The Chinese market is rapidly growing as a post covid recovery and has become a global hub for businesses to source various products. In the last couple of decades, the Chinese market has made a name for itself. As a result, small and large companies from around the world now source their products from China.
Whether it is raw materials or finished goods, China is the primary market that many business owners turn their eye towards. However, sourcing products from the Chinese markets isn’t an easy task. There are issues that you might face if you end up choosing the wrong suppliers.
For instance, if you don’t find the right suppliers, then you might have to wait for long delivery delays or poor-quality shipments. There is also a chance of incorrect items being delivered to you. And the last thing you need is your supplier ghosting you after taking the payments.
Nevertheless, most of these problems won’t occur by partnering with the right China trading company. So, what is a China trading company? What are some factors to consider when choosing a China trading company? And how can you find the best one for your business? We’ll discuss all these things and a lot more to give you a better about China trading companies.
Table of Contents
Chapter 1. Overview of China Trading Company
The Chinese manufacturers are open to doing business with almost everyone globally. However, this process is not easy and there are many small steps involved that need to be taken care of. There are a lot of ways things can go wrong. One has to be on the ground in China and a Sourcing expert to ensure that everything goes right from sourcing the right manufacturer to negotiating, product development and production, quality control, and shipping. Also, there can be scams involved sometimes. To know more about these scams check our video below:
That is where a China trading company comes into play since it can offer more flexibility when it comes to shipment, processes, etc. Let’s understand in depth what a China trading company is.
1) What is a China Trading Company?
A China trading company is an entity that connects buyers and sellers. They can help buyers and sellers not just in the same place but in other countries as well. Furthermore, they can act as a mediator for different parties such as factories, retailers, wholesalers, etc.
These companies have years of experience operating in the Chinese market. They have an extensive understanding of the Chinese laws surrounding the import and export processes, laws, etc. All these things make them a capable and trusted partner for companies wanting to do business in China.
In addition to understanding laws, trading companies also have links with manufacturers and factories.
The companies source goods from different manufacturers and then sell them to others businesses under their name. But, the rate is higher than what you’ll get for acquiring products from factories.
Nevertheless, it saves you from most issues that companies face when dealing with manufacturers and factories directly.
Moreover, a reliable China trading company puts in all the effort to find the best quality products for their clients. This way, they can charge a better rate while retaining their clients.
2) What Role do Trading Companies Play in the Chinese Market?
Small and large companies looking to source products from China might find it lucrative to deal with manufacturers. However, most factories and manufacturers only deal with a single type of goods.
They focus and invest their resources in producing only one type of goods for better efficiency and productivity. For instance, a factory in China might only specialize in producing clothes for newborn babies.
So, if you have a store for kids’ clothing, then you might need to deal with multiple factories to source the products. Besides that, some factories might only accept bulk orders and wouldn’t cater to small quantities.
It means that this would become less feasible for businesses that want to order smaller batches. But dealing with a Chinese trading company can save you from this hassle. They can help you with sourcing the goods and then ordering them by preparing all the sets of items you need.
Next, they will order it in one go instead of dealing with different manufacturers and factories. Doing so will save time and money for businesses since they would only have to deal with a single trading company. It also means less paperwork and receiving all products in one go rather than waiting for deliveries from different manufacturers.
In general, trading companies like EJET are a suitable choice for businesses that want to source products in low quantities and budget-friendly prices.
Likewise, some trading companies can help find customized products. All these things make trading companies a preferable choice for businesses.
If you want to know more information, you can contact our sourcing consultant Sunny Qiu for a free of cost consultation call!
3) Why You Should Buy from a Chinese Trading Company?
Since China has a huge manufacturing industry, it offers various benefits for small and large businesses. But you can only reap those benefits if you work with a reputable China trading company.
Working with a trading company in China opens you to a wide range of benefits. Here are just a few of them.
a) On Ground Sourcing and Competitive Pricing
We did mention how a Chinese trading company might charge a little more than what a factory would charge. But it will still cost you way less and you can get a good price for your products. The primary reason for that is the Chinese market is hyper-competitive.
Thus, many Chinese trading companies want to grab the small and large business owners’ attention. And the best way of doing so is by offering lower rates to lure customers. So, there is a good chance you might find a trading company that offers products at a competitive price.
b) Better Customer Support
The primary focus of a manufacturer or a factory would be the production of the goods. Therefore, they might not have time to focus on customer support. You might have to wait for some time before you can expect a response from the factory.
On the other hand, the trading companies’ primary responsibility is to customers. They would be more responsive and offer better customer support services than the manufacturers. Moreover, they’ll pay more attention to the specifics and deliver the best services.
Furthermore, it gives them a better grip on what you can expect from them. For instance, they can come up with a better plan to help you source the right products suitable for your requirements.
c) Flexibility on Minimum Order Quantity
As discussed earlier, some factories and manufacturers might have a higher minimum order quantity (MOQ). They would only take orders for bulk quantities and won’t entertain smaller orders. The requirement for an MOQ is due to the high cost that factories will incur for producing small quantities.
It would be difficult for factories and manufacturers to attain a good profit from a small order. Even if they do take your order for a smaller quantity, it would be likely at a higher price.
On the flip side, the quantity you order isn’t an issue for the Chinese trading company. If they have the products on their scope, they’ll take your order for sure.
d) Helps with On-Ground Sourcing and to Verify Manufacturers
They can help you to do On-Ground sourcing since they are based in China and have a better understanding of the local wholesale markets and manufacturers. These trading companies can also support you in finding reliable manufacturers for your products and also can verify them. Like checking their business licenses, making sure they do not have legal issues and have the right documentation to do business.
If you want to learn more about how to verify Chinese suppliers, we have a blog for you. Read it here: How to verify a Chinese Supplier.
Chapter 2. 6 Types of Chinese Trading Companies You Need to Know
There are different types of trading companies that you’ll find in China. Each of them comes with its own set of benefits and drawbacks. Nevertheless, you can go through them in detail and then decide which one is more suitable for your business.
This chapter will cover in detail the different types of trading companies in China to make it easy for you to choose the most suitable one.
1) Traditional Sourcing Company
The traditional sourcing company is the most common type that you’ll come across in China. They work as a connection between businesses and manufacturers to facilitate transactions. One of the main responsibilities of this type of trading company is to source the right products for their clients.
In addition to sourcing, they also have to do proper inspection and supervision of the products. Once everything is clear, they have to ship the products to their clients, which are usually large and small companies. It makes things easy for clients to source high-quality products by acting as an intermediary company.
The biggest benefit of working with traditional trading companies is that they’re aware of the legal procedures. So, it ensures that your business complies with all the local laws and guidelines when sourcing products. Besides that, they have a strong supply chain network to deliver the products.
2) Hot-Selling Type Trading Companies
The HS or hot-selling is also a popular type of trading company that you’ll come across in China. As the name suggests, this type of company will only focus on sourcing products that are in demand. They’ll first identify the hot-selling products in the markets and then make arrangements with the manufacturing unit.
The usual span of sourcing and selling for a single product is around 2 to 3 months.
After that, the company will switch to products that have a higher demand at that time. A big advantage of working with such a trading company is that they have a lot of popular products to offer.
So, it becomes easy for businesses to easily source products that have a high demand. They also have a clear idea about the market and consumer trends. However, their main concentration is on getting popular products and earning a profit from them.
3) Hong Kong Trading Companies
The Hong Kong trading companies have their licenses and other registration in the city. Hong Kong had a lot of manufacturing facilities and units in the 1980s. However, most of them then moved to mainland China. Nevertheless, trading companies continue to operate in Hong Kong even today.
Most companies also have partnerships with manufacturers that operate in different countries, such as Vietnam, Malaysia, etc. Also, they have the legal records to work and fulfill the needs of international clients. But, there is a requirement for physical presence to open an account.
4) Factory Group Trading Companies
Factory group trading companies are a type of entity where different Chinese manufacturers and factories come together. They combine their services to form a single large manufacturing unit. That way, they can streamline the invoicing and export process that comes with this type of business setup.
The biggest benefit of working with a factory group trading company is that the buyers can have various options. They can choose any one of the options at their convenience. You can directly deal with manufacturers and negotiate for better deals.
5) Combined Manufacturer and Trading Companies
This setup of a trading company functions as both the factory and supplier. The trading company will make use of its current resources to manufacture the products itself. They’ll also handle the trading process as well by delivering the products to the customers.
Collaborating with such a company means that you not only get a better deal but will also enjoy high-quality products. Combined manufacturers and trading companies also have a better retention strategy.
6) Certain-filed Trading Companies
Most trading companies have a higher price for products compared to factories or manufacturing units. It is mainly because of the additional efforts and process that goes into sourcing the products. However, the certain-filed trading company targets only a certain niche or a product.
They divert all their resources and efforts into one particular area to help get the best prices for products. As a result, it allows them to offer businesses certain products at a market-competitive price. This type of trading company has professionals and individuals that can help get them the best deal.
Also read on: How to Import from China: A Step-by-Step Guide
Chapter 3. How to Find the Ideal Chinese Trading Company for Your Business?
Now that you know what different types of trading companies operate in China, you might wonder where you can find the best one. There are plenty of options where you can find the best Chinese trading companies.
The vast amount of data and easy accessibility to it makes it more than convenient for businesses to find trading companies. But to make things easy, we’ll cover some ways to find Chinese trading companies.
1) Go Online
The internet has made it more than easy to find anything. Whether you’re looking for groceries or a trading company in China, you can simply go online and find anything you want. Therefore, searching online is the most practical way to learn and find out about Chinese trading companies.
The Chinese trading companies have set up websites and listed themselves on various platforms. They also list their services and other relevant information. This way, it becomes easier for small and large businesses to find and work with them.
So, you can use different search engines such as Google, Yahoo, etc., to easily find Chinese trading companies. Also, it is important to use the right keywords for the search engine to show results relevant to your search.
2) Online B2B Platforms
Going on the internet and finding trading companies in China might sound like a daunting task. It also doesn’t ensure whether you’re getting into business with the right company. That is where online B2B platforms play a crucial role in helping you connect with Chinese trading companies.
You can choose from a wide range of B2B platforms that help you source products from China. Whether you’re looking to connect with factories, suppliers, or trading companies, these platforms are a one-stop solution.
Amazon Business and Alibaba.Com are the most prominent names that you’ll come across for B2B platforms.
Furthermore, you can also take help from sourcing companies like EJET. They can help you find the right products according to your needs and requirements.
3) Trade Fairs and Shows
Trade fairs and shows are one of the oldest methods through which you can connect with trading companies. Each year, thousands of trading companies attend trade shows and fairs globally. They connect with potential clients by telling them more about their services and ways to help them source products.
Also, having face-to-face interaction with the trading company develops a trusting relationship. It presents the trading company as reliable and authentic. Therefore, small and large businesses have confidence when working with trading companies.
Trade fairs and shows continue to remain a vital element of China’s economy, even after the pandemic. It is the best way for hundreds and thousands of business owners to meet trading companies, suppliers, and manufacturers in China.
Below are some trade fairs and shows that business owners can attend:
- The Canton Fair
- The Yiwu Commodities Fair
- Beijing International Auto Show
- Bauma China
- East China Import and Export Commodity Fair (ECF)
While it might seem like an outdated option, you can also get information about trading companies through newspapers. Nevertheless, it is still helpful if you go through newspapers and magazines as trading companies might advertise their services.
You can get relevant information such as email address, contact number, address, etc., to get in touch with the company.
Last but not least, referrals are also an optimal option to find the best trading companies in China. Let’s say you know some clients or businesses that interact with a Chinese trading company. You can ask for their opinion about the services that the trading company provided.
It can help you get reliable and authentic feedback about the trading company’s operations. Even if you look for a trading company online, you should ask for references or go through their reviews. It will ensure that you end up doing business with the right trading company in China.
Also read on : How to Find Reliable Chinese Wholesale Suppliers? Ultimate Guide
Looking for the best trading company for your business needs?
You’re in luck!
At EJET, we understand that finding reliable suppliers and high-quality products can be a challenge, especially when dealing with suppliers overseas. That’s why we offer a range of services designed to make the process as easy and stress-free as possible for our clients.
From product sourcing and quality control to logistics and shipping, we take care of everything, allowing our clients to focus on growing their businesses. Contact us now!
Chapter 4. Important factors to Consider When Dealing with a China Trading Company
Before you work with a trading company, there are a few things you need to keep in mind. It will help you partner with the right Chinese trading company for your business.
So, this section will cover some vital factors to consider when dealing with a China Trading Company.
1) Find the Right Type of Trading Company
There are different types of trading companies that we mentioned earlier. Each one of them has its own pros and cons along with a set of expertise. So, the first thing you need to do is choose which type of company you need to work with.
Assess the needs of your businesses and then make the right choice accordingly. If you’re looking to source a certain product, then certain-filed trading companies would be a good option. They can help you get a decent rate for the products because of their expertise and connections.
On the other hand, if you want to sell products that are currently in demand, then go for the hot-selling trading companies. It is something particularly critical for a first-time importer.
Also, English proficiency is important for businesses for effective communication. This brings us to our next point which is properly communicating with the trading companies.
2) Have a Clear Strategy for Communication
Communication is one of the critical things if you want to get the right products. Most small and large companies might find communication as an obstacle if the trading company lacks English proficiency. It can lead to serious issues, such as:
- Breakdown in the business relationship
- Costly shipment delays
- Incorrect orders
- Wrong specifications
To avoid these problems, it is better to decide on a communication channel. Emails are a better option since it allows you to have everything in writing.
It is best to avoid using technical jargon or slang language. Cover the important things so the trading company can give a focused response.
Also, you shouldn’t send back-to-back emails on the same topic as it can be confusing. If possible, then give a call to the trading company to follow up on the emails. This will clarify the vital details and ensure there is no miscommunication. You can also stay in touch through social media platforms like WeChat to get updates about your order.
3) Set the Pricing Correctly
The Chinese market is known for its cheaper products. It is why most businesses globally source various goods from this market. But that doesn’t mean you don’t pay any attention at all to the pricing.
There is always an opportunity for bargaining after you get the initial quotation from the trading company.
While you might want to get the best deals, it shouldn’t go to the point where the trading company starts cutting corners. It means they shouldn’t compromise on the product’s quality for the sake of providing a better price. There is also a chance that you might experience shipment delays.
Trading companies would prefer to fulfill the orders of businesses that pay them a better rate. So, they might push your order down the line. Also, try to negotiate as soon as you get a quotation instead of waiting for the prototype or samples.
4) Know about the Chinese Holidays and Their Impact
The Chinese New Year is one of the major holidays in China. It usually happens in late January or February. During the Chinese New Year, factories and manufacturing units are shut as workers leave to celebrate in different cities. This could lead to delays in orders during this time.
So, the Chinese holidays are an essential factor to consider when dealing with a trading company. Make sure that you get your products delivered to you before the holiday season. This will save you from shipping delays and other issues such as higher delivery charges.
While there aren’t any festivals where the entire country would stop working, the Chinese New Year is certainly one of them. As an importer, you should work with your trading company and plan about it weeks ahead. Also, keep an eye on the other Chinese events and holidays that can disrupt delivery.
5) Maintain a Strong Relationship
Before you work with a Chinese trading company, you must do your due diligence to know more about them. It includes asking for references, product samples, and the physical location of the trading company. Furthermore, it is best if you go and meet the people at the trading company one-on-one.
The Chinese business culture has a huge emphasis on interaction with their clients. You can build strong trusting relationships with a face to face interaction. Meeting the suppliers in person can also result in better deals or good payment terms and conditions.
Meeting the people at the trading company will help you get better at the procurement and sourcing processes. It will also help remove any miscommunication and provide information with complete clarity. Furthermore, it allows you to talk about customization for your products.
Chapter 5. FAQs about China Trading Company
Here are some frequently asked questions that people have about Chinese trading companies.
1) Does a trading company cater to less order quantity (MOQs)?
Yes, trading companies can cater to lower order volumes that are lower than MOQ. But the drawback is that it will be slightly more expensive than the higher MOQ. It is because the factories might not find it beneficial to manufacture a small quantity rather than in bulk quantity. So, they’ll likely offer a higher price to the trading companies.
2) What is the best way to negotiate with trading companies?
There are only two opportunities for you to negotiate with the trading companies on prices. The first is right after they send you the initial quotation and the second is after sending you product samples. It is best to have a firm knowledge of the product, especially if you’re a new importer. Also, try presenting yourself as a “hot prospect,” which means someone ready to buy.
3) How to know if a trading company in China is legit?
You can check through multiple ways to know whether the trading company is legit. Firstly, you can ask for references along with documentation for operating in China. Next, you can check with the Chinese government agencies and officials to verify the documents. You can also go through the reviews and ratings other people have given to the company.
We hope you now have a clear idea of what a Chinese trading company is and its different types. You can go through each of them to understand which one would be suitable for your business needs. Furthermore, you can also use the ways mentioned in this article to find the right trading company in China.
Also, before choosing a company, make sure that you have a clear communication process in place. It will give complete clarity for the business transactions. Furthermore, you should negotiate the best deals in the early stages. Start bargaining for the price as soon as you get the initial quotation.