Check suppliers, price imports, write RFQs

Alibaba Trading Company vs Factory: How to Tell

Paste a business scope and answer a few questions to see whether the evidence points to a maker, a trader or neither. A trader is a normal kind of business.

An Alibaba trading company buys from factories and resells the product, while a factory makes it in its own plant, and both can be legitimate. The Supplier legitimacy checker helps you judge whether a supplier is more likely one or the other, and it flags risk signals along the way. The checker runs in your browser, is free, needs no sign-up and uploads nothing. It works from answers you give about what you see and from optional licence details, so it gives a list of signals rather than a verdict on any company. Use it before you pay a deposit or sign a contract, especially when you are comparing a manufacturer or trading company offer from China.
Factory vs trading company example

How to use the Supplier legitimacy checker

  1. Tell the checker where you found the supplier and the verification status shown on that listing.
  2. Say whether Trade Assurance is offered.
  3. Enter what the supplier claims to be: a factory, a trading company or both.
  4. Describe how wide the product range is.
  5. Say what a third-party audit report says, if the supplier has one.
  6. Enter where the supplier asks you to pay and how much you must pay before shipping.
  7. Answer whether the supplier refused a live video of the production floor, a factory audit, the business licence or a sample.
  8. Say whether the price is far below other quotes you have received.
  9. Optional: enter the 18-character unified social credit code. The checker tests its check character and decodes the registering department, entity type and region code.
  10. Optional: paste the business scope in Chinese. The checker highlights manufacturing words (生产, 制造, 加工) and trade words (批发, 销售, 进出口) with English meanings.
  11. Read the results. You will see risk signals marked High, Medium, Reassuring or Note, each with a short reason and source links. You will also see a card reading “Looks like a manufacturer”, “Looks like a trading company” or “Unclear”, with the evidence behind it, and a list of next checks.

When you are finished, press the Print checklist button to print a one-page check sheet. You can keep it with your notes from calls and emails with the supplier.

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

No single document settles it, so the checker adds up several signals. Each answer adds or subtracts evidence points. Manufacturing wording in the business scope scores +1, which is a weak signal. Trade-only wording scores -2. An audit report that says “manufacturer” scores +3, and one that says “trading company” scores -3. Agreeing to a live floor video scores +2, and refusing scores -2. Accepting a factory audit scores +1, and refusing scores -1. A focused catalogue scores +1, and many unrelated products score -2. A total of three points either way gives “Looks like a manufacturer” or “Looks like a trading company”. Anything closer is “Unclear”.

China Checkup notes that the business licence is always the starting point, and that public registration records can be searched online in Chinese by the registered Chinese name. It also says some trading companies pretend to be manufacturers, so look at several signals together.

What does a business scope with 生产 mean?

生产 means “produce”. The business scope (经营范围) is the list of activities a company is officially permitted to carry out, and it appears on its business licence. A scope that includes 生产 means the company is permitted to make goods, but it is a signal, not proof. A manufacturer may list sales too, and a trading company can copy manufacturing wording.

Other words to know: 制造 means manufacture, and 加工 means process, which can mean contract processing where the company works on materials supplied by someone else. 批发 is wholesale, 零售 is retail, 销售 is sales, 贸易 is trading, 进出口 is import and export, 经销 is distribution and 代理 is agency. 销售 and 进出口 often appear on factory licences too, so they do not prove a company is a trader.

Which signals count for most?

This is how the checker weighs them, not a sourced rule. The scope and the catalogue come from paperwork and listings the supplier controls, so they carry little weight. A third-party audit report and a live video of your product being made are harder to fake, so they carry more.

Sources read for this page

Opened on the dates shown; notes say where we used a substitute.

Frequently asked questions

Is it bad to buy from a trading company?

No. A trading company is a normal kind of business. Epic Sourcing lists possible benefits, including lower minimum order quantities because orders are pooled, many product categories through one contact, export documents and logistics support, better English, and sometimes stock on hand. The typical downsides are a markup, which that agent puts at 10 to 30%, and more limited access to the factory itself.

Can a factory also be a trading company?

Yes. A business licence can list both production and trade activities, so a supplier may be both. Check the business scope, then ask which products the company makes itself and which it sources from others.

Does a “Looks like a manufacturer” result mean the supplier is safe?

No. The result is a list of signals based on what you entered. It is not an audit, a guarantee or a verdict on any company. Use the next checks list to confirm the points that matter most to your order.

Can the checker confirm that a company is registered?

It tests the check character of the social credit code and decodes its parts, but a code that passes this test is only well formed. It does not prove the company exists. To confirm registration, search public records in Chinese using the registered Chinese name.

Is a Made-in-China Audited Supplier report enough?

Made-in-China.com says its Audited Supplier reports are produced by SGS and cover business licences, certifications, and production and quality control systems. They can show whether a supplier is a manufacturer, a trading company or both. Enter what the report says in the audit question, and still use the other checks.