How can I tell if a supplier is a factory or a trading company?

A trading company resells work that another factory does. A factory runs the production lines itself. You can tell them apart by what they can show you, not by what they say. Every supplier’s website says “factory,” so the words tell you very little. Live video, documents and direct access to the people who make your part tell you a lot.

Why it matters, and why neither one is wrong

Trading companies are not bad. They can be a good fit for small orders, for mixed orders that need parts from several factories, and for buyers who want one contact for everything. Some do excellent work and are open about how they operate.

The problem is not the trading company. The problem is not knowing which one you have. The difference shows up in three places:

• Price layers. A trading company buys from a factory and adds its own margin. That is a fair business. But it means your money is split between two companies, and a change to the price has to travel through both.
• Slower engineering answers. When you ask about a wall thickness, a material or a tolerance, the question goes to the trading company, then to the factory, then back. Each step adds days. Details can also get lost on the way.
• Quality control one step removed. The people who see your parts come off the line work for someone else. If something goes wrong, the trading company has to find out from the factory what happened.

For a simple, low-risk part, none of this may matter. For a part with tight tolerances, more than one material or a finish that must match, it matters a lot. Know what you have before you order.

How to check any supplier

These checks work on any supplier, from any country. You do not need to be an expert. Run as many as you can. One answer rarely settles it, but a pattern does.

1. Ask for a live video walk-through of the floor, at a time you choose. A recorded tour can come from anywhere. A live call, ideally at a time the supplier did not plan for, shows what is running today. Ask them to point the camera at the machines making parts like yours.
2. Ask to visit. A supplier that runs its own factory can usually host you by appointment. You may never make the trip. But how they respond to the request is useful on its own.
3. Check the business license scope. In China, a company’s registered business scope is public record. See whether it includes manufacturing or production, not only sales or trade. Ask the supplier for a copy of the license and check the company name against it.
4. Ask to speak to the engineer who will run the part. Not a sales contact. The person who sets up the machine and knows the material. A factory can put this person on a call. A trading company often cannot.
5. Ask which steps run in their own plant and which at partner shops. Most factories use some outside partners. A clear, specific answer is a good sign. A vague answer, or “everything is in-house” with no detail, is worth a follow-up question.
6. Ask for real process photos and videos that match your part type. If you need a molded part, ask for molding photos. If you need machining, ask for machining. Generic factory pictures that could belong to any plant do not count.
7. Check that the address matches a factory. Look up the address on a map and in satellite view. A factory has a large building, loading docks and often a visible yard. An address that shows a small office in a business tower is a reason to ask more questions.
8. Ask who owns the tooling. The answer should be short and clear: you pay for the mold, and it is yours, or it is not. A vague or shifting answer is a warning sign. A tool you do not own is hard to move.
9. Look at the audit reports. If a supplier shows an ISO certificate or a social audit such as SMETA, check that the report names the supplier’s own legal entity and the address of the plant. A report for a different company, or a different site, does not cover this supplier.
10. Watch how fast technical answers come back. If a question about a material or a tolerance takes a week, ask why. It may mean the question is traveling to a factory you have not met.

How Fudakin answers these questions

We would rather you check us than take our word for it. Here is what we can show you.

• You can visit both of our factories, Shenzhen and Bangkok, by appointment.
• We can do a live video walk-through of the floor on request.
• Once a project starts, you talk directly with our engineers and a project manager.
• We were founded in 1996 and run our own factories in Shenzhen and in Samut Prakan, Bangkok.
• Both sites hold ISO 9001, ISO 14001 and ISO 45001 certification, and both are SMETA audited.
• You pay for your tooling and you own it.

A few steps, such as some die casting, silicone and rubber molding, and prototypes, run at trusted partner shops that we manage. If a step runs at a partner shop, we will tell you which one when you ask.

Read more about the two sites on our About and Thailand Manufacturing pages. Our Standards & Certifications page explains what the ISO certifications and the SMETA audit cover, and Tooling & Minimums explains how tooling cost and ownership work.

What to do next

Use the checklist above on us and on any other supplier you are considering. When you are ready to talk about a part, get a quote. Tell us what you are making and we will get back to you.