Advantages and disadvantages of trading company:
Disadvantage
1. More and more international buyers tend to purchase directly from manufacturers to obtain price advantages.
2. Manufacturers develop increased awareness of foreign customers. Many factories have begun to develop independently while cooperating with trading companies. Coupled with the adjustment of national policies, the export right of foreign trade has been changed from the original approval system to the registration system, and factory exports have gradually become a domestic climate.
3. The trading company does not have its own factory, there is no advantage in price, and the competitiveness of other domestic suppliers is weak.
Advantage
1. The advantage of a trading company without its own factory is that all factories in China can be their own factories. Customers’ needs are often diversified and personalized. Generally, a single factory is often difficult to meet customer requirements. The advantage of a trading company is Maximize the advantages of domestic factories to achieve customer needs.
2. Analyze the advantages of trading companies by analyzing the characteristics of international buyers and the disadvantages of factories.
International buyers are divided into 4 categories:
a. A multinational company with a procurement department in China that employs domestic procurement staff. Such companies generally purchase directly from factories or from powerful distributors. They know China very well, and the products they purchase tend to be finished products.
b. There is no purchasing department in China, but the person in charge is responsible for purchasing in China. Such companies know or understand the Chinese market very well. They have more or less experience in purchasing in China. They tend to shop around, and high outrageous prices are likely to be eliminated. Such a buyer does not necessarily choose the one with the lowest price, but will use the lowest price to find the supplier he thinks is the best service, hoping that they will accept the price.
c. Small and medium-sized enterprises that have purchasing desires in China but lack experience. Such companies are often the main target of foreign trade companies in the current situation. First of all, they often do not have a person responsible for purchasing in China. They cannot invest too much energy. The needs of customers are often diversified. The products of a factory often cannot meet the requirements of customers. This requires trading companies to take on the responsibility of integrating domestic factories to meet guest needs.
d. Have not considered purchasing in China and have no purchasing experience. The potential of this development seems relatively small, but not all. Some customers have never considered purchasing in China, but when they receive a sales letter, they just have a new project at hand, so just take a look. If the first cooperation is smooth, a long-term cooperative relationship will be established.
Disadvantages of manufacturers:
Although most domestic factories currently have a direct export tendency and have their own salemen, they still have many disadvantages:
A. Insufficient experience. Many trading departments are newly established, and salemen are also novices who only speak English. They lack experience and lack foreign trade leaders with rich experience in trading.
B. Poor ability to judge risk. Of course, everyone is afraid of encountering scams and the like, but they are more afraid than trading companies. Because there is no experience, people who can take the board often can not speak English, and people who can speak English often can not take the board. This cumbersome communication process hinders the factory’s foreign trade route is smooth.
C. Less investment. Although factories want to export, they are often afraid, unwilling or not knowing how to invest. Foreign trade needs investment. And if there is no input, how can there be output?
D. The factory’s products are single and can not meet the diverse needs of some customers.