verify-a-Chinese-Supplier

Have you ever thought when importing products from China that is the Chinese supplier a Manufacturer of Middleman?

Did you wonder the best ways to know a manufacturer from a trader/middleman?

Well, it is very important to understand this difference. Why? Because when you import products from China, your goal is to get the best possible price.

Now, if you have a middleman involved, sometimes after they put their margin, the price of the product can go very high. Your goal is to directly source the products from a manufacturer in order to save your cost.

But, in our experience, we have seen that many clients were scammed by traders/middlemen who showed themselves as the real manufacturer.

In this blog, we will help you to understand the main differences, the advantages of working directly with a manufacturer, and how to differentiate someone from a manufacturer to a trader.

Table of Content

Chapter 1: Understanding the definition of Manufacturer and Middleman

Chapter 2: How to Identify a Chinese Supplier is a Manufacturer or Middleman?

Chapter 3: Should I work with a Manufacturer of Middleman?

Chapter 4: Scams by Middleman, showing himself as a Manufacturer

Chapter 5: FAQs about Chinese Supplier as a Manufacturer or Middleman

Chapter 1: Understanding the definition of Manufacturer and Middleman

who-is-a-Manufacturer-Factory

1. Who is a Manufacturer/Factory as a Chinese Supplier?

It is very important that we should first clear the concept of a Manufacturer. Whenever we call someone a manufacturer, what we mean is someone who is the factory. A direct manufacturer of the product that you want to import.

So they will have R&D, Molds, Production Machines, Assembly lines in the factory. They will be mostly focused on similar category of products.

When you visit a manufacturer, he will be dealing in raw materials and converting them into finished products.

This is who a manufacturer is. It is also important to understand here that someone who is buying parts from different places and putting them together is not a manufacturer but an assembler. He is just assembling the product.

We hope that now you have a clear understanding of who a manufacturer is. So let’s now understand who is a trader/middleman.

2. Who is a Trader/Middleman as a Chinese Supplier?

In simple terms, we can say that a trader or middleman is someone who is providing services to a buyer.

He is in the middle of the manufacturer and the buyer. So for example a trading or sourcing company in China acts as a middleman.

They will connect you with Chinese supplier, source products from them, negotiate the prices for you, arrange samples, place bulk orders and most importantly perform quality control for you.

Who-is-a-Trader-Middleman

They will also help in making payments to multiple suppliers and help in arranging to ship.

The middleman will charge a certain fee, a commission or put his profit in the final price of the product that he providing you.

Now it is totally a different debate that should you always works with a Manufacturer directly or sometimes it is also feasible to work with a Trading company or Sourcing company to help import products from China. Let’s discuss this in the next chapter.

Chapter 2: How to Identify a Chinese Supplier is a Manufacturer or Middleman?

This is the most common questions from foreigners who import products from China. How to know that a Manufacturer is the real manufacturer?

1. Method 1 – Verify the Business License Online of Chinese Supplier

Verifying the business license is usually the first step when doing due diligence on a Chinese Supplier.

Business License Online of Chinese Supplier

It allows you to verify that the company is legit and not a scam. So, if you hope to verify your Chinese supplier, there are few easy steps that you can follow i.e.

  • From your supplier, obtain an 18-digit business registration number.

chinese-supplier-business-license

As you can see that we have highlighted the business registration number. To understand how to read Chinese business licenses please check the picture below:

  • Visit the website qixin.com and translates it into English by using Google chrome extension and selecting language to English.

qixin-website

  • Enter that 18-digit business registration number that you acquire from supplier.
  • Once you put the business registration number, you will find information about the supplier which is registered with the government institution.

digital-numbers-qixin

From here you can easily see if the supplier is a real manufacturer or a middleman.

2. Method 2 – Visit the Factory of Chinese Supplier Physically

Another way can be that you come to China and go to the supplier’s factory yourself.

When you visit the place, try to look for clues, ask the owner questions to make sure this factory really belongs to him. Sometimes a middleman will take you to his friend’s factory and show that it is his own.

When you ask them different questions about how this factory got started, how many people are here, which year it was established etc., this will give you a good idea to confirm that the supplier is the real manufacturer.

Also you can ask him to show his business license and then confirm the name of the owner is mentioned on the business license or not.

The bank account should also be in the name of the same company which is on the business license. All of this information will help you to conclude that this supplier is really a manufacturer.

3. Method 3 – Search the Company Name of Chinese Supplier on Baidu.com

If you want to find more information about the company online, then you should have the Chinese name of the company. In our example let’s this take a company name and see how we can check information online.

Search the Company Name of Chinese Supplier

To get the Chinese name simply ask the contact person you are talking you from that company and they will provide it you.

-Step 1: Get the company name in Chinese. Ask for that Chinese name which is registered and is mentioned on the business license.

-Step 2: Go to Baidu.com and paste the Chinese name.

Baidu-com

-Step 3: Use Google chrome and translate the search results in English.

baidu-website

-Step 4: See the result which is mentioning “Aiqicha”.

Aiqicha

Aiqicha is the website which provides information about the companies in China. You can also check the trademarks and also you can use the owner’s name to find the results of a company as well.

For your convenience, we will also provide you this website link about Aiqicha.

check the trademarks

This website is also in Chinese and you will have to use Google Chrome to translate it into English.

-Step 5: Once you click the link mentioned above in Baidu search, you will be able to see the company information in Chinese.

We will now show you some screenshots after the website is translated into English and explain you how you can check the information if the Chinese supplier is a real manufacturer or not.

Here we can see all the information, like official website, telephone number, email, actual address.

chinese-supplier-manufacturer

This is also information that when you visit the factory or office, make sure that the address is similar to the one on this website because this is the official address registered with the government.

Moving below on the same page you will find the “Business Registration” section similar to the picture below:

Business-Registration

Here you can see the name of the legal person, the industry type which says that they are an equipment manufacturer. Now if someone is a trader, it will be mentioned here that the company is a trader.

You can also see when the company was formed and which city they are based in as well as the registered address. You can also view the map and verify the location of the company.

Shareholders’ information

Moving below you can also see the Shareholders’ information on the same page which will tell you who are the real owners of the company.

So in this chapter we have talked about some ways you can verify that the supplier is a real manufacturer or not.

Chapter 3: Should I work with a Manufacturer of Middleman?

1. Is working directly with Chinese Manufacturer better than Trader/Middleman?

Now this concept is very important to understand. Many people believe that only by working with a Manufacturer/Factory, you will get the best price. This is not true for every situation.

chinese-manufacturer-direct

There are different advantages as well as disadvantages of working with a Manufacturer directly. So let us analyze in what situations it is better to work directly with a Manufacturer and when to work with a Trading/Sourcing company.

2. When it is feasible for you to work with a Chinese Manufacturer directly

  • You have some level of understanding of Chinese language and culture.
  • You understand the process of finding the suppliers from websites like Alibaba.com and 1688.com
  • You are able to visit China personally to meet with the shortlisted suppliers and can negotiate the terms with them about price and product quality.
  • You do not have any issues in making payments to the Chinese manufacturer. This can mean that you can send money directly in USD to the manufacturers or you have a local Chinese bank account which can help you in transferring money to multiple suppliers.
  • You can perform the inspection yourself in China before shipping the products.
  • You have time and resources to find manufacturers yourself. This can mean that you work with very limited number of suppliers and limited products. So you are able to focus on working with few suppliers and do not need services of a trading/sourcing company to find suppliers

3. Can working with Middlemen be better than the Direct Manufacturer?

Many people have this wrong concept that they can get better prices always from the direct manufacturer. Yes it is surely true but one cannot say that about every case.

There are many situations in which working with a middleman can be more beneficial for you compared to a manufacturer. So you need to assess the situation and then make a decision of going directly with a manufacturer or a middleman.

working with Middlemen

Let’s discuss in which situations it will be better for you to work with a Middleman or Trader.

4. When it is feasible for you to work with a Manufacturer directly

  • Usually the factories demand bulk orders, but if you want to buy small quantities you will need to go to trading company.
  • Trading or sourcing companies can also help you to get multiple products from multiple suppliers. It can be a big hassle for you to communicate with so many suppliers by yourself.
  • A sourcing company can also help you do packaging for Amazon FBA, perform quality control and help in shipping. A manufacturer usually will not provide so many services since they are focused on manufacturing the products and shipping them.

no-more-middlemen - Chinese Supplier

  • Trading companies understand customer service more than the factories as their focus is on the clients, so it is very easy to communicate with a trading or sourcing company.
  • A sourcing company will pass the benefits of their reliable supply network and good relations to you as a customer in an effort to increase their worth to their customers.
  • Trading companies will offer you more variety of products and provide a one stop solution for all the services. With a manufacturer you can just buy the product but all the other things must be done by yourself. He will help you with shipping but still you need to take care of most of the process and documentations.

Chapter 4: Scams by Middleman, showing himself as a Manufacturer

There can be various situations in which a middleman is acting as a manufacturer and scam you. You must be aware of these situations and make sure to avoid them completely.

Such scams are unlikely to take place through big sourcing or trading companies but the smaller companies having 3 to 4 people or single owner trading companies are more likely to do such scams with the customers.

So let’s discuss these scams and understand how to avoid them.

Middleman-acts-as-a-Manufacturer - Chinese Supplier

1. Middleman acts as a Manufacturer on Fake Online Websites or Profiles

This is a common scam that if you are not physically in China, the middleman can provide you with online profile or his own company website where they show themselves as the manufacturer of the product.

If you just make your decision based on this, you will fell in this trap. You must ask for their business license of Chinese company name and use the methods we mentioned above to check the authenticity.

2. A middleman takes you to visit a friend’s factory and act as it’s his own.

Let’s say you found a middleman who is impersonating himself as a manufacturer. Now you want to check if he is a real manufacturer or not and asked him to show his factory.

He may have this agreement already with the factory that if any of my customers wants to check the factory, he will bring them to the factory and act as a manufacturer.

middleman - Chinese Supplier

Since he is bringing orders to this factory they may support him with this. Also do note that personal connections matter a lot of in China.

Now he shows you around the whole factory and you leave the place feeling that you have done your research well and that he is the manufacturer but in fact he is putting his own margin in the product.

So if you have a big order let’s say for $1 million, it is better to work with the manufacturer directly because for this amount of order he will provide a good price and also good service. So use our ways in this blog to check who is a real manufacturer.

3. A middleman creates fake business license, patent documents and other certifications and show himself as the owner.

He can create fake documents. We have heard cases where a customer goes to an office, the middleman shows him his certifications and business license but all of it was fake.

The buyer didn’t verify those documents and just by looking at them felt that they are real and this person is a genuine supplier.

We will advise you that to avoid this scam always verify all the certifications, business licenses and documents from the authorities who provided those documents.

Only they can confirm that it is real or not and usually all of them have some ways to verify. So always see the authority name that gave that documents and visit their website or call them and find the way to verify the legality of the documents.

Chapter 5: FAQs about Chinese Supplier as a Manufacturer or Middleman

faqs - Chinese Supplier

1. Is Alibaba a middleman?

Alibaba.com is an online platform that connects buyers with factories, manufacturers as well as traders who can be a middleman and Alibaba charges for providing services to these parties. Alibaba itself cannot be called as a middleman.

2. How do I verify a Chinese manufacturer?

There are many ways to verify as we have mentioned above in the blog. You can check some websites which can provide information about the manufacturer or check their business licenses to verify it.

3. Should I always work with a manufacturer?

No. It depends on situation to situation. There are some situations in which you can get more benefit from a trading company, like small quantity, payment services, consolidating goods from different suppliers, shipping, etc.

So it all depends. If you have a large order and you have sourcing experience you can surely buy directly from the manufacturer.

4. Are sourcing companies reliable to work with?

You should check the reliability of the sourcing companies before working with them. How many staff they have, how long they have been working for, what are their past customers reviews.

All this information will help you make a decision and will show it this company is professional or not.

5. Does Middleman puts a lot of profit for himself in the product price?

This is a misconception. If middleman puts a lot of profit in the product and then quote you the price, he will not get orders since the buyers are also able to do calculations and get some idea of the prices from Alibaba or 1688.com.

So if a middleman wants to build a long term relationship he will put that much profit that he can still provide competitive price to you, the buyer.

Conclusion

To conclude we hope that this blog have given you a good idea of who is a manufacturer and how is a middleman, trading company or sourcing company.

It is a very important to know how to verify them and also how to check the documents that will provide. This will help you save money, time and also avoid scams.

We also talked about different ways to check if the supplier is really a manufacturer or not. If you follow those ways, we believe you will make the right decision in your business. If you need any help in sourcing products from China, we are your one stop solution provider