When you contact a Chinese supplier, the first thing worth establishing is what kind of company you are dealing with. A factory manufactures. A sourcing or trading company buys from factories and sells to you. Both are legitimate, and the right choice depends on what you actually need.
This article compares the two honestly, including the cases where going direct to a factory is the better decision.
We are a sourcing company, not a factory. We are saying so at the top of this article because you should be able to establish this in the first email with any supplier, and a supplier who hides it is telling you something important.
What a factory gives you
Dealing directly with a factory means you are buying from the entity that designs and produces the product. This has clear advantages:
- Lower unit price — there is no trading margin in between
- Direct access to engineers for specification questions
- The certificate holder is the factory, so certification verification is straightforward
- For high-volume repeat orders of the same SKU, this is usually the cheapest route
And clear limitations:
- The factory sells what its equipment is set up to produce, not what your market needs
- Minimum order quantities reflect their production runs, so a mixed order is usually refused
- Export experience varies — a factory strong in manufacturing may be weak on documentation, shipping and customs paperwork
- One factory means one quality standard, with no comparison available
- Factory MOQs on tooling and custom packaging can be high even for established brands
What a sourcing company gives you
A sourcing company sits between you and the production base. What that buys you:
- Comparison across factories — the same specification can be quoted by three or four different production bases
- Mixed-model containers — you can test five products in one 20ft container instead of committing to one SKU
- Quantities matched to your market rather than the factory's production run
- Someone else handles export documentation, consolidation and shipping logistics
- OEM and ODM coordination, including tooling, artwork and sample approval
- Accountability in your language and time zone, in one contact
Where a sourcing company costs you
Honesty requires naming the downsides. A sourcing company adds a margin, and that margin is real. You also have an additional party between you and production, which means if something goes wrong there is one more link in the chain.
The margin typically runs in the region of 5 to 15 percent depending on how much coordination is involved. If your order is a large, single-SKU container of a standard product, that margin may exceed what the flexibility is worth to you.
The trade is flexibility and coordination against unit price and directness. Which side of that trade is worth more depends entirely on the size and mix of your order.
Which one should you choose
| Situation | Better route | Why |
|---|---|---|
| Large single-SKU container, standard product, repeat order | Factory | The margin is no longer buying you anything useful |
| Several categories in one container | Sourcing company | A factory will not consolidate products it does not make |
| First order, testing whether a supplier is reliable | Sourcing company | Wider choice, and someone who can verify before you commit |
| Highly customised product needing engineering | Either | Factory for speed on engineering; sourcing company if you need the factory found |
| Private label with new packaging and artwork | Sourcing company | Artwork, tooling coordination and label compliance are the hard part |
| Buying a product that is not Chinese-made at all | Sourcing company | You need sourcing reach, not a production line |
How to verify whichever route you choose
This applies to trading companies and factories alike, and it takes one message:
- Ask directly whether you are the manufacturer. The answer should be unambiguous.
- If they are a trading company, ask which factories they work with and whether you may contact them.
- Ask for the company registration number and registered address.
- Request a live video call showing the office, and if they claim factory capability, the production line.
- For a trading company, ask which factory will produce your order, and request that factory's certificate number.
- Put the agreed inspection criteria in writing before production starts.
Any supplier who is uncomfortable with a video walkthrough of the production line making your order is telling you something. You have not paid yet.