Trading Companies in China: 37 Companies you Need to Know

For most people, differentiating product manufacturers, suppliers and trading companies in China can be a difficult task.

Today’s guide will explain everything you need to know about trading companies in China.

You will know who they are, what they do and role they play when importing from China.

Keep reading to learn more.

1) What is a Trading Company in China?

This is a type of supplier that sources a wide variety of products from one or more manufacturers and resell them to the customers.

A trading company in China is hardly involved in assembling the items at all.

You place the order through this entity, and they forward it to the local partner factory.

It is similar but not identical to what is commonly referred to as wholesaler or distributor in the west.

Since a trading company liaises with different manufacturers, it becomes easy for you to obtain a wide range of commodities.

2) What are the Types of Trading Companies in China?

There are five major types of trading companies in China, which include the following;

Traditional Trading Companies

These refer to the types of entities, which acted as gatekeepers linking the customers and the factory.

These types thrived in China in the past years since they could effectively sell local factories commodities without investing in their stock.

Ideally, traditional trading companies could easily add between 20-40% on top of the factory price.

However, they are gradually becoming redundant, given the dynamics in international business is rapidly changing.

Factory Group Trading Company

These refer to the category of trading companies where a few larger manufacturers control multiple production facilities.

Of course, this also involves covering a variety of commodities and materials.

Essentially, they trade through a single trading entity in all their exporting and invoicing procedures.

Combined Manufacturer and Trading Company

This is the type of trading company selling a broad range of related products manufactured by other factories within the same locality.

It is a manufacturer with its products but also sells other varieties of products related to those they produce but manufactured by different factories.

In short, they buy the products they don’t manufacture from other factories then resell them to customers together with what they produce.

Hong Kong Trading Companies

These types of trading companies operate from Hong Kong, originally the center of manufacturing before the 1980s.

Some of these trading companies have expanded to become relatively large manufacturing groups.

They operate factories in different parts of Mainland China, Malaysia, Cambodia, and Vietnam.

SOHO Trading Company

SOHO refers to Small Office, Home Office trading company.

It is a type of company with only one or two people handling its various operations.

In many instances, the proprietors of SOHO trading companies are usually former employees of specific factories or trading companies.

They form such entities after winning some loyal customers, obtain company registration, and setting up an account on Alibaba.

3) How do you Check Whether Trading Companies in China are Genuine?

Nowadays, it can be a bit difficult to determine whether the trading company you’re dealing with is genuine or not.

Most will outrightly state they are trading companies upon asking, whereas others would say they are factories.

In the case of the latter, you need to dig deeper by asking them the specific commodities they make.

However, if that’s not enough, another ideal way to check the genuinity of a trading company is by checking their registered capital.

A company with significant registered capital is perfect since it indicates its strength in the trade.

Another option would be to check the business license.

Ask for these documents and to determine the specific business scope.

Alternatively, you may choose to check with verified suppliers’ directories.

This way, you’ll be able to determine whether or not the preferred trading company in China is genuine.

Moreover, you can check from online platforms. In such instances, you can look at the reviews and feedback from previous customers.

This gives you an idea of the genuinity of a trading company or otherwise.

4) Which are the Best Trading Companies in China?

Typically, the best trading company is dependent on a host of variables, including one that suits your specific demands.

This may as well include the particular products you’re purchasing.

A key aspect of determining the ideal trading company is its ability to boost sales of your business without spending money on marketing.

Nevertheless, some of the highly ranked trading companies in China include the following;

• Zhejiang Willing Foreign Trading Co. Ltd
• Yiwu Trading Company
• Xiamen ITG Group
• Tai Yick Trading Company
• Nexfar Trading Company
• Soto Imports
• Young &Young Trading Company
• Orient International Enterprise Ltd
• Nanjing Maxfit Trading Company Ltd
• Sinergia Trading Company
• Cheung’s Trading Company
• EL-Hashem Trading Group Co. Ltd

5) Which Services do Trading Companies in China Offer?

They offer a wide range of services, which include the following;

• Assorted product sourcing from different manufacturers
• Premium customer service
• Quality inspection
• Packaging
• Customs clearance where applicable
• Freight forwarding

6) How do Trading Companies Work in China?

Technically, trading companies are mere businesses, which work with various manufacturers that produce different products.

It is the ideal way of profits and sales maximization.

These products are sold to different categories of customers, including individual consumers, government bodies, corporates, and other businesses.

Essentially, trading companies often procure a variety of specialized products, thus maintaining stock or store and deliver commodities to customers.

These types of companies identify their marketing networks by figuring-out products and negotiate with the manufacturers.

They are also experts in import and export rules and procedures.

Trading companies also employ sales agents both in the local and foreign markets to solicit orders and promote their brands.

It is an ideal way for such companies to create a large pool of China trading companies.

Trading companies operate as middlemen by finding and determining products clients need and supplying them with the same from different companies.

7) What are the Benefits of using Trading Companies in China?

Some of the major advantages of using trading companies when importing products from China include the following;

• They understand the customers’ needs better than manufacturers.

Therefore, you’re confident of getting better and suitable products for your business when buying from such entities.

• Most of the reputable trading companies in China always promote the products they sell, which is unlike factories.

In essence, they help push the products in the market, thus proving worthy to the customers.

• Trading companies also tend to have better customer service, which is critical since they understand difficulty of establishing markets.

It thus makes it easy for them to handle their customers with utmost care and caution.

• Trading companies have low minimum order quantity making it affordable to various buyers, including small-scale traders.
• In many cases, trading companies in China often sell for relatively small manufacturing companies.

Such manufacturers are usually inexperienced and have less capacity and expertise to sell their products internationally.

The advantage herein is that such products are typically low-priced, which is directly passed to you as the customer.

• They are strict when it comes to quality inspection and control.

Trading companies employ a professional quality control team, which understands the specific demands of the customer.

• You can always source different types of products all under one roof.

The essence here is it prevents you from undergoing the hassles related to searching for other products from various manufacturers.

8) Is dealing with Trading Companies in China better than Manufacturers?

Ideally, it depends on your specific demands and the various underlying circumstances as far as importing goods from China is concerned.

In other words, different situations dictate the better option to deal with between trading companies and manufacturers.

For instance, if you’re purchasing a single product in large quantities, it would be better to deal directly with manufacturers.

Dealing with manufacturers is also a better option when in need of better discounts.

Of course, this is subject to the MOQ.

You can as well get custom products when dealing with a manufacturer, which can be difficult to get from trading companies.

Furthermore, manufacturers also provide a better turnaround time for producing a specific product in large quantities.

On the other hand, it is always better to deal with trading companies if you’re working within a limited budget.

What happens with such entities is that you can always negotiate a suitable MOQ, in some cases, as low as one piece.

It is also a better option when purchasing a variety of products from different manufacturers.

In this case, you won’t undergo the hassles of looking for assorted commodities from independent manufacturers.

Moreover, quality control systems among trading companies are better than those of manufacturers.

And most importantly, dealing with trading companies is ideal since they understand your particular needs.

This way, it becomes easy to get products, which match the needs of your market.

In a nutshell, several elements determine the better option for dealing with either trading company or manufacturer in China.

9) Is Importing from Trading Companies in China Profitable?

Not in entirety, but it is profitable to a great extent.

Technically, dealing with a trading company will certainly be more expensive than a factory.

Even so, when you find a suitable trading company, it will eventually be cost-effective to work with.

In essence, an ideal trading company will provide additional value through quality inspection, customer service, and sourcing, among others.

Moreover, importing from trading companies in China guarantees you a shorter expected delivery date.

This is vital, especially when you are out of stock since it allows you to maximize your sales and subsequent profit.

Also, trading companies can consolidate all your different orders and ship them as a single consignment.

The benefit of this is it reduces logistical costs hence increasing your profit.

If you are importing a few products or you need a variety of products of commodities, working with a trading company is relatively profitable.

10) How do you Find a Trading Company in China?

You can use several approaches to get a suitable trading company in China.

Some of these ways include the following;

Internet search – You can get factual information about any trading company you’re looking for in China from the internet.

Most of these entities have established their web presence on various online platforms.

It thus makes it easy for you to ascertain the authenticity of the company from such resources.

Trade shows – These refer to organized events often taking place in various major cities in China.

In such instances, you’ll have to visit these shows and get to know the ideal trading companies one by one.

Referrals – This is arguably the most effective approach to finding a reliable trading company in China.

You only need to inquire from your acquaintances and networks to link you with the ideal entities they’ve worked with before.

Print media – Many of the trading companies in China also tend to advertise their services in various media sources.

The common platforms include newspapers, magazines, and newsletters, among others.

11) How can you buy Bulk from Trading Companies in China?

The first step is determining the most suitable trading company to purchase the bulk order from in China.

Remember, not all trading companies have enough capacity to facilitate bulk orders from their customers.

Then find out whether the preferred entity has enough stocks of the different products you’re purchasing.

An ideal way of confirming this is by placing your order and communicating with the representatives of the company.

Once they confirm the availability of stock, you can request for the proforma invoice.

This document is essential, especially if you have to get funding from credit institutions such as banks.

You will negotiate with the trading company based on a variety of prevailing elements.

If you agree on a particular rate, you can then go ahead and make a down-payment for order fulfillment process.

It is as simple as that, but you also need to ensure you understand all the underlying factors for the process to be efficient.

12) How do you Bargain when buying from a Trading Company in China?

Typically, trading companies often deal with different categories of customers from time to time.

Price negotiation is often a sensitive issue to such entities, given they already provide discounted rates on most of the products.

In other words, there are a few special conditions, which can make it easy to get the grounds for bargaining from trading companies.

One of these grounds is the MOQ.

Of course, trading companies often provide flexible MOQ when purchasing different products.

You can obtain a single unit and also as many units of the items as possible.

However, it is often easier to get better deals when purchasing higher MOQ compared to lower MOQ.

If you’re a repeat customer, it also becomes easier to bargain for a better deal from trading companies in China.

Loyalty is a fundamental aspect that many entities often look into, especially when frequently purchasing higher MOQ.

Unit price is another ideal bargaining ground.

The volume you purchase Vis a Vis the unit price can make it easy for you to negotiate for a better deal from trading companies.

Moreover, other additional services such as repackaging, quality inspection, and shipping may determine the level of a bargain.

This usually happens, especially when you order bulk from such companies.

13) Between Trading Companies and Factories, Which one offers Lowest MOQ?

Trading companies often offer lower MOQ compared to factories.

In essence, it is easy to negotiate for lower MOQ when purchasing from trading companies since it is always flexible.

Moreover, trading companies deal with a variety of products from different manufacturers.

It thus makes it easy to provide lower MOQ given most customers often buy various products from a particular trading company.

However, you should also note that most trading companies often forward the orders to local manufacturers.

Thus in some instances, like buying from traditional trading companies, they tend to pass the entire factory MOQ to the buyer.

14) Does a Trading Company in China provide Quality Test Report and Compliance Certificates?

Not in totality.

In many instances, it depends on the specific trading company you’re dealing with.

Only a few of them are accredited to provide test reports and compliance documents.

Even so, even where you find a company, which provides a quality test report, it’s hard to as certain the validity of the report.

Some authorities will only allow product SKU and purchase invoices matching up with test reports and compliance certificates.

And this can always be a challenge when importing certain products from trading companies in China.

15) Are Trading Companies on Alibaba?

Yes.

Alibaba.com has a host of trading companies.

Typically, they are still valuable in various industries; thus, the platform can hardly function without such entities.

Nevertheless, traditional trading companies are becoming insignificant suppliers on Alibaba.com.

Therefore, their presence on this platform is diminishing day by day.

16) How do you Identify Trading Company on China eCommerce Sites?

Different Chinese ecommerce platforms have various settings and outlook.

As such, identification of trading companies may thus vary from one ecommerce website to another.

However, some of the aspects you need to look into when identifying these entities of Chinese ecommerce platforms include;

• Low registered capital mostly, CNY 500,000 or below
• Defined as “Trading Company” on their respective pages
• Lack of ISO 9001, BSCI, and other relevant company certifications
• No product standard mentions nor test reports
• Deals with an assortment of products, often unrelated
• Company name includes the term “Trading” or “commodity.”

17) Do Wholesalers Work the same way as Trading Companies in China?

Not really.

What happens is wholesalers often have a variety of commodities in stock, unlike trading companies.

As such, wholesalers can sell products in stock in lower volumes at any moment they wish to.

Ideally, they can package and ship an order at any moment, whereas trading companies must always place the order and wait for some time.

In a nutshell, wholesalers are always ever-ready and swift to fulfill customer’s orders.

However, trading companies in China mostly have to wait to receive products from the factory in readiness for shipment.

18) Do Trading Companies in China Support OEM Businesses?

Yes.

In fact, most of the manufacturers in China operate on an OEM basis.

It thus becomes easy for trading companies to sell their products to prospective customers.

As long as the OEM businesses provide the necessary quality, trading companies in China are always supporting their trade.

Most Chinese trading companies have a list of various OEM businesses in China, producing different products.

19) What are the possible Scams of Sourcing from Trading Company in China?

They are quite several, but the most common ones you’re likely to face, especially as a first-timer, include the following;

• Counterfeit products
• Inferior quality products or items less than your standards
• Change of payment recipient when you’re about to close the deal
• Requesting for more payments for customs clearance
• Refusal of sending samples
• Unverified profiles on ecommerce websites such as Alibaba
• A trading company posing as a manufacturing company
• Asking for payment to a personal bank account
• Actual products different from the samples or photos on the website
• Payment details that hardly match the company information
• Accepting payment only through Western Union

20) How do you Handle Risks Associated with Trading Companies in China?

You can use several interventions to manage risks related to importing from trading companies in China. Some of these risks include the following;

Do thorough background research of the company – Search on various online platforms and look at the feedback and reviews page.

In any case, you can easily pick out a potential scam trading company by merely reading the reviews.

Check seller’s guarantees – Ideally, trading companies can offer specific safeguards to buyers. In general, the more guarantees offered, the more confident you can be in purchase bid.

Trading companies provide guarantees on a per-item basis. Even so, ensure you do thorough research before committing.

Use recommended payment methods – You must be skeptical of trading companies preferring irreversible payment methods.

That is the first sign of a scam, which you must be wary of when dealing with such entities.

Deal with verified trading companies – If you are shopping from ecommerce outlets, ensure the trading company has a verified badge.

It makes it easy to follow-up with such a company if the transaction doesn’t go as expected.

Choose trading companies with as many as complete orders as possible – Look for trading companies that have shipped as many orders as possible successfully.

The more completed sales, the lesser the chances of issues arising.

21) Can you use Sourcing Agent when buying from Trading Company?

Absolutely correct.

This is one of the most effective and low-risk techniques of importing goods from Chinese trading companies.

Many such agents have been in the trade for ages; hence know all the ideal trading companies for specific commodities.

Using a sourcing agent is advantageous because it is safe, and you’re guaranteed of the respective quality you’re seeking.

What’s more, is a sourcing agent is always involved in the entire process of dealing with trading companies.

Therefore, it allows you to have peace of mind and, at the same time, avoid the tiresome hassles of dealing with trading entities.

22) Is it possible to Drop Ship Products from Trading Company in China?

Yes, you can go for drop shipping.

However, you should never use the trading company’s name or contact information on your invoices or packing lists.

You need to identify a reliable trading company, forward them the sales order and allow the entity to fulfill it.

In this case, your focus will be to market, advertise, and manage the online presence of your business.

For best results, though, it is recommended that you research thoroughly on suitable products in line with your strategy.

Also, find out how your competitors are handling the business from the perspective of pricing.

Finalize and incorporate an ideal fulfillment process, which works for you into your system.

23) How do Middlemen and Trading Companies in China compare?

In China, middlemen and trading companies compare in a wide range of ways, including the following ways;

Both entities play the role of intermediary in a transaction or distribution chain by facilitating interaction between two involved parties.

They both specialize in carrying out critical activities involved in procuring and sales of products in their flow.

This runs from the manufacturers to the eventual buyers.

Neither middlemen nor trading companies produce any commodity. Even so, they possess in-depth knowledge of the market needs.

They provide manufacturers with vital feedback about the market and allow them to focus on production.

While at it, they provide ancillary services such as warehousing, distribution, insurance, advertising, finance, etc.

However, a slight difference between these entities is that middlemen are always willing to assume the risks involved in the process chain.

For instance, middlemen would take risks such as perishability, loss, damage, or theft.

Trading companies, nonetheless, hardly assume such risks given they often forward customers’ orders as it is to the manufacturer.

Therefore, it becomes difficult for them to face and assume such risks in the process chan.

Another difference is some middlemen are only involved in the facilitation of products for buyers from the producers.

They act as brokers, underwriters, forwarding agents, auctioneers, or commission agents, among others.

By contrast, trading companies are involved in the entire order fulfillment process.

Their interest is to receive, process, and dispatch the orders to respective orders within agreed terms and conditions.

24) Which are the Best Products to buy from Chinese Trading Companies?

Ordinarily, there is a myriad of products you can always choose to import from Chinese trading companies.

However, the best products are entirely dependent on your demands concerning the market needs and your budget.

But some of the highly regarded products you may consider importing from these entities include the following;

• Furniture and home décor
• Toys
• Fashion accessories
• Footwear
• Electronic accessories
• Phones and accessories
• Computer and office components
• Light and accessories
• Travel and outdoor products
• Car electronics
• Home appliances
• Kitchen supplies
• Pet supplies

25) Is a Sourcing Company the same as a China Trading Company?

Not in totality.

A sourcing company is an entity assisting buyers in finding goods and supplies of specific quality or attributes and at a low cost.

It can supervise, conduct QC as well as ship products to the respective destination.

Some sourcing companies may be representatives of select factories, or, better still, serve multiple companies.

Mostly, sourcing agents strive to get clients the best prices for specific commodities they need and meet quality standards.

They also make sure the manufacturers or suppliers can provide the products within a stipulated time.

They pay for sourcing agents is often on a commission basis, often ranging between 3-5% of the purchase order.

However, a trading company is basically a firm connecting buyers and sellers locally or internationally.

In a nutshell, a trading company can easily act as a sourcing agent.

26) How do you know if you are dealing with a real Factory or Chinese Trading Company?

Typically, the difference between a factory and a Chinese trading company is a blurred line.

Thus it can be challenging, especially if you’re inexperienced or the first timer.

Either way, some of the elements, which distinguish these two types of business entities include the following;

· Product Variety

In China, most manufacturing companies often focus on product type or manufacturing process.

This is often as a result of high cost of machinery needed for producing different types of components.

Therefore, if you find an entity, which deals with a variety of products, it becomes easy to tell it is a trading company.

· Company Name

Most trading companies often have relatively savvy and marketable names compared to manufacturers.

The reason is this case is the business is trying to obtain clients from mostly from international customers.

On the contrary, the focus of manufacturers is making products.

In essence, trading company names ought to be more consumer-friendly to attract a significant customer base.

As such, you easily tell a real factory or Chinese trading company by looking at the naming.

· Company Online Platforms

Most trading companies have easy-to-use online platforms, such as websites.

They are often coded in different languages such as English, Spanish, French, Dutch, and Portuguese among others.

Factories mostly have poorly designed websites, lack decent advertising efforts, and are commonly coded in Chinese.

· Location

Determine the precise location of the company. Use Google maps to get the exact direction.

If they’re loca