Trading company in UK VS trading company in China
I know there are trading companies in UK. They get orders in UK and they find suppliers in China and place orders with China suppliers. How does a British trading company get orders? I mean, why doesn't a British customer work with a Chinese trading company rather than a British trading company since a Chinese trading company can always offer a better price than a British trading company?
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Can a Chinese company offer "understanding of UK customers need"? Customers know UK companies and have clear understanding of risk involved when dealing with them. How they can estimate the risks involved when dealing with Chinese company? – Ross 12 years ago
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On top, can a chinese company provide the relevant standard of service for a UK customer - that is LOCAL, not with worldwide hassles. Can he deliver without customs etc. - importing and running returns etc. is a complex operation and if you run low volume customers they do not want to be bothered with having to ship returns worldwide because the chinese company just does not have a local representation. Plus you may need permissions etc. to run in UK, legal paperwork, certificates etc. - most chinese companies would be hard pressed to even know where to go. – Net Tecture 12 years ago
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To give an example - I recently imported 100 PCI express cables from china. Took my company about 6 man days (!) to clear them through polish customs (I am in poland) thanks to a small issue on the paperwork. Doubled the price. And the issues you may face just start there. – Net Tecture 12 years ago
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Added value is the short answer. – Steve Jones 12 years ago
1 Answer
As someone who've worked in HK and China I can give you the pros and cons
Local companies are bound by domestic laws, such as TradePractices Act and warranties. So the price a Chinese firm may quote is ex-factory or FOB. As others point out once customs, insurance and freight is factored in (see book Poorly Made in China on short-fibre packaging which falls apart) the price may escalate.
HK companies have recognised that with Alibaba, foreigners can go straight to their suppliers so they focus on logistics, supply chain coordination and a whole of international compliance issues that a pure manufacturer doesn't care about. For ExIm, the difference may be marginal but when you are trying to coordinate across multiple components and offices, having a single point of contact simplifies matters.
The book Poorly Made in China makes the point that the first item is usually precisely to specs but that quality fades over time as margins are cut. The example author gives are pockets whose depth are just a couple centimetres too short to fully insert his western fingers. Save a few cents at cost of pissing off your customer(s)? Not to mention subsuppliers which you have no control over such as illegal abestos brake linings in chinese made imported cars?
There are times where there is no choice except to deal with chinese firms. Example is limited export quotas or a JV may make it conditional to partner up. Fortunately the competition is forcing them to smarten up their act (though still uneven) so taking the time to develop long-term relationships can be worthwhile if you believe your interests are aligned ... just be careful of the old saying, "same bed different dreams" if your supplier starts treating you like a competitor.
