Thought Work

Trading Company: Yes or No?

The featured image, while unrelated to this blog’s content, may complement the question posed in the title.

Recently, a client asked whether we operate as a trading company or a factory. They’re searching for a partner proficient in both magnetics and plastic injection molding. This is a nuanced question, as many believe working directly with a factory improves communication and lowers prices by cutting out the middleman.

I detailed my personal connection to Tengye and the plastic injection molding companies our company or I partner with, as outlined in the presentation and the response below:

I know the term “trading company” might seem negative to international clients like you because people often prefer to work directly with factories. However, keep in mind that for most companies buying from China, direct collaboration with factories is practically impossible due to several reasons. 

First, factories in China are typically located in remote or industrial areas, making it challenging, if not impossible, to recruit an international sales team, which usually consists of younger people. 

Having visited the USA, I can see the differences clearly. For example, in China, the number of Starbucks or Tesla Superchargers in an area shows how developed it is and how many young people live there. If you’re new to a Chinese city and looking for the most popular spots, just check the map for the highest concentration of Starbucks or Tesla Superchargers.

In contrast, Starbucks and Superchargers are generally more spread out in the USA. That’s why, like many other companies, our sales team is based in a business district very close to the city center in Hangzhou.

Moreover, for exports from China, regardless of factory ownership, a separate trading company entity is often used, which is also related to tax benefits. This is the same with the large magnet factory company, Innuovo, I worked for after graduation. People like me are often reluctant to work in factories, which are typically situated in the more remote areas of the city.

When Suzhou MagMolding manufactures molds and injection-molded parts for the automotive and medical industries, it’s almost inevitable that they meet the ISO 9001 standard. MagMolding takes charge of both the design and the manufacturing of these molds. The production of the final injection-molded parts is carried out in a factory situated about 5 miles away, which not only holds the ISO 9001 certification but also the more rigorous IATF 16949. Yes, your products will be produced at a well-managed production site with Suzhou MagMolding. You are welcome to visit us before deciding to put your money with us.

What truly matters is whether the person or team you’re directly working and communicating with has enough control or influence over the technical and production team to actually move things forward. Sometimes, even when you’re working directly with a great factory, it can be challenging to make progress or be efficient. This is because the sales representative might not have enough resources or time allocated from their technical or production team.

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