I have met many many times, that buyers told openly they don't like to do business with trading companies.

My friend is in a trading company and he told me recently that his order has just ruined again only because the company he stayed is a trading company but not a manufacturer! As I am his friend and I know how hard he worked and how excited he was when heard that his buyer was satisfied with his hard-working and products.
He was puzzled and not understand, is trading company so bad-impression in buyer's mind? Is there still have a room for trading company to survive if all the buyers like to contact with manufacturers?

I also don't understand, so here I post and hope could get answer if there're some buyers could see. And what should trading company do if they don't want to close their office?

Replying to [Raindrop]:

Yes. It unfortunate , but true.

This is because, there is no entry barrier for some one to start a Trading company, unlike manufacturing.


A manufacturer has to have sound knowledge and solid finances to manage the show. If the technology is not good, they will collapse. Due to competition, they have to make good products.


However, the Trader can be any one , even without an office or money. All one would do is make a website and claim he is a big trader. The true colours will be known only when you deal with them. Sometimes, if the line of business is not profitable, they simply close down and start another. In manufacturing, it is not possible.


Internet gave opportunity to many people to become traders and with some good communication skills, one can sell online. If they are not greedy and not try to cheat buyers, the buyers will come to them, even if we do not see them face to face.


I am from India and I buy from some traders in HK, Singapore, China. But we always have a fear that we may lose money, as everyone nowadays asks only for T/T. If some one asks for LC, it may suggest that, that trader may be genuine. But LC has its disadvantages of some extra money being charged by banks, making companies go for T/T.


Hence, if one is dealing with traders, we recommend that ensure that that trader is in business for more than 2 years atleast. If it is a manufacturer, it is Ok.


All the best


regards


Ramesh

The Human Search Engine
*No web addresses or private emails allowed to be posted in these forums*

Replying to [Raindrop]:

Yes even I have heard of the same story from many of them who are although genuinely involved and hardworking in their commerce.

However, one can build a very good trading company even if one is not "Called" as a manufacturer. This is from my own experience and may be that this works for most of the products; the answer is:-

"Manufacturers without a Factory"

One can outsource or job-work the product with the required specification(s) and have contract a done with a buy-back arrangement (if required) for the specified number of units of the product with the specifications required.Therefore the following advantages can be attained:-

a)Call it your product (brand it) but manufactured / job-worked at "XYZ Manufacturing co" under license of your company

b)Retain your product specifications which could be unique and possibly patented

c)Price stability can be maintained

d)Overall quality control on your product can be maintained

I hope the above are at least those few advantages that one can have among others. Believe that this would be of some help to your friend.

Regards,

Mr.H.P.Gore

GR Associates
Essential oil Supplier

Replying to [alluwanted]:
Dear Ramesh,
Thanks for your reply. It's quite helpful for us to know what is the buyers real concern. I will tell this to my friend, as I never thought(I think also he has never known)except the price, the financial safety is another consideration for the buyers. Actually his company has existed more than 10years, and as far as I know they also could accept L/C payment. They are a strong company as we stayed in the same city, I know this without any doubt.

Is it still any possibility for the buyer to come back? I mean what should he do to gain the trust from the buyer again?

Tks vs rgds
Raindrop

I think, that there are many factories, which don't want to sell their products directly to small customers, only to a trading company which buys in big quantity.

Replying to [Raindrop]:
When I worked as a supplier, everytime we showed our items on our booth in Canton fair, the importers would ask me like this: are you trading or manufacture?
when I repied " trading", they went away...Lost a lot of business opportunities.

Actually, I don't think it is bad to deal with trading company.
1) they are more professional on foreign trade.
2) they share the profits of the importers, but they also have to share the risk. (you need the trading company to take care of your purchases, to chase the factory to make the delivery on time, to QC the items, to solve a lot of problems..Factory use to make a lot of problems when production)
3) they accept the small order, but the factory only care for big orders.
4) they work with several factories, they can have more designs for the importers to select, that means they have a good collection of designs.

Now I have working with several importers as their buying agency.
When I deal with the trading companies, they are afraid that if I know they are a trading office only, I would tell my customers, and lose their business. So they always try to cheat me. But since I am a Chinese, I can easily identify if they are a trading company or a manufactory. So I talk to them, "it doesn't matter if you are a trading company or not. I don't care. My customers also don't care. They care about the prices only and quality only. If your price is good as the factory's, why not deal with you? And for me, what I concerned is your delivery time, your quality.."

Finally, they seems to be openly for me after that. And we can work with each other friendly.

Replying to [Raindrop]:Yes and no.
It's easy to settle yourself as a trader today, but in order to survive you must have a product: service, expertise and trustworthyness.
A buyer often wants the lowest price and has checked the market himself (he forgot the amount of time he spent) and don't like that it cost more through you.
It's important that you expose your product to him, and here is a fine inspiration: http://resources.alibaba.com/topic/19022/How_to_Sell_Anything_to_Anyone_.htm
The buyer has to realize that he must pay a price for things to be easy and reliable for him. (Tell him e.g.: It's easy for you. I take the risk. All you have to to is order the product, unload it when it arrives, inspect it and pay the invoice - that's the product you pay me for, the remaining is pure market price).
If he don't agree, drop him. He can then use his own lack of experience and save money in buying "uncertain quality".

Trading is also a market of offer and demand, and the offer is greater than the demand.

I can (also) not rely on a monthly salary from trading each month and therefore I have combined the trading with retail sales in my own country. That gives a steady basic income.

I guess if you are persistent, sooner or later you get in touch with good buyers and sellers that apprecialte your work and realizes that you are worth your fee.

Replying to [Raindrop]:

I am myself running a trading company. True, many buyers prefer to buy from manufacturers directly than from traders.

But take heart that there are umpteen number of successful traders who are doing roariong export business.
The crux lies in convincing the buyers. There are many star and super trading houses in India dealing in a multitude of products.
Please note that Manufacturer has the limited option of sticking to his own products whwre as a trader has choice of many manufacturers of the same product and also he has choice of many varieties of the same product. Besides, a trader can simultaneously deal in more than one product. which choice is nor there for a manufactutrer sticking to one product.
Further a trader may give many value added services to his buyers and can afford to allow them a longer credit than the manufacturer.
Most manufacturers themselves prefer to sell through a trader- exporter than to undertake the cumbersome excercise of export trade. Traders normally have specialised knowledge of the naunces of foreign trade than manufacturers, who normally lack the knowledge of various aspests of international trade. It is therefore safe for them to depend on traders.

I myself deal in many items like chemicals, Engineering goods, Oils etc and my experience is that we are getting a very good response from overseas buyers.

Incincible

Replying to [Raindrop]:Like any other Business, a Trader must develop a Business Model and a Business Plan. I am sure the niche for these people is still there, but they must be sure that they understand what it is.

Obviously, there is no point in trying to compete with the big boys who can deal direct with the suppliers.

From reading these forums, I am left in no doubt there is still much Romantic attachment tot he tradiitonal image of the Trader/Trading Company. The truth though is that the world has moved on and that the Trader must adapt and re-invent themselves (on an ongoing basis) or die!!

Replying to [sampanviking]:
reading all this can be say that people do not want deal with traders. but let us look at their business also who import goods and sell................ well they also not manufactures how do they expect peole do deal with them?
its true that entry & exit for a trader is much easier but we should also look in the other side of a trader who also acts as a local agent.we should look at few basic things before doing business with him.
1. date of establisment
2. nos of manu. associated with
3.experience
4. knowledge
etc...........

Replying to [hellojasmine]:
Dear hellojasmine, I appreciate your comments.
I work for a trading company located outside Asia that buys goods in China from both manufacturers and trading companies. We sell the products to clients in Latin America.

1) You mentioned that trading companies share profits with importers. Yes, I have seen that happening. However, I have also seen that for exactly the same product (same brand and specifications because I have check the samples), the price the Chinese manufacturer offers me is equal to the price that the Chinese trading company offers me. My conclusion is that the manufacturer and the trading company have an agreement to offer the same price and the manufacturer gives this trading company a discount. I have tried to reach this same kind of agreement with Chinese manufacturers but has not been possible. Any suggestions on how to achieve this?

2) You indicated that trading companies accept small orders and that some manufacturers only care for big orders. If the trading company accepts a small order, in the end it needs to send the small order to the manufacturer. The manufacturer accepts the small order because of the long term relationship with the trading company or the trading company has its own product inventory to sell the small order to its client?

3)You mentioned that you were in a trading company but now you are in a buying agency. What is better in terms of profit margins, sales volumes, etc? Buying agencies charge services fees and/or percentages of total amount purchased by clients?

Thanks in advance for your help. Any other writers are welcomed to help also.