Factories vs Traders Part 3

I decided to call the contacts I had made at the factory and understand what the problem had been. The reality I discovered opened my eyes wide. Our trader placed many orders in that factory. Among them, a multinational, which was our competitor whose orders were between significantly larger than ours. They had a production problem with that other customer and the factory and the trader argued. The trader used all the orders placed in that factory as a hostage in the negotiation. He threatened the factory with taking away all the customers if the factory did not pay the costs of that misunderstanding. The trader was between losing the factory or losing the client. If it was his best client … obviously, he preferred to lose the factory. The factory refused and the trader executed his threat. And there we appeared … that without eating or drinking we were forced to move our orders to another factory without having any problems with the current one.

That day I discovered that in the same way that working with a trader can give you advantages, let’s call it “group buying”, when there is a problem in that group … you can splash even if you do not want to. And I understood that group buying is beneficial if you are one of the key customers of that trader. That is, if you are big, move the orders of others to guarantee a better position in the factory and if you are the small … you are the harmed of the maneuvers performed by the trader to benefit its large customers.

Over the years, I discovered that traders can not even tell you about those changes. And that if I had not been present in the region, the factory change would have been made without notifying us. In fact, I have lived several cases like this, where when you go to perform quality control the trader gives you another address and tells you that they have moved the factory or any excuse thinking that a Western in China is lost, the Chinese characters look like all the same … and you can sneak the excuse they want because ultimately, you are in their hands.

The objective of this episode is that you have as much information as possible the next time you see yourself in the situation of choosing between a trader or a factory.

A trader can be a partner, has done a previous search and filtering and speaks English, goes to fairs and does everything he can to get closer to your culture and find solutions to your problems. A trader is also a kind of wholesaler in origin for small orders that a factory would not allow.

That is, there is no definitive answer between factory or trader. We have to know how to formulate the question well about what we need and the answer will be one or the other.

Also be aware that this is not A or B and, although they are major choices, we do not have to get lost in a false dilemma fallacy and we can add variables and think that a partner in China can be an alternative to a trader and also it is to displace a worker of ours or hire a worker in China full time or part time if our business is smaller and we will reach factories as a trader does by paying a fixed cost and not a percentage of everything we buy … which also increases as we grow and as we said, it is increasingly difficult to escape from this captive client syndrome.

We have to get them to trust us not to enslave us and for that there are many options, we do not stay with the most common or the first that they offer us.