Trading Companies’s prices lower than direct factories

A foreign friend asked me why the China Trading Company’s prices  were lower than the  prices from the direct same  factory when trading companies and foreign customers bought the MDF from the same factory at same time ?

This is a good question, if the premise is not the same factory, it is good to explain, because the trading company in order to carry out the company’s work, must be profitable, so they will find competitive factories, such as small and irregular factory ,quality is not stable and uniform ,lack of stable customers or do not have a stable source of funds .

The questions of  the customer  is  when the customer and the trading company buy from the same factory at the same time, the prices are much higher than  the trading company, and the terms of payment are very harsh.

The problem also plagued a lot of domestic purchasing managers, because in the event of such problems, their foreign managers are expected to suspect that their purchasing managers have hidden cooperation with the factory?

In fact, according to my other friends knowledge and experience , and according to many years of copperation experience with such  factories, such factories have price advantage  , but have more stringent requirements, they need payment faster. However, a lot of foreign customers often pay more slowly, so the factory directly quoted higher prices to foreign buyers. Factory funds all need interest, whether they borrow from banks or borrow money from individuals.

Of course, this is only one explanation. There may be other problems that need to be handled with care.




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