How to tell a real factory from a trading company
Research suggests a large share of "manufacturers" on B2B platforms are actually resellers. Here is how to spot the difference.
Why it matters
A trading company buys from a factory and sells to you with a margin on top. Sometimes that is useful — a good trader can consolidate several products — but often it means paying more, slower communication on technical issues, and less control over quality.
Buying closer to the source usually means a better price and a direct line to the people who actually make your product.
Signs you may be dealing with a trader
A very wide, unrelated product range (cups, electronics and furniture from one "factory") is a common tell — real factories specialise.
Vague answers to technical questions, reluctance to share the business licence or to arrange a video walk-through of the production line, and an address that does not match a manufacturing site are all worth questioning.
How to verify
Ask for the business licence and check the registered scope of business. Request a live video tour of the workshop making your product. Confirm the factory can provide the certifications your market requires.
An on-the-ground audit — someone physically visiting the site — removes most of the doubt. This is where local presence in China earns its keep.
When a trading company is fine
Not every trader is a problem. For small quantities across several product types, a reputable trading company or agent can be more practical than opening accounts with many factories.
The point is to know which one you are dealing with, and to pay a source-level price rather than an unnecessary markup.
Frequently asked questions
Is a factory always cheaper than a trading company?
Usually on unit price, but not always overall. A trader that consolidates several products into one shipment can sometimes reduce your total logistics cost. Compare the landed price, not just the unit price.