Things you should know when distinguishing factories & resellers in China

You may have read many articles online teaching you how to distinguish a potential supplier in China is an actual factory or just a reseller/trading company.

Today I am sharing a few essential facts you may overlook while sourcing in China. What you should know as a small business dealing with Chinese companies.

1.A reseller/trading company can also send you a sample

When you ask for a sample from a potential supplier in China, there are a few scenarios.

A.Send-to-address is within China. (You receive the sample domestically)

• A reseller/trading company may have a good relationship with the factory or they have an agreement that when the factory sends samples to customers, they do not specify the send-from-address/name of the sender on the shipping label. No factory name or address on sample package.

There is one time, my previous company who was importing from China asked a potential supplier to send us a sample domestically in China. We double checked the tracking number on carrier’s side after we received the package which indicated the send-from-location is in another province than the supplier’s which raised a red flag.

Please note that if the send-from-address/location is different from the location supplier provided previously, it DOES NOT mean they are definitely a reseller or a trading company. It could mean they have a factory/warehouse in a different location than the office. It only means you need to be more cautious about this supplier and further investigation is required.

• A reseller/trading company may receive the sample from a factory first and send to you after re-packaged it.

A very tricky way to hide their real identity isn’t it?

B.Send-to-address is overseas. (You receive the sample in a foreign country out of China including Hong Kong and Taiwan)

When it comes to shipping overseas, it is very common that the sender would use a forwarder company who gets a better rate from carriers and do all the paperwork for senders.

What you can do is ask the supplier if they send the package directly from the factory or will use a forwarding service. If they say:

• “We send from our factory directly.” You may check the tracking number on carrier’s website to confirm the sender’s location. Same thing with scenario A, it might show a different address from what they provided before or the reseller may receive the package, re-packaged it then send to you directly through a carrier.
• “We will use forwarding service.” You may ask the tracking number from the factory to the forwarder’s warehouse. Same with scenario A, try to match the address they provided. If they refused to tell you or make excuses they couldn’t find the tracking number anymore, you know something suspicious may going on…further investigation is required.

2.A reseller/trading company can also provide you photos of a factory

When you ask for photos of the potential supplier’s factory, most people would cooperate and send you some photos of a factory. The question is, the factory indicated on the photos really belongs to them, or they stole photos from someone else’s factory and presented as their own?

What you can do is check the details on photos. Does the product on production line match what they are selling? On the photo of the factory’s gate, does the factory’s name match the company’s name? (it more than likely would be in Chinese though) and etc.

Besides that, you may also google map the supplier’s address and see if the surroundings on google map match the photos they sent to you.

3.A reseller/trading company may invite you to visit their “factory” as well

When you ask your supplier if you can visit their factory and production line when you make a business trip to China, some reseller/trading company who doesn’t own a factory may get nervous and make excuses saying the production line is confidential and not available to public or they are experiencing low season thus the production line is not on..etc. that’s where you know you should be more prudent.

But sometimes, even the reseller/trading company doesn’t own a factory they will still reply with a positive answer. Firstly, they may count on you not going to China and inspect in person. Secondly, even if you made the trip they may come up with various excuses in the end.

When I was in my previous company, there was one time we planned a business trip to China to inspect product and factory in person. Several potential suppliers invited us to visit their factory before didn’t respond well when we arrived China. One said, “Sorry that we can’t show you our production line at this moment because we are actually moving factory which expectably will end in the end of this year.” Another said, “Consider that we are just a small factory as you are a big client from Australia we don’t think it’s a good idea to show you our factory at this moment.” (What?? It does not make any sense…)

4.A factory may resell similar products as their product line

This is the trickiest thing yet most likely to be overlooked.

Rather than explain in plain words I will just share the experience with you.

The Same business trip as the last story. When we were having a meeting in one of the big factories who we consider would be our main supplier, we asked them if we can see the production line of product A & B. They are okay with product A but a bit reluctant about product B which seemed abnormal. When we questioned it, they explained that product B is manufactured in their “brother factory” and unwilling to tell us the location/contact of the “brother factory”. We contacted another manufacturer and confirmed that product B is produced in their factory.   (The factory did show us their production line of product A and other products they are manufacturing at that moment.)

This experience taught us that it is common in China that a factory works together with other factories and they may resell each other’s products if they do not have the very specific equipment to manufacture a certain product.

In a word, there are many ways a reseller/trading company can do to present themselves as a real manufacturer; you should always be prudent and cautious in this matter.

In another hand, sometimes you do not need to be 100% sure you are buying from a factory or reseller if the price is acceptable. There are several advantages/situations you would prefer to work with a reseller instead of a factory. Situations when you prefer to deal with resellers in China