Chapter 5 – Deciding Whether to Buy Factory Direct or Through a Middleman

Let me give you some help with this decision by providing the pros and cons of buying from a middleman (trade agent). Both sides have their own merits and you have to ask yourself what is more important for you. 

  • Easier communication for you because there is a single contact for several factories
  • They usually do have better showrooms for product selection
  • They are experienced in dealing with various customers from different countries
  • They sometimes invest in their own tooling and therefore have their own products
  • Their staff is more proficient in English, which makes discussions and negotiations easier
  • Their prices are less competitive because you have to pay for their service
  • They may not be able to present you with the latest products because they choose not to take the risk of being first
  • They will try to direct you to certain factories because they have trade agreements with them
  • Solving claims through their help may prove more difficult due to their relationship with the factories. Since they have projects to execute for other customers, the factories may be more important to them than your continued business

In some cases, you will be forced to work with an export agent simply because the factory does not have an export license, or does not want to hire marketing personnel.

As you can see from the Con points, you may have more trouble solving any quality problems if you are working with an export agent than if you are working directly with the supplier.

Trading companies usually do not have enough manpower to control every factory they are working with. One lesson you will learn about dealing with Chinese manufacturers is that if there is not enough control they start doing things their own way. Their own way may not be much different from what you require, but when it comes to quality requirements, there is no room for deviation. Therefore, my advice for you is to try and work with the manufacturers directly, whenever possible. You can be more certain about the quality you will receive and you will have the advantage (and the right!) to talk directly to the factories’ decision makers in case you need to.

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