How to Identify a Real Factory vs a Trading Company

When sourcing from China, many importers believe they’re dealing directly with manufacturers.
But in reality, a large portion of suppliers online are trading companies — middlemen who source from factories and resell at a markup.

There’s nothing wrong with working with a good trading company, but if your goal is to control quality, reduce costs, and manage production directly, you need to make sure you’re talking to a real factory.

Here are five proven ways to identify them 👇


1️⃣ Check the Business License

Ask the supplier for their business license (营业执照) and review the “Scope of Business.”

  • Real factories include keywords like manufacturing, production, or processing.
  • Trading companies include sales, import/export, or wholesale.

📌 Tip: A genuine manufacturer’s business license will clearly list production-related activities.


2️⃣ Verify the Location and Facilities

Factories are usually located in industrial zones — not city office buildings.
Ask for photos or videos of their production site:

  • Workers on the production line
  • Machinery and assembly areas
  • Packaging or QC sections

If they hesitate or only show stock photos, that’s a red flag.


3️⃣ Review Their Product Range

Real manufacturers focus on a narrow product line — usually within one category.
Trading companies tend to offer a wide variety of unrelated items (for example: power tools, hair dryers, and kitchen blenders in one catalog).

A focused product range usually means they own the production.


4️⃣ Evaluate Their Production Capability

Ask these questions:

  • What’s your monthly output?
  • How many workers and machines do you have?
  • Do you provide mold development or OEM customization?
  • What testing certificates do you hold?

Factories can provide concrete answers and photos.
Trading companies often say, “We’ll check with the factory.”


5️⃣ Confirm with a Local Partner

If you’re not in China, work with a local sourcing agent or factory audit service.
They can:

  • Visit the site in person
  • Verify the factory’s existence
  • Confirm machinery and workforce
  • Report production capability

A short on-site visit often saves thousands in risk and miscommunication.


✅ Final Thoughts

Both manufacturers and trading companies can play important roles in the supply chain.
But if your goal is long-term cooperation, stable pricing, and quality consistency, verifying your supplier as a real factory is essential.

At ChinaBuy Sourcing, we help global buyers:

  • Identify real manufacturers
  • Compare quotations
  • Manage sampling and production
  • Conduct on-site inspections

So your sourcing from China becomes simple, safe, and reliable.


📩 Need Help Verifying a Supplier?

Our sourcing specialists can help you confirm whether a supplier is a real factory — within 24 hours.

Contact us or email support@chinabuysourcing.com to get started.


Leave a Reply

Your email address will not be published. Required fields are marked *