I mentioned in several articles that trading companies are sometimes the best choice for small importers. And two people asked me to confirm/explain it recently.
I think it depends on several factors, such as:
- Do you have time to follow development & production? Can you spend, say, 10 hours a week for each product and each supplier?
- Can you come to China, visit factories, and get to know the people you work with?
- Do you have the basic technical understanding that is required to speak intelligently about your product and your market’s requirements?
- Do you operate in a risky legal environment (e.g. children products sold in Europe)? Do you need to be able to prove that you know your supply chain and that you have taken all the measures necessary to reduce risks?
- Have you found a manufacturer that understands what you mean, that has English-speaking salespeople on staff, and that is interested in your business?
The more “nos” you answered, the better off you will be with a trading company.
The fifth question (finding an interested manufacturer) is often the main obstacle to small importers. Large factories don’t want to spend time working on very small quantities. Trading firms can often find small factories that are interested in your small orders… and that are unable to deal directly with export customers.
Naturally, you will need to qualify the trading company: knowledge of your industry, reference customers, etc. And I always recommend to treat them as service providers (who need to follow a certain process, send certain notifications…) rather than product suppliers.
For more information on this topic, I advise you to read these articles:
Renaud Anjoran says
Interesting distinction, thanks Jacob. I’ll keep thinking about this. it’s an important one.