Maximize Your Success In sourcing From China: How To Find The Best Manufacturer And To Identify The Trading Companies On Alibaba?
Discover how to find the best manufacturer on Alibaba and how to identify the trading companies!
Whenever an eCommerce entrepreneur decides to sell through Amazon FBA or an online store, the first question is where to source from?
Many online platforms are working to provide products to sell on online stores or dropship items to different parts of the world. However, Alibaba is undoubtedly the most trusted, convenient, and recommended platform to find trustable and long-term suppliers.
Although Alibaba is the most popular and most used platform, scammers, bad suppliers, and fake manufacturers are still in the business. Anyone can make an account and start to sell the products online. According to reports of Alizila, Alibaba’s Big Data Anti-Counterfeiting Alliance has helped the company to make 1277 arrests, $536.2 million worth of products seized, and 500+ manufacturing and distribution locations shut down by 2019.
Therefore, if you’re about to make your first purchase on Alibaba for your business, you must know how to identify trading companies on Alibaba. Besides, it is also of importance to understand how to find the best manufacturer on Alibaba. There are thousands of suppliers on Alibaba some of whom are trading companies and others are manufacturers of the product. Therefore, it is important to differentiate between the two when you’re doing business with a supplier.
We’ve called this guide to maximize your success in sourcing from China. We will talk about how you can perform a complete check to maximize your success and minimize the risks of scams to zero.
Trading Company Vs. Manufacturer?
The credibility and authority of Alibaba as a B2B platform are not questionable at all. However, there are always good and bad sellers in any marketplace. As a B2B buyer, your priority is to get the best quality product at a reasonable cost. Filtering the trading company vs. manufacturer on Alibaba is necessary because it helps you achieve your overall profitability objective without hurting the quality.
The product quality is the even higher preference of a pro eCommerce buyer. You might have heard from many people to run after the lowest price, but when shopping on Alibaba for your business, product quality, supplier quality, and credibility are the most important concerns.
The only difference between a trading company and a manufacturer is not the price. You’ll get to know how a manufacturing company differs from a trading company. After that, you’ll know why filtration is necessary to avoid any middlemen from your transaction.
What Is A Trading Company?
A trading company is the one that is not involved in producing the products and then shipping. Instead, they are mostly middlemen who have built contact with the back-end manufacturers to list the products on the Alibaba store. These are third-party businesses that may or may not be experts in selling and exporting the products.
You will find many suppliers on Alibaba listed as trading companies only because of the regulation in China. Many manufacturing units produce different products, but not all of them are authorized and registered to export the products. Therefore, the trading companies have the resources and authority to export products and work on the manufacturer’s behalf.
A trading company is a scaling opportunity for the businesses, but it is not always a favorable option for a buyer. Besides, some trading companies can be in business for just charging you unfair profit.
What Is A Manufacturer?
On the other hand, a manufacturer is the producer of a product or different products that they’re selling. The Alibaba suppliers registered as a manufacturer are specialized in certain product categories. The manufacturers have a concentrated scope of products because of the logistical flow of the production facilities.
It is easier for a trading company or middleman to list 50 pages of different products from varying manufacturers. However, a manufacturer will sell only what they’re specialized in and have the expertise in.
Why Choose a Manufacturer Over Trading Company?
Here are some of the benefits of choosing a manufacturer instead of a trading company.
- A low price ensuring you a higher profit at reselling
- Low cost of shipping due to logistics convenience
- More expertise and customization of products by direct communication
- A streamlined process.
There are many trusted and reliable suppliers on Alibaba as well that you can leverage for all benefits mentioned above. We’ll have a look at how to find the best manufacture on Alibaba.
How To Find The Best Manufacturer On Alibaba?
We can also call it how to find the best supplier on Alibaba. We used the word manufacturer to emphasize to all the eCommerce entrepreneurs that choosing a manufacturer over a trading company as your supplier in China is recommended. Each step will get you closer to the answer of how to avoid trading companies on Alibaba.
So let’s see how to find a manufacturer on Alibaba.
Step 1: Filtering
Let’s start with a general query of many eCommerce entrepreneurs. Let’s say an individual wants to source garments for his clothing retail store from Alibaba. He will be more interested in how to find a clothing manufacturer on Alibaba.
So we will also take this example on how to find ethical manufacturers on Alibaba in the clothing line. The first step is to do the filtration based on credibility and reliability. There are different types of suppliers categories on Alibaba. You can turn on the filter according to which supplier you want to look for.
Here is a description of what each type of supplier means and how each type is different.
Trade Assurance Suppliers
It is a free service offered by Alibaba, and if you order from trade assured suppliers, your costs will be covered if the product is not received on time, is defected, doesn’t meet quality standards, or is not received. You can claim the full refund of your order price from Alibaba. So, you’re insured by Alibaba if you choose to work with the suppliers having trade assurance.
Then come the Alibaba gold suppliers! A supplier, either manufacturer or trading company, can pay the high membership fees to Alibaba and get the gold badge. There is no hard and false rule that you are protected from getting scammed by such buyers, but usually, there is a meager chance of scammers in this category. The reason is that scammers won’t bother to pay a fee and go for a free account. However, it would be best to perform a profile check of the gold suppliers before placing the order. We will discuss how to assess the company in later steps.
What is an Alibaba verified supplier? Verified suppliers are the cream of Alibaba! Before we go into your most asked question of Alibaba verified suppliers vs. gold suppliers, let’s understand what verified suppliers are.
Either a third-party company or Alibaba team assesses the suppliers, and after Alibaba supplier assessment, the Alibaba supplier report is published. Now let’s talk about Alibaba verified suppliers vs. Alibaba gold suppliers.
The verified suppliers are actually the gold suppliers who have been inspected. These businesses are located in China, Hong Kong, or Taiwan. When you’re searching for a product by suppliers, you can tick the Alibaba verified suppliers, Alibaba Gold suppliers, and trade assured suppliers.
Now the question is how to filter the search. When you search, let’s say t-shirt, there will be hundreds of thousands of results. You can tick from trade assurance, verified supplier, and gold supplier. The results shown afterward will be your filtered list. Now you’ve to assess some suppliers from the list to finalize.
Step 2: Who is the company?
How to accept or reject a supplier in your list? This question will be answered by ‘who is the company?’ That means you’ve to analyze the following things:
There is a regulation that companies are registered in China with their location name, registration name, nature, and type of partnership. So when you’re looking for different companies on Alibaba, you’ll look for the following information in the company’s name.
- Location(the first part of the company’s name if it’s registered in China)
- Company Name(the second part shows the registered name)
- Main Product(What is the product line they’re in)
- Business Partnership(Co., Ltd, Partnership, etc.)
If a company is registered as a trading company or a manufacturing company will be mentioned in the profile. The pros and cons of manufacturing and trading companies have been mentioned above already.
Number Of Years
Since how many years has the company been in the business? The higher the number of experience years, the better it is.
Many business owners don’t know about the difference between company certifications and product certifications. An important way to identify if the company is a trading or manufacturing company is to check company certifications.
If a company is a manufacturing company, it will most likely have ISO9000, an international certification for quality systems. ISO14000 is for environmental safety, and it’s good to have the certification for the environmental system.
Step 3: What do they do?
The next step is to identify what do the suppliers do?
You can identify a trading company and manufacturing company by looking at their product list. Manufacturing will be concentrated around 4 to 5 products related to the same industry. However, a trading company might have listed thousands of products from different manufacturers.
The second thing to check is product certifications. Depending on your country’s requirement for different industries, you can check if the supplier has the must-have certifications. Most generally following certifications are required across different countries: UL, RoHS, CE, FDA, MSDS.
Step 4: Where are they located?
The fourth thing you’ve to look at in any company is a business address. A manufacturing company should have the address of the factory ideally in any industrial area. Therefore, you can quickly identify if you’re dealing with a manufacturing company or a trading company.
Following five provinces of China are coastal provinces, and 80% of manufacturing companies have their factories in these cities:
- Zhe Jiang
- Jiang Su/ ShangHai
- Guang Dong
- Fu Jian
- Shan Dong
If the factory address is of these coastal provinces, the chances are high that the company is a manufacturing unit. If the company’s address says something like Office#9, 16th Floor, Enclave Avenue Building, city name, you must question why the supplier has not provided the factory address?
Step 5: Communication Says A Lot
You will identify the best manufacturer by most of the attributes we’ve already discussed. However, communication with the chosen suppliers will also speak a lot about the company. Look for the following red flags to know if the company is a manufacturer or trading company:
- A manufacturing company will be prompt in replies because they don’t have to confirm prices, product MOQs and other details from any other party. However, a trading company will usually take more time to respond.
- You can also ask the supplier for a surprise visit to the factory by your sourcing agent. If the supplier is willing for the tour, he is most likely a factory. A trading company will more likely use delay tactics.
How Can We Help?
If you’re concerned about avoiding a supplier on Alibaba and talking about bad suppliers, of course, we can help you with that. Or you don’t know what to ask Alibaba suppliers and are even confused about how to check if Alibaba supplier is legit; we have a sourcing package that covers all your concerns, from how to find ethical manufacturers on Alibaba to how to verify Alibaba suppliers.
If you want to know how to avoid trading companies on Alibaba and bad suppliers, listen to 11 Questions To Weed Out Bad Suppliers | Ep. 005.
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