that in China.

3. Company location

Where is the company located? Put their address into Google Maps and see if they are located in the middle of Hong Kong, Shanghai, Shenzhen or another densely-populated metropolitan location. If they’re located in a downtown area, chances are that is not the manufacturing location.

That doesn’t necessarily mean they are not the actual manufacturing company - some large factories do have sales offices based in the city. But quite often a little investigation into the actual manufacturing location reveals that the office is not related to the company that is producing the goods.

4. Company website

Is the company website appealing and easy-to-use? Is it all in English?  If so, it is very likely you are looking at a trading company. Unless it is a huge and well-known manufacturer, the company website is usually the biggest indicator.

This is especially true of Chinese trading companies. Even some of the largest factories in China have very basic websites, with very little English and a poor layout. Having an appealing website simply isn’t a high priority for most factories. The lack of decent advertising efforts coming from Chinese factories themselves is part of the reason why trading companies have taken hold in China.


Well, What are the advantages of traders and manufacturers?


Here are three great reasons why many importers continue to buy through a trading company:

 

1.     Trading companies often help to ensure they’re working with a quality factory that will make                a quality product.

2.     Trading companies often offer lower prices, especially for smaller orders.

3.     Trading companies help to ease communication between the buyer and the factory.

 

And for manufacturers,there are at least seven reasons to consider buying goods directly from a manufacturer:


1. Factory-direct products normally cost less. This is true because there aren’t any middlemen involved. Retailers and distributors have numerous expenses that they must pass on to buyers. Customers need to fund their buildings, employees and transportation contractors. These companies also incorporate advertising costs into their prices. For example, distribution increases the price of a car by nearly one-third, according to the U.S. Department of Justice.

2. When you order an item from the manufacturer, it’s less likely to suffer damage in shipping. Some products change hands repeatedly as different distributors and retailers try to sell them at various prices. Items that fail to sell in a luxury shop may be sent to a department store before reaching a liquidator. Each transfer increases the likelihood of shipping damage. Even if a product appears to remain intact, it could fail sooner because rough treatment has weakened internal components.

3. If an item comes directly from the factory, it probably won’t be near its expiration date. This gives you more time to use or resell the merchandise before it deteriorates. Food isn’t the only type of product that expires. Things like toothpaste, pain relievers, bottled water and batteries also have expiration dates. This consideration holds greater importance when you order goods in bulk.

4. Factory-direct items have been stored in fewer places. “This greatly decreases the likelihood that they’ve been exposed to extreme temperatures or suffered water damage,” said Factory Buys Direct. Products may also absorb unpleasant odors when they sit in warehouses or stores for long periods of time. People occasionally buy items that smell like the cleaning fluids that workers use in such buildings.

5. Merchandise typically has a smaller environmental impact when customers directly order it from manufacturers. The products only need to be transported from the factory to the buyer. They might be sent to one warehouse during this process. On the other hand, many retailers and distributors repeatedly transport, store and repackage goods. Wholesale items are often sold in smaller bulk quantities before they reach retailers.

6. A manufacturer may supply extra features or accessories to customers who purchase products directly. On the other hand, retailers wouldn’t want to carry a style that only a few people would want to buy.

7. You may be able to obtain specialized products that retailers and distributors don’t sell in your country. This makes it possible to purchase interesting obscure items. For example, you might be able to order a factory-direct boombox that tunes shortwave bands, has a cassette player and features amusing disco lights. You can also gain access to a wider range of apparel when you buy directly from manufacturers.

To sum it up, factory-direct buying delivers many valuable benefits. Some of these advantages improve the quality of products or help you find merchandise that meets your specific needs. Most people choose to order goods in this manner when they want to cut costs or can’t find desirable products elsewhere. Although retailers may provide more convenient service and support, they rarely match the prices of factory-direct items.


So,traders or manufacturers? It actually depends on who can procure the product/service with better skill and efficiency. It’s not always about price.

Are you knowledgeable about the product and its market/industry?

If not, how can you buy a product better than a trading company can, assuming the latter is more entrenched in the industry?

If you are new to the product or market, you could start with buying small quantities using a trading company. Once you gain more experience, you can start buying direct.

 

 


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