Deal with Chinese Suppliers Archives -

Chinese Trading Companies: Are They Just Middlemen?

Jing Zhu — Fri, 10 Jul 2026 08:37:15 +0000

When sourcing products from China, you will come across many trading companies. Some buyers see them as middlemen and try to avoid them, while others wonder whether they can actually be good sourcing partners in terms of price, MOQ, service, and supply chain support.

I understand these concerns. As a sourcing company that has helped 4,000+ overseas buyers, we’ll share how Chinese trading companies work, how they differ from factories, and when working with one may or may not be the right choice for your business.

What is a Chinese trading company?

In simple terms, a Chinese trading company does not manufacture products itself. Instead, it sources products from one or multiple factories and sells them to overseas buyers.

Unlike factories, trading companies are not limited to a single production line. They can often source different products from different suppliers, making it easier for buyers to purchase multiple items through one supplier.

Some trading companies work directly with factories, while others source products through larger trading companies. The type of trading company determines the products, pricing, and services it can offer. Understanding these different types will help you choose the right trading company for your business.

Are you choosing the right Chinese trading company?

Not all Chinese trading companies operate in the same way. Understanding the type of trading company you’re dealing with helps you know what to expect in terms of pricing, MOQ, customization, and service.

General trading companies

These companies carry a wide range of ready-made products. You’ll find a lot of them in wholesale hubs like Yiwu, Guangzhou, and Shenzhen. They work with many factories and wholesalers, but most of their business is built around existing products rather than custom sourcing.

They work well when you need to purchase different small items in one order—gifts, daily-use products, toys, or home goods. But if you’re looking for private label, product modifications, or custom packaging, this type of company may not be the right fit.

Specialized trading companies

Specialized trading companies focus on one specific product category, such as furniture, lighting, pet products, packaging, kitchenware, or electronics. They usually work with a group of long-term factories in the same industry and understand product materials, price levels, quality standards, and common customization options.

They are suitable for buyers who already know what category they want to source and need more professional product knowledge, or light OEM customization.

Sourcing companies

Sourcing companies work more like a buyer’s local team in China. Instead of simply selling products, they provide a more stable sourcing solution by helping buyers find suitable suppliers based on product requirements, budget, MOQ, customization needs, and shipping plans.

They are usually involved in more steps of the process, including supplier comparison, sample follow-up, production tracking, quality inspection, and shipping coordination. Their value is to make the sourcing process smoother and safer, while helping buyers balance quality, service, and price.

China Product Agent helps you source products, manage orders, control quality, and simplify the process from start to finish.

Product-integrated factories

Some manufacturers also source related products from partner factories to offer a more complete product package. For example, a furniture factory may also help supply lighting, rugs, cushions, or home décor, so buyers can purchase several related items through one supplier.

This type is suitable when your main product still comes from a real factory, but you also need matching products from the same category or scene. The advantage is convenience, but the supplier may not be equally professional in every product they help source.

Chinese trading company or factory: which is better for your order?

Many buyers assume buying directly from a factory is always the best option because factory prices are lower.

In reality, the right choice depends on your order volume, product type, customization needs, and sourcing experience.

Lower product prices ≠ lower sourcing costs

A factory may offer a lower unit price, but that doesn’t always mean lower overall costs.

If your order involves multiple SKUs or suppliers, you’ll also need to compare factories, follow up production, arrange quality inspections, consolidate shipments.

Sometimes, paying a little more for the product can save much more across the entire sourcing process.

It's harder to tell a factory from a trading company than you think

Many buyers spend a lot of time trying to find a “real factory.”

The reality is that it’s often difficult to tell from a supplier’s website, Alibaba profile, or company registration alone. Many factories also source products from partner factories, while many trading companies work so closely with manufacturers that the difference becomes less obvious.

In many cases, buyers spend weeks trying to avoid trading companies, only to end up working with one anyway.

Choose based on your business stage

If you’re a startup or small business, don’t spend too much time trying to find the “perfect factory.” At this stage, your priorities should be finding a supplier who is willing to work with small orders, communicates well, delivers consistent quality, and can support your business as it grows.

If you’re a growing brand, a specialized trading company can be a good choice. They often have stronger supplier networks within a specific industry and can help expand or upgrade your product line.

If you’re an established business with larger order volumes and stronger purchasing power, working directly with factories usually becomes more practical. You’ll have more room to negotiate pricing, production schedules, and even payment terms.

What actually makes a good trading company?

They understand your business, not just your product

A good trading company does not quote blindly from the beginning. They first try to understand your sales channel, target market, budget, MOQ, and long-term plan.

After working with 4,000+ overseas buyers, we’ve found that clients from different markets often have very different sourcing needs. Climate, regulations, consumer preferences, and purchasing habits all affect which products and suppliers make the most sense.

They recommend the right supplier, not just the cheapest one

The lowest price is not always the best choice. A good trading company helps you balance quality, price, MOQ, lead time, and supplier stability.

Price matters, but it should never be the only factor in sourcing. A slightly higher price can sometimes mean better materials, more stable production, fewer defects, or better after-sales support.

They know the product well

A good trading company understands the product, not just the quotation. They know the differences in materials, production processes, common quality issues, and realistic OEM options.

They should also tell you directly when some requirements are not practical. Instead of simply sending you a price and letting you figure everything out, they should help you make better sourcing decisions.

They help solve problems

Sourcing from China will not always go perfectly. Delays, rework, packaging mistakes, defective products, and compensation issues can happen.

The real value of a trading company shows when problems appear. A good one responds quickly, communicates clearly, and works toward a solution instead of shifting blame or avoiding responsibility.

Final thoughts

So, a good supplier isn’t necessarily a factory or a trading company. It’s the one that helps your business grow with fewer risks and fewer surprises.

At China Product Agent, we’ve helped more than 4,000 overseas buyers source products from China over the past 10 years.

We’ve worked with startups placing their very first order, growing brands expanding their product lines, and established businesses optimizing their supply chains. Instead of pushing one sourcing model over another, we help clients choose the suppliers and sourcing solutions that best fit their business stage and goals.

If you’re looking for reliable suppliers in China, or simply want a second opinion on your current sourcing strategy, feel free to contact our team. We’d be happy to help.

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China Wholesale Suppliers: How to Find Your Best Fit

Jing Zhu — Mon, 29 Jun 2026 09:56:21 +0000

Looking for China wholesale suppliers, but not sure where to start?

Maybe you’re starting an online store with a tight budget. Maybe you want small custom orders for your own brand. Or maybe you already have suppliers but want lower costs and a more stable supply chain.

In this guide, I’ll break down what actually works for each situation, so you can choose the right way to find China suppliers.

Where can beginners actually find China suppliers for small orders?

I want to start an online store, maybe on Shopify or TikTok Shop. I don’t have a big budget yet. Where can I find China suppliers that accept small orders?

AliExpress and DHgate are the easiest places to start

If you don’t want to hold inventory, AliExpress is usually the go-to option to find China dropshipping suppliers.

For more details, see our guide on AliExpress Dropshipping.

If you only want to buy a dozen or so pieces per product style and have a budget of a few hundred dollars, you can start with DHgate.

Still unsure? See our DHgate guide to better understand the platform before sourcing.

You can also compare DHgate and AliExpress. Some AliExpress sellers also offer wholesale discounts when you buy more, such as 3% or 5% off the listed price.

New to sourcing from China? See our guide: China Sourcing Made Easy: 6 Essential Steps and Tips.

Want to try 1688? Use China ProductWholesale for small wholesale orders

You may also hear that 1688 prices are low. But for overseas buyers, buying directly from 1688 can be challenging due to language barriers, international payment issues, order consolidation, shipping, and limited after-sales support.

Still, many buyers want to try 1688. That’s where China ProductWholesale comes in. Hundreds of our clients already use it. You just need to make sure each product is at least $50 and the total order reaches $500, and that’s it.

If you’ve never used 1688 before, you can try it yourself and see how challenging it can be. For step-by-step instructions, see our guide: 1688 vs Alibaba.

Want to build your brand? Alibaba may not be enough

I don’t want to sell the same products as everyone else. I tried Alibaba, but adding my logo or custom packaging doesn’t seem that easy. Is there a better way to find China suppliers for small custom orders?

For overseas buyers, Alibaba is often the first place they check. It’s free to browse products across almost every category and easy to compare many suppliers at once.

For more info about Alibaba sourcing, see our Alibaba tutorials.

Sourcing ready-made products on Alibaba is relatively straightforward, but small-batch customization is not always as easy. It usually works better when your product requirements are clear and your order budget is around $1,000 per style or more. At that level, suppliers are usually more willing to discuss custom details.

But if your project involves multiple factories, you’ll have to deal with several suppliers. That means more time, more coordination, and a lot more back-and-forth.

How China Product Agent makes small custom orders easier

To be honest, small-batch customization is not easy. For factories, small orders often don’t bring enough profit to justify the upfront labor and time involved.

For example, when customizing handbags, bag factories usually require an MOQ of a few thousand pieces. One of our US clients wanted to customize just 300 pieces, but kept getting turned down when contacting factories on his own.

Instead of just looking for another factory, we broke down the supply chain. We sourced the leather materials and hardware for the client, then sent everything to a suitable bag factory to make the finished bags.

Custom bag

Leather sourcing

Hardware matching

This is why solving real sourcing problems requires a deep understanding of both product production and the supply chain.

We are familiar with product customization and development, especially logo and packaging customization. Based on your budget and order quantity, we can help you choose the most practical option.

4 common ways to customize your logo

Custom packaging

Make product customization easier

Already selling? How to find better suppliers without lowering quality

I’m already selling this product, but my current supplier is either too expensive or not stable enough. How can I find a better supplier in China without lowering product quality?

As sales grow, many buyers want to improve their current suppliers, reduce costs, and make the supply chain more stable.

You can send your current product sample to potential suppliers and ask them to make a sample. Once you receive the samples, compare the product quality, price, and supplier communication.

Good suppliers are not always the cheapest. They usually communicate clearly, quote transparently, explain material and production differences, and are willing to support QC and after-sales issues.

Start with a small trial order first, and arrange pre-shipment QC. Once the quality remains stable, you can gradually increase the order quantity.

Looking for real factory sources? See our guide: How Buyers Actually Find Manufacturers in China.

How China Product Agent handles your China supply chain

Comparing and managing suppliers one by one takes time, sourcing experience, and real skills. That’s where China Product Agent can help.

Based in China’s major industry clusters, we work directly with factories across daily consumer products, from raw materials and parts to finished products. This allows us to quickly match your product requirements with the right suppliers.

We compare multiple suppliers, check samples, and evaluate price, quality, MOQ, lead time, communication, and production capacity before choosing the best fit.

Supplier and sample checking

Product inspection

Warehousing and shipping

For products that already sell well, we can help you buy in bulk and get better factory pricing. We follow up on production, arrange QC, and offer shipping solutions tailored to your budget and needs.

If you need to hold inventory, you can keep part of it in our warehouse for free for 1–2 months. Then we can ship it in batches to your fulfillment center to help reduce overseas storage costs.

Let China Product Agent manage your China supply chain

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MOQ: When and How Negotiation Actually Works

Delicacy — Fri, 30 Jan 2026 10:05:00 +0000

MOQ is often discussed in the context of inventory or restocking planning.

But in this guide, we’re talking about the MOQ you run into when dealing with factories — the minimum quantity a factory requires to get production started.

This guide isn’t about pushing MOQ as low as possible.

Instead, it’s based on real sourcing experience and focuses on which MOQs are actually worth negotiating, when it makes sense to change your approach early on, and what practical options you have when suppliers tell you, “This quantity doesn’t meet our MOQ.”

What is MOQ in the supply chain?

MOQ refers to the minimum order quantity a supplier is willing to accept to start production or fulfill the order. Below this threshold, suppliers usually won’t take the order — or they may adjust pricing and terms.

In finished product wholesale sourcing, the most common MOQ structures are:

By quantity — for example, MOQ: 500 pcs/SKU
By order value — for example, MOQ: USD 2,000/order

Why do factories set MOQ?

Factories set MOQs not to make things difficult for buyers, but to cover fixed production costs and make production worth running.

Upfront costs don’t change with order size

Whether the order is small or large, factories still need to set up machines, prepare molds, and confirm samples. These upfront steps take time and labor.

When the quantity is too small, these fixed costs can’t be spread out properly — so either the factory says no, or the costs get pushed into the unit price.

Raw materials also have MOQs

Some MOQs don’t come from the factory itself, but from upstream suppliers. Raw materials, semi-finished components, and accessories often have their own minimum order requirements.

For example, plastic toy production requires plastic pellets, usually purchased by the ton. In apparel production, fabrics are typically ordered by the meter, often with MOQs of 300–500 meters. Trims such as zippers and buttons also have MOQs.

What really drives MOQ differences across products？

Standardized, ready-made products have lower MOQs

For highly standardized daily-use products with mature designs already on the market, MOQs can range from just a few dozen to a few hundred units. These products usually rely on existing molds and well-established production lines — such as storage boxes, coasters, and other small household items.

If the supplier already has inventory in stock, the MOQ can be even lower, sometimes just a few units.

For the same type of ready-made, standardized products, MOQs on Alibaba are usually similar to those across Chinese wholesale platforms.

Alibaba

Global Sources

In comparison, DHgate focuses more on small-batch wholesale, with typical MOQs starting from just a dozen units per style. Suppliers on DHgate usually display clear tiered MOQs with corresponding prices, which makes the platform more friendly for buyers running small tests or trial orders.

The deeper the customization, the higher the MOQ

Light customization

If you’re making simple changes to existing products—such as adding a logo or customizing the packaging—the MOQ is usually manageable. For most daily products, it’s typically around 300–500 units per design.

Deep customization

Once you start changing the product materials, structure, or functions, MOQs go up fast. For example:

Custom socks with special fabrics or non-standard colors usually need at least 1,000 pairs per style, size, and color.
If private molds are involved, the MOQ often starts at 1,000 units or more.

Which types of products usually have more flexible MOQs?

Handcrafted or semi-handcrafted products

Common examples include:

Textile products such as clothing and cushions
Wooden products such as toys, handicrafts, and furniture

These products rely more on manual labor than fully automated production lines, so startup costs are lower and MOQs are generally more flexible.

T-shirts/hoodies: logo printing usually requires 50–100 pcs; custom designs based on your artwork typically start at 300 pcs per style per color
Wooden sofas/office desks & chairs: often 1 piece to start
Wooden toys: about 200 pcs per style for simple structures; around 2,000 pcs per style for complex structures

Actual MOQs still depend on the specific product and the level of customization involved.

High-value products

The higher the unit value, the more flexible suppliers usually are with MOQs. For example:

Custom packaging: regular boxes typically require 300–500 pcs, while high-end gift boxes can start from 100–200 units/style.
Corrugated display stands: the MOQ is often as low as 10 sets.
Electric tricycles: with custom body color, configurations, and branding, suppliers may accept as low as 1 unit, usually treated as a sample order.

Which types of products usually have rigid MOQs？

Low-value products involving mold development

Molding costs often start from a few thousand USD. When spread over low-value products, factories naturally require large order volumes, leaving very little room for negotiation. MOQs are usually quite rigid.

For example, custom-size plastic bowls or containers — MOQs typically start at around 10,000 pcs.
For cosmetic bottles with unique shapes, the MOQ is typically around 50,000 pcs per style.

Products requiring complex processes or special equipment

Some products cannot be made using standard equipment. For example, seamless underwear, seamless compression wear, or diabetic socks usually require specialized production machines.

These machines are expensive, and both setup and trial costs are high. As a result, MOQs are not only high but also hard to negotiate.

When and how MOQ negotiation actually works?

1. Don’t ask “Can you lower the MOQ?” — Ask why it’s high

When a factory quotes its MOQ, many people’s first reaction is: “Can you lower it?”

But asking that right away rarely helps. MOQ varies a lot from product to product, so it can’t be generalized. Even with the same product and customization, MOQs can be different depending on how it’s done.

For example, adding a logo to a water bottle: laser engraving can often be done with just one unit, while screen printing usually starts at around 500 pcs.

So negotiating MOQ isn’t about pushing the number down right away. It’s about first understanding why that minimum exists, and whether there are alternative ways to achieve a similar result with a lower starting quantity.

laser engraving

screen printing

MOQ negotiation usually works best when the gap isn’t huge.
For example, if a supplier’s MOQ is 2,000 units and you need 1,500, there’s often room to make it work with the right communication and approach.

2. Accept higher unit prices when MOQ is small

At the end of the day, small-batch negotiation is about finding a balance both sides can accept. Expecting low quantities and low prices at the same time isn’t realistic — factories won’t produce at a loss.

When your order is small, being willing to pay a slightly higher unit price so the factory can still make money often makes them much more willing to work with you.

3. Reduce variants — avoid all-at-once launches

Many startups and even well-funded businesses start with big ambitions—launching a full product line with multiple styles and colors at once.

But this is risky: high upfront costs, long lead time, and no clear market validation.

A more practical approach is to research first, then test the market with 3–5 high-potential variants—keeping risk, inventory, cash pressure, and total MOQ under control.

Because MOQ is usually calculated per variant—such as style, color, size, or material.

Example

When customizing handbag colors, the MOQ is often 300 units per color, per style. Launching too many styles and colors at the start quickly pushes the total order size up.

Starting with the three best-selling styles with custom colors keeps quantities manageable and lets you test the market with lower risk.

Another case

We once worked with an animation company that wanted to turn its IP characters into plush toys, silicone figurines, keychains, and phone cases—all at the same time.

What they didn’t realize at first was that each product type required mold development. The molding costs alone ran into tens of thousands of dollars, and the overall MOQ quickly became very high.

That is too risky, especially when it’s still unclear how the market will respond to new IP products.

So we advised them to start with plush toys, which have the lowest production cost, and then decide whether to move forward with new product development based on real market feedback.

For reference only, not client’s final product

4. Increase the upfront payment

Small orders mean higher risks for factories.

If you’re willing to increase the upfront payment—for example, paying more than the standard 30% deposit and 70% balance, or even paying 100% upfront for smaller orders—factories are more likely to see your sincerity and feel that you’re easy to work with.

In many cases, better payment terms matter more than pushing hard on MOQ itself.

5. Show you’re not a one-off buyer

Share your target market, sales plan, and budget. Show suppliers you’re serious, prepared, and capable of execution—that’s what helps suppliers see long-term potential.

Don’t overpromise. Vague claims like “orders will be huge later” or “we’ll work long term” are things suppliers hear every day—and pushing them too hard can backfire.

Most importantly, keep your expectations realistic. If you’ve already tested the market—through KOL, Kickstarter or Indiegogo campaigns, or actual orders and sales data—show the results directly. That usually makes MOQ discussions much easier.

At its core, MOQ negotiation is a value exchange. The deal only moves forward when the supplier can still make money.

When you can’t meet the MOQ, instead of fixating on a single number, it’s often smarter to be more flexible about how you work together. Getting the supplier willing to work with you and push the project forward matters more than the MOQ itself.

Is MOQ blocking your project? How China Product Agent can help?

Finding suppliers isn’t hard. What really drains time and energy is the communication cost—reaching out to factory after factory, explaining your requirements over and over again, negotiating MOQs repeatedly, and still ending up with results that may not be ideal.

Based in China’s major manufacturing hubs, China Product Agent has always worked closely with factories on the ground. Our network includes small workshops, as well as mid-sized and large factories.

We match you with the right factory based on your actual needs, so you don’t have to keep starting from scratch and learning through trial and error.

audit suppliers

medium-size pickleball racket factory

large titanium cup factory

Many buyers test the market with small trial orders—reorder quickly if it works, and switch products fast if it doesn’t.

This is similar to Shein’s “small-batch and fast turnaround production model”. What makes this model work is a highly stable and well-developed supply chain behind it.

Our role is to integrate your supply chains in China, making it easy to source.

We integrate and manage the entire supply chain for you—from raw materials and components to semi-finished processing, assembly, and final products—coordinating all parties and driving the project end to end. This enables projects to start faster and move forward more smoothly and flexibly.

fabric sourcing

embroidery factory

clothing factory

We handle small orders well. Because we bring factories long-term, repeat business, small orders aren’t the problem—one-off orders are. That’s why they’re more flexible on MOQs and pricing when working with us.

building block sample room

Vinyl toy factory

custom packaging

Struggling with MOQ? Source smarter with China Product Agent

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China Sourcing Agents: Top 5 Buyers’ Questions

Jing Zhu — Sun, 02 Sep 2018 12:03:15 +0000

Today, sourcing agents play an increasingly important role in managing international supply chains. In this blog, I sort out 5 buyers’ most concerned and confused questions about sourcing agents and give you the most objective answers. Be sure to spend 2 minutes reading this before you work with a sourcing agent!

What is a sourcing agent？

A sourcing agent is a person or company that helps buyers find suppliers and source products as needed—like a real estate agent, they connect you with resources, negotiate deals, and handle the details to simplify the process and reduce risks.

With Alibaba so easy to find Chinese suppliers and products, why work with a sourcing agent?

Sourcing products from China may seem straightforward, but it’s actually complex and full of unexpected issues, from sampling to quality control and product delivery to your place. When problems pop up, it’s always a headache. That’s where sourcing agents step in to save you time and hassle, providing a more cost-effective, efficient experience.

What does a sourcing agent do?

Now in China, there are many buying agents available. Their services basically fall into 2 types.

One-stop sourcing services

Middle and large sourcing companies with experienced teams manage every step, including dealing with Chinese suppliers, price negotiation, sampling, quality inspections, logistics, customization, and new product development.

Sourcing companies with at least 40 staff can handle such comprehensive service. For instance, China Product Agent has grown from a 40-person team in 2015 to 170+ to ensure top-quality service for every client order.

Especially when improving existing products or developing new items, sourcing companies must have a deep understanding of the product and rich customization experiences. If not, you might find the sample revised many times, yet still far from the result you want. Months can pass with little real progress on the project. This delays your schedule for the new product launch.

If you’re interested in our clients’ custom projects, follow us on TikTok and Instagram.

Single or partial sourcing service

Private agents you find on Fiverr or Upwork, as well as small sourcing companies with fewer than 10 people through Google search, typically offer single or some sourcing work. Common services include general translation, supplier information packages, product photos, sample consolidation, supplier audits, production tracking, consultation services, etc.

Here are some examples.

Who needs a sourcing agent? (5 types)

New to import with limited experience

Sourcing overseas involves language and cultural differences, plus a lot of business aspects to learn—it’s not a quick process. For beginners, it’s hard to get enough time and energy to track the sourcing process and manage all the details.

Experienced agents can take care of the entire sourcing process and offer professional support at every step, giving you peace of mind. Plus, you’ll pick up practical tips & product knowledge along the way, valuable for your growth.

Customize small batches to test new products and markets

When testing new products and markets, e-commerce sellers usually go for small batch customization, like 300-500 units. Before approaching us, most of them spent time browsing on Alibaba but struggled to find suppliers who offered reasonable prices, met their expectations, and were highly cooperative. So they turned to us.

We work with both large and small factories and have years of experience in customization and new product development. So we can handle small orders well.

We’re willing to handle small batch orders with budgets of just a few thousand dollars, growing together with our clients.

That’s why over 150 million-dollar e-commerce sellers have launched their projects with us.

Optimize the supply chain and save costs

Most successful businesses will reach this stage:

Optimize current suppliers to reduce product, logistics, and storage costs.

Manage the entire supply chain to ensure stable product quality and steady supply, lowering risks.

Effectively handling these tasks requires a professional sourcing team. That’s why big international companies set up purchasing offices in China. Small and medium-sized businesses, on the other hand, prefer working with a reliable sourcing company as their purchasing office in China. Just like 60% of our successful Amazon, Shopify, and dropshipping sellers. They trust us to,

Bulk customization at the most competitive factory pricing.

On-time delivery for every batch, with quality assured and compensation for any defective items.

Ship batches to designated fulfillment centers or dropship directly from China, saving on logistics fees.

Excellent communication, easy to reach anytime, giving you peace of mind.

Source multiple product categories with ease

When you engage in the sourcing for:

A supermarket, restaurant, hotel, interior design company, etc.

A retail store selling pet supplies, party supplies, stationery, beauty products and cosmetic packaging, home decor, furniture, etc.

Government, school, and large enterprise procurement projects.

Personal projects, like home renovations, café renovations, etc.

Your procurement list might include hundreds or even thousands of different items, each requiring a separate supplier. It’s nearly impossible to visit each factory in person.

For your stable-selling products, you can bulk purchase directly from the factory. For the remaining variety of items, working with a sourcing agent can greatly improve your sourcing efficiency. They source all the items you need from different suppliers—you just pick the options that meet your price and quality needs.

Source specialized items

Besides daily consumer products, some specialist categories—like chemicals and medicine—are harder to find reliable suppliers either online or at trade shows. That’s where a sourcing agency specializing in the industry can step in to support your business.

What about China sourcing agent fees?

Sourcing agents typically charge either a fixed fee per project/time or a commission on the order amount.

Flat charges

Small sourcing companies and private agents in China charge a fixed fee per project or period (hour/week/month). Suitable for short-term or one-time service needs.

Private sourcing agent (Upwork): flat fees

Some experienced buyers prefer to hire a private full-time sourcing agent for weeks or months, to do some simple sourcing work like finding suppliers, translating, and communicating with suppliers.

Small sourcing companies are usually run by individuals with foreign trade experience, focusing on categories they know and charging a fixed fee for single services. For example, supplier sourcing, quality inspection, or logistics arrangements. It’s a good fit if your sourcing needs happen to align with their area of expertise.

Small sourcing agency: a flat fee per project

Commissions

Commissions are another common pricing model among medium and large sourcing agents, similar to real estate agents taking a small percentage of the property price as a commission.

Typically, the sourcing commission rate is 5-10% of the order amount.

This is reasonable for daily consumer products. Many sourcing companies attract new clients with very low commission rates or even offer free trial orders.

Always remember, “No business is charity.” They’ll make up the difference elsewhere, like higher product prices, inflated shipping costs, poor QC, and lack of attention to your order leading to a range of risks & headaches. You’ll end up worrying more than if you’d sourced suppliers yourself.

If the products you’re sourcing are in high demand and highly competitive, like rolled steel, or if your orders exceed $500,000, the service fee might be around 3% of the order value or even lower. This is reasonable.

4 practical tips to find reliable sourcing agents

1. Choose the sourcing agent located in industry clusters.

Most sourcing companies are concentrated in Yiwu, Guangzhou, and Shenzhen. Their strategic locations make it easy to connect with factory resources in the Pearl River Delta and Yangtze River Delta, major 2 industrial hubs in China. They can also take full advantage of port logistics, easier to consolidate and ship goods, reducing logistics costs.

Pearl River Delta & Yangtze River Delta

2. Choose the sourcing agent with a professional support team.

In the past 5 years, at least 150 sourcing companies have popped up in the market. When googling “China sourcing agent,” you’ll find plenty of results. Their services seem similar, and they may seem reliable in communication. But once you start working with them, issues start popping up one after another.

As a sourcing company with 10 years of experience, we deeply know that quality sourcing services require time, experience, and resource accumulation. It takes extensive collaboration and trial and error to find the best products and suppliers, follow up on production, and enforce strict QC. This requires seamless cooperation and oversight across all internal departments to consistently deliver high-quality service to our clients, year after year.

In China, it’s easy to become a sourcing agent. With a business license and a website, even one person can do it. However, it’s challenging for them to ensure sourcing efficiency and service quality. Even if they want to do well, they often struggle to deliver.

3. Choose the sourcing agents with transparent pricing

Choosing an agent with clear service charges and transparent product quotes with details is crucial, especially if you’re in custom products like electronics. The component costs like circuit boards, chips, or aluminum fluctuate quarterly and can vary significantly due to differences in material types.

Make a cost breakdown of your sourcing project, including the sampling, molding, testing, bulk order, packaging, and shipping. Then, you can compare overall expenses accurately.

Transparent pricing and clear explanations of price changes build trust naturally.

4. Choose the sourcing agents specialized in a certain product type.

Choosing an agent who specializes in your product category can be a good option, especially for specialized items like chemicals, machinery, large furniture, etc. They have a more comprehensive understanding of the product and access to reliable factory resources.

Before we wrap up

Finding the right sourcing partner is like finding the perfect pair of shoes—it should fit just right. Look for a company that truly understands your industry, knows your products, shares your values, and brings proven solutions. The best sourcing partners are transparent about their methods, provide clear reporting, and keep communication open.

We’ll never claim to be the best, but we’re always striving to improve, aiming to be a reliable partner in helping your business grow. If one day you feel it’s time to talk about your project, we’re here and ready to chat.

Need better control when sourcing from China?

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4 Main Reasons Why You Can’t Find Factories in China

Jing Zhu — Tue, 12 Jun 2018 09:15:36 +0000

Many importers who are purchasing products from China want to find real factory suppliers, not any middlemen or trading companies, though this is not an easy task.

The topic “how to find a factory in China” is discussed frequently in many Facebook/LinkedIn groups and trading forums related to “import from China”. But unfortunately, most answers are useless, such as visiting China in person or searching Gold Supplier on Alibaba. There is no solution that can really work after I search all related topics on the Internet.

However, I found that there is no one thinking about “Why we are not able to find factories”, which I think it’ll make more sense than just asking “How to find factories”. And only when you know the main reasons for failing, then you will figure out the best way to get the factory.

In this article, I’m going to explain why Chinese factories in certain industries are so hard to find, and what kind of factories are more likely to be discovered.

1. Some Special Products Are More Likely Made by Small Factories, Which Are Not Easy to Be Found

What kind of products you are importing usually is the essential thing of whether you can search the real factory because you cannot find factory suppliers for every product? I think this is the main reason why foreign importers fail to find factories.

If your target product is such common types as T-shirts or socks, buying through Alibaba or Google is OK. And it’s still not difficult to find out a real factory supplier, although there’re lots of trading companies after searching.

But the situation will be totally different if you are source some special products, for example, self-stirring mug. Due to its less demand in the market, there are almost no middle/large-scale factories will be its manufacturers. So the manufacturers of this kind of mug are very few and most of them are small factories (probably less than 30 staffs). That’s why the suppliers you searched on the Internet are all trading companies. Then realized that you can’t find the factory.

In addition, there are several other reasons why small factories are difficult to find, which I’ll explain in the following paragraphs.

2. Factories Didn’t Publish Their Information on English Website

All foreign importers, no matter whether they can speak Chinese or not, are sourcing suppliers on B2B platforms such as Alibaba or Global Sources or searching on Google. So if a factory doesn’t have any staff who know English, then it’s impossible for them to publish their product information on the English website. So there is no way for foreign importers to find them.

It’s very common in China that no one can speak English in a small-scale factory, and most staff are doing work related to products and production, and dealing with domestic trading companies. Because they think that it’s expensive and not very easy to build an English sales team.

For example, you have to pay about USD 4,000 annually as the membership fee, then you can publish products on Alibaba, which is the so-called “Gold Supplier”. Also, you need to pay at least USD 7,000 every year to employ a full-time English salesman, and it’s only for a basic salary. If his working ability is not like you expected, you may get no order.

One of our suppliers–a small toy factory, who has no English-speaking salesman and only works with domestic trading companies

The targeted customers of these factories are Chinese trading companies, so they would like to publish their information on Chinese websites, such as 1688 (Chinese Alibaba website, belongs to Alibaba Group), which is the largest Chinese B2B platform in China and has more suppliers than Alibaba.com. One interesting thing is that many suppliers on Alibaba usually go to 1688.com to find their suppliers.

But it’s very difficult for foreign importers to source suppliers directly on 1688.com. First, you must speak Chinese as your mother tongue or know Chinese very well. Second, you need to be quite familiar with all kinds of Chinese suppliers. Because trading company suppliers on 1688.com are even more than factories, it’s harder to distinguish them than searching on Alibaba.com.

3. Factories Don’t Know Online Marketing

Even though some factories are Alibaba members and have published products there, it doesn’t mean they certainly will be searched by foreign importers. Because there are many skills to be ranked on the first page of Alibaba searching result, such as keywords settings and Pay for Per Click, which is similar to Google AdWords. Trading companies know more and better than these factories about these skills which help them to be easily searched by importers.

It’s even more difficult to be searched on Google than on Alibaba for factories. Factories must have their own English website, and do SEO (Search Engine Optimization), and SEM (Search Engine Marketing) work such as marketing on Facebook or LinkedIn, to increase the probability of being searched. Trading companies also send developing letters to potential customers that searched on Google.

That’s why most small factories cannot be found by importers even they are publishing products on Alibaba. Besides, some small factories reply to Alibaba’s inquiries very slow, which may make the importers feel like they are not reliable and professional, so they ignore them. There is one tip for you: those suppliers who are replying to you slowly, or difficult to communicate with, maybe they are the factory.

4. Factory Keeps All Information in Secret If Product Has Patent or Copyright Issue

It’s universally acknowledged that China is producing all kinds of copycat products and exporting every corner of the world. Once there’s a hot-selling product in the market, maybe electronics or even a toothbrush, Chinese factories will start to copy it and sell cheap price. The interesting thing is, in a lot circumstances, importers don’t know the product is a copycat.

It’s usually quite difficult for imports to find real factories of this kind of product as involving patent or copyright issues. These small factories often work with domestic trading companies so that can export this kind of product to other countries. So most importers are buying from trading companies, rather than from real factories.

This circumstance often occurs in lots of electronic products manufactured in Shenzhen. For instance, an automobile recorder we sourced for one European customer. I chose the best price among more than 20 suppliers, but he told me that the products were produced by his friend and entrust him to sell. He also claimed that he won’t take any customers to visit the producing workshop as it needs to be kept as secrecy.

Conclusion

Most importers want to bypass the middlemen or trading companies and purchase directly from factories, but not every importer can actually make it. In this case, you’d better find more suppliers (no matter middles or trading companies) and compare them to select the most suitable one. Or you can attend some fairs which are the best way to find factories, such as the Canton Fair, Global Sources Fair, etc.

Also if you want to learn more about the differences between trading companies and factories, you can check another article: 7 Ways to Verify Chinese Suppliers Are Factories, Not Trading Companies. Learn ways such as find industrial clusters, checking VAT invoices, to find out whether your supplier is a factory or not.

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7 Ways to Verify Chinese Suppliers Are Factories, Not Trading Companies

Jing Zhu — Fri, 19 Jan 2018 09:17:11 +0000

Many importers are dying to know whether they are dealing with a factory or trading company when importing certain products from China. Because almost every Chinese supplier claims that they are factories, including suppliers on Alibaba, though they are actually trading companies. So there are lots of blogs and articles that teach importers how to verify suppliers on the Internet, but most solutions they suggested didn’t make any sense in reality.

In this article, I’ll first explain why solutions that lots of people suggested don’t work, then offer 7 correct ways to find out what your supplier really is.

Part Ⅰ: 2 Ways Often Suggested, But Don't Work at All

1. Check Supplier’s Registered Capital

Some blogs mentioned checking the supplier’s registered capital to verify whether it is a factory. If with large registered capital, then it’s a factory, otherwise, it’s a trading company. But this is totally wrong. If your supplier is a small-scale factory, its registered capital will be likely less than some types of trading companies. And the registered capital of the large-scale trading company can be very large, like more than 10 million CNY.

No matter you register a company or a factory in China, your registered capital is usually more than CNY 500,000. But it doesn’t mean you must have ￥500,000 in your hand at that time. It means during the next 10 years, the amount in your company’s account can be over 500,000 on any day, and it’s legal.

Another thing is you can easily borrow ￥500,000 to deposit in your company’s account for one day, then transfer it out the next day. It only takes hundreds of US dollars to get this one-day loan as there are many companies that can offer this service.

2. Ask for Samples, Check the Address Where It Was from.

Some others recommend the importers ask for samples before placing the order to the suppliers. Then you can check the product’s quality, and get the supplier’s office address. If the office address is the same place as the registered address on the business license, the supplier will be a factory; otherwise, it’s a trading company.

But this method is not applicable in China, or even many other countries, because it’s quite normal that a factory’s office address is not the same as the registered address. Many middle and small-scale factories’ workshops are rented, so they may change to rent another place after 2 or 3 years, but they won’t update the registered address at that time. And some factories’ workshop and office are divided into different places, even different cities.

Part II: 7 Ways to Verify Whether Your Supplier Is a Factory

1. Check the Business License

The most important part is “Business Scope” (经营范围) when checking a supplier’s business license. This is the easiest and most direct way which your supplier cannot counterfeit. A factory’s business scope must include words like “manufacture or produce” (生产，加工，制造), which a trading company’s business scope won’t have.

Send supplier’s business license to a reliable friend who knows Chinese well for a check, or you can go to Elance to find a freelancer for translation, which only costs several dollars.

2. Check the Value Added Tax (VAT) Invoice

This is the best way to verify suppliers. Chinese government offer drawback for many kinds of exporting products in order to encourage export. But if a company wants to get export drawback, 17% VAT invoice is must needed which can only be issued by a factory.

So there is the way: tell the supplier that you have a partner in China who can help you apply for export drawback, so ask for issuing a 17% VAT invoice. If the supplier refuses or hesitates to reply to you, they probably are a trading company or a very small-scale factory.

But if they agree to issue the VAT invoice, you can ask for a clear picture of the invoice made before, and check carefully the company name on it. If it is the same name on the supplier’s business license, then it must be a factory.

3. Check Supplier’s MOQ

Factory’s MOQ is normally higher than trading company’s, and it’s almost common sense in trading. So that you can verify your suppliers by testing if they can sell you fewer quantity products.

For example, you are finding a supplier for purchasing 5,000 mugs made of glass, you can tell the supplier that you are buying only 300 pieces for a try, and will place big order in the future if the quality is good. They will say no if you are dealing with a factory as their MOQ won’t be less than 1,000 pieces. But a trading company may accept your 300 pieces order.

4. Check the Products Catalogue

A factory usually is specialized in one or several kinds of products, if there are lots of kinds of products in your supplier’s catalog, then it’s more likely to be a trading company.

I know a stainless steel vacuum cup factory (200 workers, around 70Km away from my office) that is among the TOP 10 in the Chinese vacuum cup industry. Except for vacuum cups, they also sell glass-made cups, but these are supplied by other smaller factories. This company’s glass-made cups price is even higher than other trading companies quoted.

But if your cup suppliers supply stainless steel vacuum, glass, plastic cup, and mug, etc. they are not factories.

5. Check the Factory Auditing Reports

If the supplier told you that they have supplied products for world companies like Walmart, then you can require them to send you the factory auditing report.

If they refuse or hesitate, then they probably are trading companies. If they send you the factory auditing report, you need to check the company name on the report. If it’s the same name as the one on Business License, they must be a factory.

6. Check the ISO 9001 Certification

Not every factory has ISO 9001 Certification, but most companies who have this certification are factories because the trading company has no need to have it.

But still, some trading companies get this certification, and all of them are only specialized in one product category and have a solid relationship with their factories. I know several of these types of trading companies, and I have to say working with them will be no much different from working with factories, even on price.

7. Check Where Supplier Is Located in China

All products have their own industrial areas in China, and let’s take RC (Remote Control) toy cars as an example. All RC toys are mostly produced in Chenghai, Guangdong Province.

Because this city has a complete supply chain for all parts of RC toy cars, such as motors, remote controllers, and wheels. The factory only needs to design a car’s shell and packaging, then assemble all parts together. Producing RC toys in any other city will be more complicated and higher cost than in Chenghai, so factories will be not likely located in other places.

If your suppliers are not located in Chenghai, like in Guangzhou or Shenzhen, they are probably trading companies. Maybe there will be some high-tech RC toys factories located in Shenzhen, but very few.

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How to Import Small Quantity from China: Guide for Business Starter

Jing Zhu — Mon, 15 Jan 2018 07:29:12 +0000

We got many inquiries from people who want to start a small business by importing small quantity products from China since our website started. Most of them do not have much relevant experience, and just consider it’s very simple: find a Chinese supplier, buy products at a low price, ship home, and sell a high price in the local market.

But the truth is importing small quantities directly from China is never that easy. You will face many different problems, such as shipping fees higher than the product’s value, or your order being much less than the supplier’s MOQ. In some circumstances, you may have to give up your wonderful plan of starting a new business.

In this article, we will give a complete introduction of how to import small quantity products from China and explain some problems you may have.

What Is Small Business? And What Is Small Quantity Buyers?
What Kind of Products Are Suitable for Small Quantity Buyers?
How to Find Chinese Suppliers for Small Quantity Buyers?
How to Ship Cargo from China When Buying Small Quantity?
How to Avoid Scam When Buying Small Quantity as a Business Beginner?

What Is Small Business? And What Is Small Quantity Buyers?

Different companies and people have different definitions of small business. Most sourcing agents or consulting companies define small businesses as those that import less than USD 500,000 annually. But for many business starters, this amount is way too high, and maybe they still can’t reach it after 5 years. That’s why it’s not easy for small starter businesses to find a suitable sourcing or consulting company that can offer them relevant services.

I’d like to define customers who purchase USD 5,000-50,000 (including different kinds of products) in one order as Small Business. With this amount, the shipment volume usually is from 5 CBM to a 40HQ container. This amount usually can reach the factory’s MOQ and can buy from them directly.

4 to 5 CBM normally will be the most suitable minimum volume for LCL (Less than Container Load) shipping. If less than this, the whole export & import process is complicated and costs lots of money, which means the average cost for each product will be high.

Small Quantity Buyers refer to those who buy less than $2,000 per order, and who just start a new business (I mentioned in the beginning) are also a part of them. This article will more focus on helping this group of people.

What Kind of Products Are Suitable for Small Quantity Buyers?

For small business importers, those who buy more than USD 5,000 per order, must know what to import and how to sell. But small business starters probably even have no idea what kind of products to start with first.

a. High-Value or Small Size Products

Shipping is always a big problem for small quantity importers. Because their shipping volume is always too less for LCL, usually less than 2 CBM, and have to choose air freight or express, which costs 8-10 times higher than LCL sea freight.

Products with large size or large packages, like mug and teddy bear, is not suitable for small quantity importers, because both express and air freight fee are charged by dimension weight (length*height*width).

This means your shipping cost is even higher than the products’ value, but your competitors import by LCL sea freight which costs 80% less than you. Then you have no chance to compete with them in the local market.

So for small quantity importers, high-value, small-sized products are a better choice. Shipping cost won’t be high, sometimes only 10% of the product’s value. Such as fashion accessories, small electronic products, watches, etc. Most importers won’t choose sea shipping because of the timeliness, so no need to worry about your shipping cost is higher than competitors.

b. Choose Interesting Products, Instead of Normal Items

Small quantity buyers can try to find some special and interesting products, and avoid those common products which can be bought everywhere.

Some people think that daily used products, such as socks, are very easy to be sold as everyone needs them, but it’s not true. Because there must be numerous people importing and selling these items with low profit, and it will be hard to compete with them. But you can think about importing some special socks, such as “non-slip children socks”, or socks with good designs.

Common products in daily life are not suitable for small businesses, either. For instance, we received many inquiries from different countries (European and Middle East countries), and they want to import a 20GP container of A4 printing papers.

But they only found that the total cost to import from China has no big difference from the price in their countries. Because this kind of product has no much-added value, and the cost is mostly depending on the raw material. So the price is very transparent, even with a large demanded quantity.

Toilet paper is also a very common product, but our Czech customer selects those with interesting designs printed: such as US dollar, Euro, Heller, and even Kama Sutra. These special toilet paper can be easily sold at several times higher prices than the common one.

How to Find Chinese Suppliers for Small Quantity Buyers?

Most small quantity buyers find Chinese suppliers online. Even customers who buy larger quantity (around USD 30,000-50,000 for each order), they seldom actually come to China for finding suppliers, except attending some fairs.

First is the high cost, including air ticket, hotel fee, and traffic allowance, and it will cost totally around USD 4,000 for a week visiting China. Second is finding a good Chinese supplier is a tough task, except you go directly to some places like fairs or Yiwu wholesale market. Or you already contacted suppliers before coming to China.

But if you have enough time and budget to come to China to visit wholesale markets, I recommend you to read Top China Wholesale Markets for All Products.

a. Alibaba

No matter for large buyers or small quantity buyers, searching Chinese suppliers on Alibaba is the best choice. But If you are buying a very small quantity (less than USD 400 for each item), Alibaba suppliers probably can’t sell you because usually, they have higher MOQ.

Maybe you can pay for products at a higher price, and sometimes suppliers will sell you. If not, you have to turn to DHgate or Aliexpress. Don’t spend much time persuading them that you will buy a big quantity in the future, and this is for trial. Because Chinese suppliers are hearing this from clients every day, and it doesn’t work at all.

b. Dhgate and Aliexpress

If the Alibaba supplier’s MOQ is still hard for you to reach, maybe you can only go to DHgate and Aliexpress. They’re two similar sites to Alibaba with some differences. Usually, DHgate tends to small quantity wholesalers whose buying quantity is between Alibaba and Aliexpress. Aliexpress more tends to retailers, though it claims itself for online wholesale, and this truth is known by most Chinese suppliers.

Many buyers may have such questions: Is Dhgate safe? Is Aliexpress safe? Actually, both of them are legal platforms and what you really need is practical tips to avoid or handle problems when buying on them.

How to Ship Cargo from China When Buying Small Quantity?

I have to say that the shipping way is really a big problem for small quantity buyers as mentioned in the beginning. Sometimes small quantity has to give up importing from China because express is the only way to ship, and it’s too expensive.

a. International Express and Air Freight

International Express is suitable for cargoes under 300kg, while air freight is suitable for over 300kg. But air freight needs the same import & export processes as sea freight. You also need to pick up your cargo at the airport.

Hazardous articles such as liquid, powder, and products with batteries cannot be shipped by air in cargo. Balancing scooters is also one among them. (You can check another article-Importing Balancing Scooter from China)

b. LCL Companies That Offer All-in Price Shipping Service

This kind of LCL company is the best choice for small quantity buyers. They usually are specialized in certain ports or areas and offer an all-in-price shipping service. They will handle all custom and shipping processes, and you just need to pick up your cargo in their warehouse, or sometimes they can deliver to the door.

Moreover, their price is very low even you ship 0.5 CBM because the container is shared by 10 to 40 clients. You can learn more by check another article: How to Ship Products When Import from China: Complete Guide.

But this kind of company is hard to find, not existing in every area or city. You’d better ask some experienced importers in your country, and maybe they know.

I know some of these kinds of shipping companies, and I’d like to help you. You can tell us what kind of products and the quantity you’d like to deliver and I will contact you via email.

There are companies offering $80/CBM to Malaysia & Singapore, delivering to the door; $280/CBM to Kenya but you have to pick up cargos at their warehouse in Nairobi; $280/CBM to Sydney/Melbourne warehouse, etc. The rate is just for reference.

c. Consolidate Cargoes from Different Suppliers And Ship Together

If you are buying from different suppliers, then you can think about consolidating them in one shipment, and you will save shipping costs. Because even use international express, heavy cargo is charged in lower price/kg than light one.

It makes more sense for sea freight. If you import 5 different products from 5 suppliers, each product 0.5CBM, then you can consider consolidating them together by LCL sea shipping. By doing this, your shipping cost will be 80% less than express. Or you have to pay for 5 international expresses separately because there’s no cheaper solution.

So you need a person to consolidate your cargoes in China. One solution is to find a reliable forwarder who has its own warehouse, then you can use it for consolidation (usually free of charge). However, most of the forwarders don’t have a warehouse, and they just pick up your cargo from the supplier, then send it to the LCL shipping company to load in the container. (This may due to the particularity of the Chinese shipping agency industry, which we will introduce in a future article)

Another Solution is you can choose one reliable supplier, and let other suppliers send all the cargoes to him, then the forwarder can pick up cargoes together in one place.

We strongly recommend you to try to consolidate cargoes, so that you can gain more import experience. Then congratulations, you moved the first step of expanding your business, and you can try to purchase a larger quantity next time.

How to Avoid Scam When Buying Small Quantity as a Business Beginner?

Many starter businesses are afraid of being scammed on Alibaba and other online platforms when sourcing products from China, but the truth is seldom people were under this case.

No matter you are buying from Alibaba, Aliexpress, or DHgate, none of the suppliers can take your money without sending the products. Because all suppliers on these online platforms are required to offer their Chinese ID cards, or company registration information in the beginning.

Then they have to pay a certain amount of fees every year to become suppliers on these platforms. Such as for being a Gold Supplier in Alibaba, you have to pay CNY 29,800 (around USD 4,730) annually for a membership fee; pay for USD 4,700 deposit to become suppliers in Aliexpress.

One interesting thing is: many people believe that Gold Suppliers are qualified suppliers verified by Alibaba, that’s also what Alibaba tells. But it’s not true. All suppliers on Alibaba are Gold Suppliers because they already paid for it. So you can just ignore the Gold Supplier thing when directly searching for suppliers on Alibaba or using the RFQ service.

So the worst situation is the products sent by the supplier are of worse quality than you expect or fewer products you received.

To avoid the possible scams, make sure to be careful when finding suppliers online, and do not only focus on the lowest price as you already can get good profit in retail. Or you’ll take the risk of receiving cheap quality or problem products. Even if you want to return products at that time, you’ll find shipping cost is high, and most Chinese sellers don’t accept return and refund.

Further Reading to Make Your Purchasing Safer

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Small Chinese Factories Reliable? Introduction of 3 Types Small Factories in China

Jing Zhu — Sat, 02 Dec 2017 07:47:38 +0000

If you are importing daily used products from China (less than a container for each product type), your manufacturers are probably very small. One thing that you shouldn’t do is believe everything your supplier tells you about them. For instance, a supplier may claim to be operating on a large-scale basis, employing a multitude of workers. Don’t be lured with a picture of employees and the manufacturing plant, unless you personally visit their production plants or stores.

When sourcing on Alibaba, you’re likely to encounter trading companies or middlemen who lie to you they are factories. They will even include lots of photos to back this claim and convince buyers that they are a huge manufacturing company offering quality products. However, most of these photos are usually products of Photoshop. They are doing this as most buyers will not come to China to visit them.

I have been sourcing products for foreign small-scale businesses and customers for years. During this period, I have visited hundreds of small-scale factories that deal in all kinds of products. I know lots of tricks that Alibaba suppliers are playing. And guess what? I would like to share some of the experiences I’ve had with these small-scale factories.

Who do small-scale factories serve?
Home-based workshops/factories
Well-organized small-scale factory
Mystery electronic products workshops

1. Who do small-scale factories serve?

Big buyers and international retail companies such as Walmart and IKEA usually tend to buy from big factories. These big companies always put high value on the factory’s quality management system. In order to become a supplier to any of these big players, your factory must first be inspected by their inspection company of choice. This is to assure them of your eligibility. As a result, small-scale factories are likely not to become their suppliers.

However, there happens to be a different and very interesting scenario here. The big factories that usually qualify as suppliers of products to these big buyers may at times ask small-scale factories to produce or supply a part of the supplies needed. This is especially when the buyer’s order is big. Even though the small-scale factory did not meet the ‘requirements’ needed to supply the big buyer, the quality of products produced is similar to that of big factories.

Big factories always have high MOQ. Due to this, the pricing for a similar line of quality will be much higher than that of small-scale factories. In usual circumstances, large-scale factories always specialize in certain product categories where orders may at times amount to more than $50,000. If you buy daily products that are less than a container, small-scale factories will be more suitable for you since their orders usually range from $1,000 to $30,000. But the quality of products will vary depending on how you source and choose these factories.

For products such as cheap craft, Christmas gifts, and low-value toys, small-scale factories are the best place to look out for. This is true because small-scale manufacturers usually depend on material and labor costs, something that renders large-scale producers less competitive. However, if you are looking for products such as machinery and construction materials, large-scale factories are the most probable places to find them.

2. Three types of small-scale factories in China

Lots of news and blogs are circulating the web saying that the environment of small factories in China is terrible. This has resulted in some unrest and tension among customers. They are no longer sure whether these small-scale manufacturers have what it takes to produce reliable and high-quality products. In this regard, I will be sharing the three common types of small-scale factories in China in a bid to help you source and inspect the quality of suppliers.

1. Home-based workshops/factories

A few months ago, we helped a customer source over 40,000 pieces of the flying lantern. From our experience, low-value craft products like flying lanterns are probably produced in Yiwu. After comparing quotes from different factories, we finally contacted a supplier named Jiang. We visited him in a village just 20km away from our office. To our surprise, we found that the products are produced right here in the village.

Jiang has been doing the flying lantern business for about 6 years now. Whenever he gets an order from trading companies, he will deliver all the required materials to other neighboring homes in the village. Once they are done, the complete flying lanterns will be returned to Jiang’s warehouse and packed in cartons. According to Jiang, labor and materials are the biggest costs for this product. Thus, producing them in the village has helped reduce up to 30% of the cost that would have been incurred for renting a factory house and hiring full-time workers.

We visited one of the villager’s homes and he was busy working when we arrived. We found him packaging the flying lanterns for a trading company from Shantou, Guangdong. These products were eventually destined for Russia. He said he had worked on this product for 4 years. When business is at peak, there are usually around 100 villagers like him working for Jiang.


A villager is packing flying lantern at home	Our team member is checking quality in Jiang’s warehouse

I prefer to call them home-based workshops or factories rather than manufacturing companies or factories. These kinds of home-based factories are very common in Zhejiang Province because most low-value dairy products are produced in this region. These types of products usually demand low technology or skills so they can easily be produced by anyone.

It is recommended to opt for a home-based factory that has been in business for quite some time. This will present you with a better choice of products thanks to the high quality available and the competitive prices on offer.

2. Well-organized small-scale factory

One of our main suppliers is actually a very good case for describing this kind of small-scale factory. The factory is also located in a village just 3km away from the flying lantern village. This factory only produces five types of Turtle Projector Lights and it has been in business for about 5 years now. According to the owner, this is the biggest and most well-organized turtle projector light small-scale factory in Zhejiang Province.


Factory building of our turtle light supplier	The turtle projector light our customer purchased

Cotton stuffing machine	Turtile projector light producing line

The 6-storied building with naked bricks in the photo above is the supplier’s factory. The first and second floors are used as warehouse space while the third and fourth floors are production areas and sales office. The fifth and sixth floors are dormitories for the 30 workers employed here.

Although the factory is small, all tasks including and not limited to filling cotton, assembling products, sewing and quality control have been distributed very well. They are all finished by different people. There is also a conveyor on the production line, thus, all workers can work very efficiently.

These kinds of small-scale factories are the best for small businesses. The quality of products on offer is good because they are well organized and specialized in certain products. The pricing is also very competitive because of their small scale of operation. These companies exist in every place you visit in China.

3. Mystery electronic products workshops

For people with some trading knowledge about China, they must know that Shenzhen is well known as the capital of electronic products. It manufactures 90% of all no-brand electronics in the world, for instance, tablets, mobile phones, cameras, memory cards, etc. When you are sourcing Chinese electronics suppliers on Alibaba, you will see lots of photos of nice production lines and factory workshops.

Don’t fall for these photos easily since some of them are at times fakes. Unless you want to start your own shop or you are buying in large quantities, you won’t consider buying from authentic factories with well-managed production lines. There are also others probably made by “mystery workshops”, however, this kind of situation also depends on the products.

We helped a customer source 1, 500 pieces of low-price car cameras costing around $7 each. We visited the supplier in their office in Shenzhen. The supplier refused our request to visit their factory because it’s the kind of rule that all suppliers in Shenzhen know. For no-brand electronic products, they are usually copied from international brand prototypes and then produced secretly in “mystery workshops”.

However, these kinds of products (like our car cameras) are without any quality problems – they have CE certification. In addition, overseas customers usually ask reputable quality inspection companies to their offices to check these products. The supplier only showed us the GPS tracker workshop thanks to the fact that they have their own brand and patent. However, the price is higher as compared to the no-brand GPS trackers produced by their competitors.

For most no-brand electronics, the producer just needs to buy electronic circuit solutions from engineers, components from different suppliers, and assemble all parts in a small workshop. Products usually won’t have big problems nowadays, because all parts are mass-produced by professional factories. In addition, assembling all parts is not a difficult job and it can easily be finished at a small studio in Shenzhen. And that’s the main reason why Shenzhen became the capital of all types of global electronic products.

Our team member is checking car camera quality for our customer

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4 Reasons Why Trading Companies Are Better than Manufacturers

Jing Zhu — Sat, 17 Sep 2016 12:54:55 +0000

Most people who want to import certain products from china will always say “I want to find the factory” because they think factories offer the lowest price. This is not always true. Sometimes, a trading company offers cheaper prices than factories. Buying from factories also has various other troubles such as quality issues and late delivery.

In China, trading companies are sometimes more popular than factories, that’s why the number of trading companies is times more than that of factories. IKEA, Walmart, and other large customers are also supplied by various trading companies. Li & Fund Ltd, a well-known Hong Kong Company is one of the most successful trading companies and serves countless international groups in different industries.

Trading companies offer professional and better service, and I’m going to introduce its advantages in following 4 reasons.

Trading Companies Are Easier to Communicate with
Trading Companies Have More Product Choices
Trading Companies Have Smaller MOQ
Trading Companies Are Safer to Cooperate with
Tips for Whom Prefer Buying from Factories

1. Trading Companies Are Easier to Communicate with

Sales from trading companies tend to have higher and better English understanding and communication level as compared to those of factories. Thus, they won’t get problems in communicating with customers. They also reply to customer’s emails in time. If there is any problem in production, shipping, or inspection, the trading company’s sales always notify their clients at the first time.

Many middle or small-scale factories tend to put more emphasis on production, and cooperation with local trading companies. Those factories may also have foreign trade sales, but they are not good at communicating in English and are usually slow to reply to customer’s emails (Chinese mostly use Wechat and phones for daily contacts and rarely use email). In addition, most qualified sales prefer working at trading companies because that’s where they get more working experience.

For instance, our factory supplier for kid toy helmets is the best among the suppliers of this product in China. Although they also have foreign trade sales, they spend over 90% of their time dealing with trading companies. Thus replies to inquiries at Alibaba may take two to three days, and others don’t even get replied.

2.Trading Companies Have More Product Choices

Every single product supplied by a trading company usually gets many factory suppliers, thus there are more designs and types. Even for just one item, the trading companies may offer products of different qualities according to customers’ requests.

Factories usually specialize in one product, which leads to great limitation, they cannot offer you many choices.

For instance, if you do cup business and you choose a trading company, you will get the choices of materials such as stainless steel, plastic, and glass, or cups suit for kids, sport, teens, etc. If you choose a factory, you will have to contact 5 to 10 of them because you will be getting only one choice from each.

3.Trading Companies Have Smaller MOQ

MOQ refers to the minimum order quantity. The MOQ of trading companies is usually small, but they are also able to serve well both small and large businesses. Even for small orders, quality is strictly controlled.

The MOQ of factories is much higher, so they prefer customers who can place large orders such as one container for just one single item. For small orders, they prefer taking them from trading companies，so that can save the time of complicated communication with foreign customers. They can just deliver goods to trading companies, which usually place orders to them.

4.Trading Companies Are Safer to Cooperate with

Trading companies choose their suppliers carefully. They tend to choose stable factories that produce good quality goods so that they can enter into long-term cooperation.

If a customer has an issue with the quality of the product, the trading company will be readily available and willing to help, and if necessary they will ensure that you get a part refund from factories. Because it is the trading company that brings business to the factory, so factory has to satisfy the request of the former.

If you don’t usually buy large quantities from factories, when quality issues arise they will not readily help the way a trading company does.

5. The following tips may be helpful for those who prefer buying from factories

You specialize in just one product type and you just need that from one supplier.
You are familiar with factories based in the local or some other cities and you can easily find them. Because finding factories is sometimes challenging even for native Chinese. You better focus on the selection of the various products that trading companies offer instead of spending too much precious time finding factories.

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What to Do When a Customer’s Needs are Less Than Factory’s MOQ

Jing Zhu — Mon, 11 Apr 2016 14:07:37 +0000

Last November, a customer asked us to source 1000 pcs of “Potty Pad”. The customer wanted the packaging box to come with its own design. However, the factory’s Minimum Order Quantity (MOQ) is 2000, which was much more than the customer’s needs.

The factory said the MOQ for this product was 2000 pcs mainly because their box supplier had this MOQ for customized packaging boxes. Printing 1000 boxes will waste more materials than 2000 pcs, thus the price for each box will be much higher than printing 2000 pcs one time. If no need for own design box, the factory is fine with 1000 pieces order.

Our customer said it is a new product for him, and he only needed 1000 pcs for a start. But he needed customized packing with his company logo on the box. If it sells well, he can get more products in the future. However, he didn’t want to take risks by buying 2000 pcs in the first order.

After negotiating with the factory, we suggested 3 solutions to solve the problem:

Only order 1000 pcs, but pay $0.3 higher for each because the MOQ is 2,000 pcs.
Make an order of 1000 pcs for the product and print 2000 pcs of boxes. The rest of 1000 pcs of boxes can be reserved for the next order. The customer only needs to pay for 1000 pcs of the product and 2000 boxes during the first order (a box is $0.5 each).
Order 1000 pcs of products and print 5000 boxes. The rest 4000 boxes can be reserved for future orders. The factory offers 5% off because we are able to buy 5000 in total. The customer will only pay for 1000 products (5% discount) and 5000 boxes during the first order.

The customer chose solution 2 because he could buy 1000 products by using the same price as for 2000 pcs. He also got a customized design for the boxes. If 1000 products are sold, he can buy 500pcs or 1000pcs during the next order and only pay the products’ price without paying for the boxes. Even if the sales turn out bad and he doesn’t need these products anymore, he will only have lost the money for 1000 boxes, which is still better than ordering 1000 pcs only, paying an extra $0.3 for each.

In the end, he sold the products came back for the remaining 1000 pcs 1 month later.

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