Chinese Manufacturing Companies, what are they and how to select them?

 » Made in China  » products are everywhere. They are present in almost every industry and every segment, even niches. These same products are made by Chinese manufacturing companies.
Naturally, any smart entrepreneur looking at importing goods will want to deal with them. However, China is a vast country with a diverse industry landscape. Finding, choosing, and dealing with factories in China can be a challenge.

Today, we will look into the types of Chinese suppliers and how to select the best Chinese manufacturing Companies for your business. It is the first step to building an efficient and sustainable supply chain in China.

Chinese Manufacturing Companies article excerpt

Chinese manufacturers (Chinese factories)

Photograph of manufacturing equiment at a Chinese manufacturing company

Chinese manufacturing companies are key players in global supply chain. They are responsible for 10% of the world’s production of finished parts and products exported to all corners of the world.
Chinese factories are companies that concentrate their resources on :

  • Purchase of raw materials or parts necessary for production
  • Production of parts/components and/or finished products
  • Development of new models
  • Development of production methods

Chinese factories can be small (a workshop with a few people) or gigantic (the manufacturing parks of the giants Hon Hai, Trina Solar, or HikVision for example.
A large number of Chinese factories specialize in producing products for export. However, they do not hold export licenses. They usually work with Chinese trading or Chinese wholesalers.

Chinese agents (independents)

Chinese agents could be any of these people

China’s independent agents are individuals, who generally have access to a network of Chinese suppliers (Chinese factories, assemblers, wholesalers, or import-export companies).
The independent Chinese agent usually masters one or more foreign languages. They are paid on commission by the suppliers. His or her scope of action limits to sales but may include order management.

Independent agents ensure their communication themselves. They have their own websites. In addition, they are also registered on platforms such as Alibaba.com. They usually insist on the idea of « direct buying from China ».
You can find them at trade shows in China. They do not have stands, but distribute brochures and catalogs in aisles.

Chinese import-export companies

Chinese trading company participating to a tradeshow in Guanzhou

The Chinese import-export company is usually a legal entity which does not manufacture on its own but works with Chinese factories.
The import-export company or « trading » usually fulfills three core functions: Sales / Marketing / After Sales.

Some trading in China includes Purchasing, Quality, Engineering, Development. Several Chinese export companies are the only actors one may place orders with. Indeed, they hold product certificates and patents. These are often required for customs and as part of a Quality Assurance program.
Among the former Chinese import-export companies, there are :

  • Augustine Heard & Co,
  • China Company,
  • David Sassoon & Co., Ltd
  • Shewan, Tomes & Co.
  • Olyphant & Co.

The most significant Chinese trading in the world today is undoubtedly Li & Fung.

Chinese wholesalers/distributors

Chinese wholesalers (or Chinese distributors) constitute product stocks. They resell these products in smaller lots, and usually operate with a distinct network of factories. They are different from Chinese export companies because they typically offer non-customizable products.
Their key functions are :

  • Purchases of standard products in volumes from factories
  • Re-packing
  • Resale in small lots with foreign customers.

A new type of wholesalers has emerged. They develop an offer adapted to Dropshipping operations and online retail platforms such as Amazon, eBay, etc …

Chinese assemblers ( assembly workshops )

Chinese assembler's modern assembly line

Chinese assemblers belong to the category of « Chinese manufacturing companies « . An assembler, by definition, does not machine parts, or if it does, has minimal machining means.
Their size varies depending on the industry and strategy. A Chinese assembler has at least one assembly line and one packing line. Some of these assembly workshops incorporate the production of parts and thus become Chinese manufacturers.
Chinese assemblers are concentrating their resources on :

  • purchase of parts and components
  • assembly & packaging

There are a large number of Chinese assembly workshops in the field of electric scooters, for example.

Import Export Companies 3.0

These are the Chinese suppliers of tomorrow. They appeared with the advent of trading platforms like eBay, Amazon, and others. They focus on providing finished and customized products for online retail.
Their added value is especially vital for internet sellers and Dropshippers.
Their duties include :
– Wholesale purchases from factories
– Customization of products and packaging (labeling, making « kits »)
– Promotion and sale

The types of companies mentioned above are all involved at a certain level in global trade. Knowing how to differenciate them not only betters one’s understanding, but also gives a special edge to one’s business.

In some cases, it may be difficult to spot independent agent or an import-export company disguised as a Chinese manufacturing company. Shanghai JS Sourcing has been helping Clients navigate suppliers and vendors networks for a decade. Feel free to contact us for more information.