Are you trading company or factory?I only work with factory…These are two phrases that I often hear from clients during my work.Because they think that working directly with factory means that they can get better prices ,and get more control over the products.On the contrary ,trading company as a middle man between manufacturer and client ,need to have extra markup based on factory price ,and maybe can’t control quality well.
But is this the real situation?Based on years of experience in trading frozen seafood ,my answer is no.Trading company and factory have their own pros and cons.And they all provide service to buyers.And I think they are suitable for different types of buyers.In this article I’ll show the differences between these two and when you should use each.
What are the Advantages and Disadvantages of frozen seafood factories?
Advantages
More control
As for raw material ,production line and production technology ,there is no doubt that the advantages of the factory are more obvious.Most factories are located in the origin of raw materials.They usually predict the price trend of the product in the first time according to the fishing status or breeding situation of the fish.If you buy from factory ,you can communicate with the manufacturer in charging of making your cargo directly and you can get more control over your products.
Knowledge of technology and products
Factories mainly focus on production, they have a better understanding of the production line, process and technology .If you want to know the production technical issues of your order,maybe you can get a professional answer soon.
Disadvantages
Single product and market
In frozen seafood business ,due to the limitation of the origin of the raw materials and the type of machinery, a factory or even most factories in a region can only produce one or two varieties of seafood.For example ,China is the world’s largest producer of tilapia,and Guangdong Province and Hainan Province are the main tilapia breeding bases in China.So tilapia is the main product of the frozen seafood factories in Guangdong and Hainan.If you still need to import other species,such as scallop ,pollock or squid and so on ,you have to find factories in other provinces.
As for market,every seafood importer should know that seafood trade is restricted by factory registration number.For example ,some factories have FDA plant number but maybe don’t have EU registration.Or in some countries/regions that restrict the import of Chinese seafood, there may only be dozens of factories in China that have registered licenses.And even some factories don’t know if they can export to this country.Maybe the factory that you find have good prices and stable quality ,all the details satisfy you .But finally you find this plant number can’t workable for your market.So as a buyer ,you need to do a lot of homework before buying from them.
Not flexible enough
Payment term
The payment term of the factory is generally relatively fixed.Because the factory has fixed production costs, labor costs and management costs.In order to control risks and maintain the normal operation of the enterprise.The factory generally charges 20%-30% of the order amount as a deposit.Even some factories will not accept L/C.
Delivery time
The delivery time of factory is limited by raw material and promotional seasons.If their production capacity is full ,Some old orders will postpone the delivery date and the new order can’t be accepted.Delivery time is important ,so you need to check carefully before placing order.
What are the Advantages and Disadvantages of frozen seafood trading company?
Advantages
More Product and market choices
Because of trading company can cooperate with different factories ,so can have more product and market choices available.For example some clients run frozen seafood business ,not only one or two species ,maybe have tilapia ,squid ,mackerel ,seafood mix ,mussel ,clam…they can get all offers from one trading company.and even can quickly find two or three trading companies to compare prices,Instead of spending a few days to find factories that can supply them in various provinces in China.If working with trading company ,you don’t need to worry about the factory’s registration number,because they work together with many factories ,there is always one suitable for you.trading company can help clients save a lot time and energy.
More professional service
Trading company mainly focus on sales rather than production.They spend a lot of time to study market ,product and plants.And understand market well.As a middle man between client and manufacturer,in order to get orders ,trading company have to offer additional value through top service ,good communicate ,sourcing .Once there is a problem with your order,they must try their best to give you a solution based on their experience of the market and products.So when you work with a trading company, you often feel that the salesperson is friendly and positive.
More flexible
It is a very attractive sales point for trading company.More flexible payment term and delivery time.If some customers don’t have deposit ,but can be verified by CITIC Insurance,it means this client have good reputation ,I know some trading companies can help customers pay a deposit to the factory to make cooperation go on.Regarding to delivery time ,it is not a problem for trading company ,they have many factories as suppliers ,after they get the order, they can allocate the order reasonably according to the situation of different factories even the peak season for orders.
Disadvantages
Less control
A trading company does not actually produce any goods and don’t have workshop ,workers. Instead, they source a variety of products from factories.If the market change ,the cost of raw material goes up suddenly,Trading companies may face temporary price increases from factories,even the factory’s breach of contract.However ,they have to bear all losses themselves,Otherwise, the trust of the customer will be lost forever.Most trading companies are located in the downtown and far away from the origin of raw materials.Sometimes they won’t get market information right away.This is a disadvantage for trading company too.
Lack of knowledge of production
Trading company always work in office ,and they don’t have enough time stay at workshop .Compared with factories ,trading company lack of knowledge about the production line, process and technology.
Is the price and quality of the factory better than the price of the trading company?
Price
Some customers think prices of trading company must be higher than factory.trading company need to add commission, and factories can offer the lowest prices ,so buyers prefer to work with factories directly .Is this fact?of course not.Every species frozen seafood supplied by a trading companies usually gets many factory as suppliers.For example my customer send me a tilapia inquiry,I usually sourcing from three or four plants in different raw material area according to customers’ requests and market.There is no doubt that I can quickly get different market information from my regular suppliers.After comparison, we can help customers match the most suitable products and prices.So we usually can supply lower price to customers than many factories.This is the reason why I think the prices is not the abvious difference between trading company and factories.
Quality
Quality issue don’t have relationship with the type of supplier.The core is the person and company you work with.There are many factories in China .Not all factories will have quality assurance.Same situation for trading company,if a good trading company ,they will take responsibility for customers anytime even if suffers losses themself.And now ,there are many options for buyers to control quality,for example sent a inspector or ask the third party inspection (SGS or BV) before loading container.
Should You Use a Factory or a Trading Company?
This question don’t have a clear answer.As for buyer , good price is very important,nice service,good communication, and stable quality are equally important.
If you are only focus on one or two species frozen seafood ,Or you have a large demand for a species frozen seafood , just need to buy from one or two suppliers ,I think it’s worth spending time to find a suitable factory to negotiate a better price and delivery time.If you are freshman in frozen seafood business ,and the quantity is small or you are running many species seafood business even need to mix container ,I think a nice trading company is more suitable you.Anyway,whether you will cooperate with a factory or a trading company,choose a sales who is good communication and realiable.
Are you importing frozen seafood from China?What species ?Your suppliers are trading company or factories?And do you have very bad experience with your suppliers?Or if you have any question about frozen seafood ,please feel free to post your comment and question below.
