{"id":7754,"date":"2018-01-19T17:17:11","date_gmt":"2018-01-19T09:17:11","guid":{"rendered":"http:\/\/jingsourcing.com\/?p=7754"},"modified":"2025-02-11T14:17:48","modified_gmt":"2025-02-11T06:17:48","slug":"verify-suppliers-are-factories-not-trading-companies","status":"publish","type":"post","link":"https:\/\/jingsourcing.com\/verify-suppliers-are-factories-not-trading-companies\/","title":{"rendered":"7 Ways to Verify Chinese Suppliers Are Factories, Not Trading Companies"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"7754\" class=\"elementor elementor-7754\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6dbea768 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6dbea768\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-72fc5106\" data-id=\"72fc5106\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-85f732c elementor-widget elementor-widget-text-editor\" data-id=\"85f732c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Many importers are dying to know whether they are dealing with<a href=\"http:\/\/jingsourcing.com\/4-reasons-why-trading-companies-are-better-than-manufacturers\/\" target=\"_blank\" rel=\"noopener\"> a factory or trading company<\/a>\u00a0when importing certain products from China. Because almost every\u00a0<a href=\"https:\/\/jingsourcing.com\/find-good-china-wholesale-suppliers\/\" target=\"_blank\" rel=\"noopener\">Chinese supplier<\/a>\u00a0claims that they are factories, including\u00a0suppliers on\u00a0<a href=\"http:\/\/alibaba.com\" target=\"_blank\" rel=\"noopener\">Alibaba<\/a>, though they are actually trading companies. So there are lots of blogs and articles that teach importers how to verify suppliers on the Internet, but most solutions they suggested didn&#8217;t make any sense in reality.<\/p><p>In this article, I&#8217;ll first explain why solutions that lots of people suggested don&#8217;t work, then offer <b>7 correct ways<\/b> to find out what your supplier really is.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-60c6fb3 elementor-icon-list--layout-traditional elementor-list-item-link-full_width elementor-widget elementor-widget-icon-list\" data-id=\"60c6fb3\" data-element_type=\"widget\" data-widget_type=\"icon-list.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-icon-list-items\">\n\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#c1\">\n\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\" xmlns:svgjs=\"http:\/\/svgjs.com\/svgjs\" width=\"512\" height=\"512\" x=\"0\" y=\"0\" viewBox=\"0 0 24 24\" style=\"enable-background:new 0 0 512 512\" xml:space=\"preserve\"><g><path d=\"m12 9c-1.6569 0-3 1.3431-3 3s1.3431 3 3 3 3-1.3431 3-3-1.3431-3-3-3z\" fill=\"#ff9933\" data-original=\"#000000\"><\/path><\/g><\/svg>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">2 Ways Often Suggested, But Don\u2019t Work at All.<\/span>\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"#c2\">\n\n\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\" xmlns:svgjs=\"http:\/\/svgjs.com\/svgjs\" width=\"512\" height=\"512\" x=\"0\" y=\"0\" viewBox=\"0 0 24 24\" style=\"enable-background:new 0 0 512 512\" xml:space=\"preserve\"><g><path d=\"m12 9c-1.6569 0-3 1.3431-3 3s1.3431 3 3 3 3-1.3431 3-3-1.3431-3-3-3z\" fill=\"#ff9933\" data-original=\"#000000\"><\/path><\/g><\/svg>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\"> 7 Ways to Verify Whether Your Supplier Is a Factory<\/span>\n\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f417478 elementor-widget elementor-widget-spacer\" data-id=\"f417478\" data-element_type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-fb4c50e elementor-widget elementor-widget-heading\" data-id=\"fb4c50e\" data-element_type=\"widget\" id=\"c1\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Part \u2160: 2 Ways Often Suggested, But Don't Work at All<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-10506c3 elementor-widget elementor-widget-text-editor\" data-id=\"10506c3\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">1. Check Supplier&#8217;s Registered Capital<\/span><\/h3><p>Some blogs mentioned checking the supplier\u2019s registered capital to verify whether it is a factory. If with large registered capital, then it\u2019s a factory, otherwise, it\u2019s a trading company. But this is totally wrong. If your supplier is a\u00a0<a href=\"http:\/\/jingsourcing.com\/small-chinese-factories-reliable-introduction-of-3-types-small-factories-in-china\/\" target=\"_blank\" rel=\"noopener\">small-scale factory<\/a>, its registered capital will be likely less than some <a href=\"https:\/\/jingsourcing.com\/5-type-chinese-trading-company\/\" target=\"_blank\" rel=\"noopener\">types of trading companies<\/a>. And the registered capital of the large-scale trading company can be very large, like more than 10 million CNY.<\/p><p>No matter you register a company or a factory in China, your registered capital is usually more than CNY 500,000. But it doesn\u2019t mean you must have \uffe5500,000 in your hand at that time. It means during the next 10 years, the amount in your company\u2019s account can be over 500,000 on any day, and it\u2019s legal.<\/p><p>Another thing is you can easily borrow \uffe5500,000 to deposit in your company\u2019s account for one day, then transfer it out the next day. It only takes hundreds of US dollars to get this one-day loan as there are many companies that can offer this service.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1d2a587 elementor-widget elementor-widget-text-editor\" data-id=\"1d2a587\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">2. Ask for Samples, Check the Address Where It Was from.<\/span><\/h3><p>Some others recommend the importers ask for samples before placing the order to the suppliers. Then you can <a href=\"https:\/\/jingsourcing.com\/b-quality-control-vs-quality-assurance\/\" target=\"_blank\" rel=\"noopener\">check the product\u2019s quality<\/a>, and get the supplier\u2019s office address. If the office address is the same place as the registered address on the business license, the supplier will be a factory; otherwise, it\u2019s a trading company.<\/p><p>But this method is not\u00a0applicable\u00a0in China, or even many other countries, because it\u2019s quite normal that a factory\u2019s office address is not the same as the registered address. Many middle and small-scale factories\u2019 workshops are rented, so they may change to rent another place after 2 or 3 years, but they won\u2019t update the registered address at that time. And some factories\u2019 workshop and office are divided into different places, even different cities.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1ed7ad5 elementor-widget elementor-widget-heading\" data-id=\"1ed7ad5\" data-element_type=\"widget\" id=\"c2\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Part II: 7 Ways to Verify Whether Your Supplier Is a Factory<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-235d9c8 elementor-widget elementor-widget-text-editor\" data-id=\"235d9c8\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">1. Check the Business\u00a0License<\/span><\/h3><p>The most important\u00a0part is <strong>\u201cBusiness Scope\u201d\u00a0(\u7ecf\u8425\u8303\u56f4<\/strong>)\u00a0when checking a supplier\u2019s business license. This is the easiest and most direct way which your supplier cannot counterfeit. A factory\u2019s business scope must include words like <strong>\u201cmanufacture or produce\u201d (\u751f\u4ea7\uff0c\u52a0\u5de5\uff0c\u5236\u9020)<\/strong>, which a trading company\u2019s business scope won\u2019t have.<\/p><p>Send supplier\u2019s business license to a reliable friend who knows Chinese well for a check, or you can go to\u00a0<span style=\"text-decoration: underline\"><a href=\"http:\/\/www.elance.com\/\" target=\"_blank\" rel=\"noopener\">Elance<\/a><\/span>\u00a0to find a freelancer for translation, which only\u00a0costs\u00a0several dollars.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-289da04f elementor-widget elementor-widget-text-editor\" data-id=\"289da04f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><img fetchpriority=\"high\" decoding=\"async\" class=\"lazyload aligncenter wp-image-102783 size-full\" src=\"https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1.png\" data-orig-src=\"https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1.png\" alt=\"business-scope1\" width=\"726\" height=\"302\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%27726%27%20height%3D%27302%27%20viewBox%3D%270%200%20726%20302%27%3E%3Crect%20width%3D%27726%27%20height%3D%273302%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-srcset=\"https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1-200x83.png 200w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1-300x125.png 300w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1-400x166.png 400w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1-600x250.png 600w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/business-scope1-1-1.png 726w\" data-sizes=\"auto\" data-orig-sizes=\"(max-width: 726px) 100vw, 726px\" \/><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-121dc3a elementor-widget elementor-widget-text-editor\" data-id=\"121dc3a\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">2. Check the Value Added Tax (VAT) Invoice<\/span><\/h3><p>This is the best way to verify suppliers. Chinese government offer drawback for many kinds of exporting products in order to encourage export. But if a company wants to get export drawback, <strong>17%\u00a0VAT invoice<\/strong> is must needed\u00a0which can only be\u00a0issued\u00a0by a factory.<\/p><p>So there is the way: tell the supplier that you have a partner in China who can help you\u00a0apply for\u00a0export drawback, so ask for\u00a0issuing\u00a0a 17% VAT invoice. If the supplier refuses or hesitates to reply to you, they probably are a trading company or a very small-scale factory.<\/p><p>But if\u00a0they agree to issue the VAT invoice, you can ask for a clear picture of the invoice made before, and check carefully the company name on it. If it is the same name on the supplier\u2019s business license, then it must be a factory.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b22c36b elementor-widget elementor-widget-image\" data-id=\"b22c36b\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"712\" height=\"312\" src=\"https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1.png\" class=\"attachment-full size-full wp-image-102784 lazyload\" alt=\"VAT Invoice\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%27712%27%20height%3D%27312%27%20viewBox%3D%270%200%20712%20312%27%3E%3Crect%20width%3D%27712%27%20height%3D%273312%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-orig-src=\"https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1.png\" data-srcset=\"https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1-200x88.png 200w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1-300x131.png 300w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1-400x175.png 400w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1-600x263.png 600w, https:\/\/jingsourcing.com\/wp-content\/uploads\/2022\/10\/VAT-Invoice1-1-1.png 712w\" data-sizes=\"auto\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7e7b339 elementor-widget elementor-widget-text-editor\" data-id=\"7e7b339\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">3. Check Supplier\u2019s MOQ<\/span><\/h3><p>Factory\u2019s\u00a0<a href=\"https:\/\/jingsourcing.com\/b-moq-meaning\/\" target=\"_blank\" rel=\"noopener\">MOQ<\/a>\u00a0is normally higher than trading company\u2019s, and it&#8217;s almost common sense in trading. So that you can verify your suppliers by testing if they can sell you fewer quantity products.<\/p><p>For example, you are finding a supplier for purchasing 5,000 <a href=\"https:\/\/jingsourcing.com\/p\/b32-mug-material\/\" target=\"_blank\" rel=\"noopener\">mugs made of glass<\/a>, you can tell the supplier that you are buying only 300 pieces for a try, and will place big order in the future if the quality is good. They will say no if you are dealing with a factory as their MOQ won\u2019t be less than 1,000 pieces. But a trading company may accept your 300 pieces order.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4fb9b21 elementor-widget elementor-widget-text-editor\" data-id=\"4fb9b21\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">4. Check the Products\u00a0Catalogue<\/span><\/h3><p>A factory usually is specialized in one\u00a0or several\u00a0kinds\u00a0of products, if there are lots of kinds of products in your supplier\u2019s catalog, then it\u2019s more likely to be a trading company.<\/p><p>I know a stainless steel vacuum cup factory (200 workers, around 70Km away from my office) that is among the TOP 10 in the Chinese vacuum cup industry. Except for vacuum cups, they also sell glass-made cups, but these are supplied by other smaller factories. This company&#8217;s glass-made cups price is even higher than other trading companies quoted.<\/p><p>But if your cup suppliers supply stainless steel vacuum, glass, plastic cup, and mug, etc. they are not factories.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-973a2a2 elementor-widget elementor-widget-text-editor\" data-id=\"973a2a2\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3><span style=\"color: #ff9933\">5. Check the Factory\u00a0Auditing Reports<\/span><\/h3><p>If the supplier told you that they have supplied products for world companies like Walmart, then you can require them to send you the <a href=\"https:\/\/jingsourcing.com\/b-factory-audit\/\" target=\"_blank\" rel=\"noopener\">factory auditing <\/a>report.<\/p><p>If they refuse or hesitate, then they probably are trading companies. If they send you the factory auditing report, you need to check the company name on the report. If it\u2019s the same name as the one on Business License, they must be a factory.<\/p><h3><span style=\"color: #ff9933\">6. Check the ISO\u00a09001\u00a0Certification<\/span><\/h3><p>Not every factory has <a href=\"https:\/\/jingsourcing.com\/b-what-is-iso-certification\/#a2\" target=\"_blank\" rel=\"noopener\">ISO 9001 Certification<\/a>, but most companies who have this certification are factories because the trading company has no need to have it.<\/p><p>But still, some trading companies get this certification, and all of them are only specialized in one product category and have a solid relationship with their factories. I know several of these types of trading companies, and I have to say working with them will be no much different from working with factories, even on price.<\/p><h3><span style=\"color: #ff9933\">7. Check Where Supplier Is Located in China<\/span><\/h3><p>All products have their own industrial areas in China, and let&#8217;s take RC (Remote Control) toy cars as an example. All <a href=\"https:\/\/jingsourcing.com\/b-china-toys-wholesale-market\/#a2\" target=\"_blank\" rel=\"noopener\">RC toys are mostly produced in\u00a0Chenghai<\/a>, Guangdong Province.<\/p><p>Because this city has a complete supply chain for all parts of RC toy cars, such as motors, remote controllers, and wheels. The factory only needs to design a car\u2019s shell and packaging, then assemble all parts together. Producing RC toys in any other city will be more complicated and higher cost than in Chenghai, so factories will be not likely located in other places.<\/p><p>If your suppliers are not located in Chenghai, like in Guangzhou or Shenzhen, they are probably trading companies. Maybe there will be some high-tech RC toys factories located in Shenzhen, but very few.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Many importers are dying to know whether they are dealing with a factory or trading company\u00a0when importing certain products from China. Because almost every\u00a0Chinese supplier\u00a0claims that they are factories, including\u00a0suppliers on\u00a0Alibaba, though they are actually trading companies. So there are lots of blogs and articles that teach importers how to verify suppliers on the Internet, [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":99080,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,95],"tags":[],"class_list":["post-7754","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-china-sourcing","category-deal-with-chinese-suppliers"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.6 (Yoast SEO v25.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>7 Ways to Verify Chinese Suppliers Are Factories, Not Trading Companies<\/title>\n<meta name=\"description\" content=\"Here are 7 powerful ways to verify Chinese suppliers are factories instead of trading companies and 2 impractical ways you should not try.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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