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Factory or Trading Company, Which One Is Better For Your Scarf Import Business

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Many scarf importers are always comparing which will be better, the factory or the trading company. The ultimate goal is to benefit from their wholesale prices. Some will say, “The factory’s price is lower.” And some will say, “The service of the trading company can meet my requirements.” Either way, in this article, we will learn when to choose a factory or a trading company for your scarf import business.

In fact, the most important thing to choose a trading company or a factory depends on the number of orders for scarves. Yes, if you want to import a scarf and are confused, check your order’s quantity first and then consider the points discussed below. It will help you out.

Difference between a factory and a trading company

Before getting into what is best or what isn’t, one must know about the difference between a factory and a trading company. The factory is the one that takes the responsibility for manufacturing while the trading company just pucks up the products from the factory and supplies them to the others.

Characteristics of a factory

Factories are the main producing point of the product you are going to import. A scarf factory is a primary area where various kinds of scarf are manufactured. From fabrication to packaging, every single step is done and monitored to meet the desired criteria. Factories do have a specific product (in which they specialize), which they call their signature product. How to distinguish scarf factory and scarf trader, you can read this article.

Characteristics of a trading company

A trading company does not take the burden of making products instead, they source the products from various other factories. In contrast to the factory, a trading company can offer you a wide variety of products as it’s easier for them to the source rather than make.

Benefits of working with a trading company

To get to know about what is suitable for the scarf import business, one must be aware of the perks of working with various kinds of companies. Let’s learn about the positive side of working with a trading company. But before getting into it, remember when you want to order a small quantity of a product or multiple kinds of products in a small quantity, then you should choose to work with a trading company.

Experience and infrastructure

Experienced trading companies also handle the logistic of your product for market sale delivery. In case you are unable to find any trusted partner for shipment as well as paperwork, some trading companies may refer you to the established ones. Hence, working with a good trading agency helps you to get rid of various other problems.

Relationship with factories

Now you are aware of the fact that trading companies source products from multiple factories and hence, to get their desirable work done, they share good relationships with the management there. Similarly, their relationships get strengthened with time as they start communicating frequently compared to a layman who wants to avail the services of a factory. Apart from that, trading companies usually hire local people and the reason behind there is that local people can speak the factory language easily and so assist in communication to bridge gaps. On the other hand, they promised various factories to take customers routinely and so factories offer them a lot of benefits which contribute to their good relationship.

Flexibility in MOQ

If you are going to place an order containing a smaller quantity of product compared to the minimum order quantity criteria of the company, trading companies will show flexibility here by accepting your order instead of asking to maximize the number of products. Similarly, importers face the issue of per unit price along with MOQ. Any fluctuation in one thing can cause a change in the other. Reducing MOQ will lead to a high per unit price. But trading companies can give you an edge here to show flexibility in both.

Are accountable for their action

Importers are afraid of working with factories just because they consider the factory could vanish or stop communicating after payment without product delivery. This might happen in the case of new factories, but established ones wouldn’t commit such an act. To avoid facing such a situation, importers usually contact any trading company. It is noticed that trading companies show more accountability for their actions and so if you are working with a trading company you can ask for product changes in case of any violation of rules.

Cost reduction

Trading companies usually include shipping in a similar budget and hence it provides cost reduction to the customer on the total order.

More fluid communication

To reduce language and cultural barriers, trading companies hire language experts to experience more fluid communication with clients. It also helps to prevent chances of miscommunication with the clients and so get a better understanding of the client’s expectations and requirements.

High technical knowledge

To deliver customers’ orders safely, trading companies work with technical experts. These experts analyze the requirements and operate accordingly. Hence, compared to factories, trading companies have high technical knowledge related to the products. But the point again is, that small-scale factories don’t provide much benefit, but the large scale does.

Satisfy customers need

Trading companies are more concerned about the satisfaction of customers’ needs and, for that reason, they try to meet customers’ requirements completely.

Challenges of working with a trading company

Challenges are also a part of everything in this universe. Apart from the perks of working with a trading company, sometimes you are supposed to face some challenges as well. To decide better to go for a trading company or factory, disadvantages of working with them should also be considered. These challenges are discussed below.

No price advantage

When working with trading companies, individuals get no price advantage compared to factories. Factories offer a price reduction on the bulk of orders while trading companies can’t as they are not the manufacturers but instead are mediators to source products.

Less control over design, production, and material

Those who are more concerned with the kind of scarf fabric, method of production along with design should go to work with factories. As trading companies hold lesser control over design production and material as compared to the manufacturing companies. Although trading companies try to satisfy the customer but still they can’t dictate every desirable step to the manufacturing companies as per customer requirements.

Benefits of working with a factory

Scarf manufacturing companies/factories offer a wide range of benefits to the customers as compared to trading companies. If you want to place an order in bulk amount, then the best option to go for is working with any manufacturing company. Reasons for that are mentioned below.

Lower cost

The first and the most beneficial point is that factories offer a minimum cost of the order compared to trading companies. The reason is that they are producing the product in bulk amount and do possess the desired machinery for that already with expert handlers of it. These all factors assist in cost reduction. If you want to import your desirable wholesale scarf and save some bucks as well so, do contact the manufacturing company to enjoy the cost-benefit.

Fewer chances of miscommunication

In the case of working with a trading company, there is a huge network of transferring your demand to the manufacturer and thus chances of miscommunication increase. On the flip side, working with a manufacturing company summarizes that network and chances of appropriate communication increase. Furthermore, communicating directly with the manufacturing company gives you an edge to take some suggestions from them for better output. Similarly, you can also discuss your queries to get a suitable response if you are working directly with the manufacturing company.

Quality management

The topmost concern of the customer is to get the best quality product. Right? So when a customer is working directly with the factory, quality management is completely ensured. Similarly, direct communication with the factory involves fewer individuals to deal with and handle your product, thus the quality of the product is ensured. Factory can accommodate here with a special offer for the customer with the best quality product.

Good for customization

Customized products are a widely spreading trend and so most scarf importer wants their scarf to be customized as per their culture or the preference of the consumer. In this case, factories offer the best customization service compared to trading companies. While customization, fabric choosing, printing method, desired print, sewing, and packaging these all steps that are crucial and can be carefully done by any scarf manufacturing company. So if you want to get a customized order, I would suggest you work with a manufacturing company for good customization.

More control over design, production, and material

Factories hold more control over their design as the entire procedure is completed under their supervision and after their consultation. Similarly, the end product will exactly match the customer requirements because of the careful implementation of guidelines. So if you want to import wholesale scarves and are sensitive to design and material, then chose to work with a scarf manufacturing company to get satisfactory results.

Improved transport

Factories handle transportation carefully and so offer good transportation services as per products instruction. Here, scarf manufacturing companies are concerned about safe transportation depending on the fabric and print of the scarf.

Challenges of working with a factory

Apart from its benefits, customers can face challenges sometimes while working with a factory.

Supply chain issue

Instead of working with multiple suppliers, working with a single manufacturing company can cause supply chain issues. If the staff of the concerned factory is not trained/experienced enough, then it will cause a delay in product finishing and lead to less availability of the desired product for sale.

Unpopular products

Most of the time, while ordering from factories, there are chances of getting outdated or unpopular products. So, one should keep this under consideration to prevent such challenges.

High MOQs’

If you are ordering from a factory so you are supposed to place a large order. The minimum order quantity for factories is higher compared to trading companies and so you may face this challenge in case you want to order a minimum quantity of product.

Type of scarves customers suitable for factories

Now the question arises of the identification of the customer suitable for working with the manufacturing company directly. It depends on customer requirements and priority. If the customer is concerned about the best scarf quality along with design so it’s better to work with the factory directly. Similarly, focus on the quantity of order. Do contact the scarf manufacturing company and ask about their MOQ along with PPU (price per product).

If you feel like your order quantity correlates positively with their MOQ, then why not choose to work with them? Furthermore, if you want to choose any specific scarf printing method or scarf production method, then working with a manufacturing company will provide you with this edge over a trading company. And of course, if you are interested in a customized scarf, then choosing a factory for that purpose is the best option. Factories provide the best scarf customization on a reasonable budget compared to any agency. Last but not the least, if you are interested in saving your bucks along with getting high-quality desirable products, then I recommend you to go to the scarf factory where you can get satisfactory services as per requirements.

Types of scarves customer suitable for trading companies

For a trading company, the most probable and suitable situation to work with is less order quantity compared to factories’ MOQ. If you want to import your wholesale scarf in less quantity with the best pricing, then working with a trading company is the best option for you to choose. Furthermore, if you are concerned about your satisfaction with less involvement in design and production, then working with any trading company to import a scarf would be convenient for you.

Another condition to go for a trading company is if you want to get a variety of products and don’t want to deal with Moreover, getting to know about trusted partners to assist you in shipping scarf from China would be assessed easily by the help of a trading company. Hence, you can save your time and energy by choosing a suitable shipping method and company.

How do identify the supplier as a trading company or factory?

Now let’s discuss the trouble that usually people can face when importing their products from China. That is the identification of the supplier! Yes, people often claim to be a factory although they are any trading company and vice versa for their benefit. In this situation, you should concentrate on finding out their identity. To avoid any scam, the following points should be mandatory to consider for the verification of the supplier is necessary.

Business License

The quick and smart way of verification is to ask for suppliers’ business licenses. While going through their business card notice, if the word “produce/manufacture” is mentioned on the business scope, then it symbolizes the license of a manufacturing company. For reading and comprehending the language mentioned on the license, you can go for any tool to translate by scanning or contact any person holding a strong grip over the Chinese language.

Suppliers MOQ

Test the MOQ of the supplier. You simply can ask them to send you a hundred scarves at the present moment and later on you’ll order in large quantity. At this time, if your supplier is any factory, they will deny placing such a small order. Whereas, if the supplier is any trading company, you’ll see their willingness to accept this order. Hence, you can verify them based on such a small test.

Value added tax invoice

The Chinese government holds an exciting policy for factories that can help you out in verifying your supplier. The government issued 17% values added tax invoices to the large-scale factories in case of exporting products from China. To verify whether your supplier is a factory or not, you simply can ask them to issue you an invoice by stating that you already have applied for export drawbacks.

In this case, if the supplier is a trading company, they’ll hesitate to share or maybe deny it at the end. But if the supplier is any large-scaled factory, they will show a willingness to proceed with your request.

Factory auditing report

In case your supplier claimed to be a verified supplier of various international companies, you can ask for their factory auditing report. If they provide you with the report, you are supposed to check the name of the company in the report and on the business license. If the name matches, then your supplier is a factory. On the other hand, if they are unable to provide you with the report or show some hesitancy, then they must be a trading company.

Product Catalog

We just got to know above that trading company have a variety of products compared to manufacturing ones. Do check the product catalog of the supplier and if you found a variety of products there, then it must be a trading company. While, if they are having specific products, then it is a sign of a factory.

Choose what suits most to you most by considering the above instructions in mind.

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