How to tell a Chinese factory from a trading company

Why it matters more than the margin

The obvious cost is the markup — typically 5–15%, sometimes far more on low-volume orders. That is the part buyers focus on, and it is the least important part.

The real cost is control. When a specification changes, when a production run fails inspection, when you need a tooling modification or a material substitution, the trading company has to relay your question to the factory and relay an answer back. Nuance disappears in both directions. Lead times stretch because nobody in the chain owns the problem.

The second real cost is that you cannot audit what you cannot see. If you do not know which factory makes your goods, you cannot inspect it, cannot check its certifications, and cannot tell whether your order moved to a different plant between runs.

A trading company is not a scam. It is an intermediary you did not know you had hired.

The business licence settles it

Every Chinese company has a business licence (营业执照) showing a unified social credit code and, crucially, a business scope (经营范围). The scope is the legal statement of what the company may do.

A manufacturer's scope contains production wording — 生产, 制造, or the name of a specific manufacturing activity. A trading company's scope reads 批发, 零售 or 贸易: wholesale, retail, trade. A company may hold both, and many genuinely do.

Ask for the licence. A manufacturer will send it without hesitation — it is a document they attach to every contract. Reluctance is itself informative.

The scope is the answer. Not the website, not the brochure, not the factory photos.

Signals that are weaker than they look

Factory photos prove nothing: they are shared freely between the factory and everyone who resells for it. Video calls from a production floor prove only that someone stood on a production floor.

A company name containing 工厂 or "Manufacturing" is a naming choice, not a licence. So is a domain with "factory" in it.

Registered capital is not evidence of a plant. It is a number the founders chose, and until it is paid in it is a promise rather than a balance.

Questions that separate them quickly

Ask what else the line runs. A factory answers immediately and specifically, because it is their equipment. An intermediary gives a vague or oddly broad answer.

Ask about a tolerance or a material at the edge of the specification. A factory says yes, no, or "we would need to test" — all of which are real answers. An intermediary says they will check and comes back a day later.

Ask for the address of the plant that would run your order, and compare it to the licence address. A mismatch is not fatal — plants and offices differ — but it is a question worth asking out loud.