Cut Out Middleman and Go Factory Direct?

Since you are on this page, I guess you want to know “how to cut out the middle man“ or have already used our sourcing service and expect to “talk to the factory directly. “

First of all, Koh’s Development is a third-party intermediary, and we're not a manufacturing or factory entity but rather the “Notorious Middleman”!

If you're thinking about direct talks with factories, we suggest you contact Alibaba suppliers or find other ways to connect with factories.

Our role is to facilitate your communication with the factory only after being appointed for our services as a “Dedicated Sourcing Manager.”

If you are still reading, let me share some hands-on experiences.

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Many Buyers believe that "when I talk directly with the factory, I can cut cost and time, the product will be delivered on schedule, and the factory will handle product return for me, for sure."??

Initially, we agreed to this idea and only offered sourcing service by providing the factory's contact, and that's it, let the customer follow up with the communication with the factory, and we can move on with the next one.

However, 8 out of 10 customers returned and asked for further assistance with communication, negotiation, or translation with the factory, and even logistics, which were outside our original service criteria.

Before we discuss what made us come up with this idea of offering “Dedicated Sourcing Service”, let me share the challenges the customer faced by "talking to the factory directly".

Challenges When Talking to The Factories Directly

1.Communication Method

Many of you are asking for the factory’s email or phone number.

However, almost all communication in China is done on Wechat. Only 5% to 10% use emails for business communication. Yes, even for business communications, people use Wechat, not using emails in China.

If you are using Wechat, that is a good start.

Some might also ask for Factory’s WhatsApp. Unfortunately, since Whatsapp is not legally registered in mainland China as a mobile service provider, you will find communication through WhatsApp is extremely slow. Also, you cannot send pictures or videos when you want to demonstrate “this is the style you want“ to the manufacturer.

We do have a “Fire Wall“ when it comes to Internet use. So don’t expect the manufacturer in China to use Telegram, WhatsApp, Line, or Facebook Messenger or ask them to search using Google. All of these are not available to use in Mainland China.

2. Lost in Translations

Wechat provides translation services in the app, or you can use google translate to clarify certain points.

However, as you might be aware, AI translation is far from accurate between Chinese and English since Chinese is one of the most complicated languages to decipher, especially when culture-related words and expressions are involved.

Attached is a typical dialogue that will happen during the communication with manufacturers:

In this example, the manufacturer confused the client’s request to put the T-shirt in the designer package as a request to produce a “bag“.

Because in the Wechat translation, the “package” is translated into “包 (Bao)” in Chinese, while “包 (Bao)” has several meanings in Chinese: dumplings, handbag, or the action to wrap up. While it will be easier for the factory worker to understand if the translation is “包装（bao zhuang）“ , which means “package. “

We cannot blame the AI. Chinese is indeed very complicated.

As a professional translator with years of training and practice, I guarantee it is impossible to translate with 100% accuracy between the two languages. We have to repeat or rephrase to convey the meaning to the counterparty.

Moreover, since this manufacturer has no export license, they cannot receive foreign currency.

3. No Specifications of Quality and No Contract

For a small business owner of an e-commerce startup, the trial order usually starts from US$2,000 to US$ 10,000 or even less.

For a factory with 100+ staff and above, it is really hard to allocate the same amount of resources to cater to a US$2,000 order, while a US$1,000,000 order requires the same input of effort.

Under this scenario, not to mention a customized contract, even an NNN agreement will not be entertained.

Usually, the factory will issue an invoice for payment processing without terms and conditions, and that is all the "protection" you have.

It sounds frustrating, yet, this is the reality of the market.

Proper communication during the production and sampling stages is crucial because modification will be impossible once the bulk product is produced unless you have solid proof that the factory has failed to meet the "standard" stipulated.

It is essential to explain all the necessary details to make sure the supplier understands your needs clearly.

DON’T RELY ON WISHFUL THINKING when it comes to “Quality Control". It takes time, hard work, and mutual understanding.

Communicate effectively to achieve the desired results.

4. Payment

As I mentioned in our video (Sourcing From China EP4), it is best to purchase from Alibaba if you only need to buy generic products without customization.

When talking directly to factories, you are exposed to more risks as you may have to make 3 to 5 separate payments to different manufacturers, each with their version of contracts to review.

You'll only need to make one payment and sign one contract by working with us.

5. Return of Products

There is a high chance that you need to return the product to the manufacturer if the product does not live up to the “Quality Standard.”

It is easier for such a request if you only sell Generic Product which does not need customization with multiple factories.

However, if you are producing customized products with more than three parts to be customized, imagine, for each customized part, you are only dealing with one factory, you will encounter a nightmare by repeatedly reasoning “why the factory failed to produce according to your standard“ with three manufacturers!

Not to mention, sometimes, to customize one part, you might work with two factories simultaneously to ensure the cargo quantity can be delivered within a certain timeframe.

Since the product is not made by one factory, it is extremely difficult to negotiate a product return when another factory causes the defect.

It is a “supply chain“ issue.

Factory One failed to produce to standard, then Factory Two could not produce to “standard“, and the semi-finished product in the hands of Factory Three has already been “sub-par“ in standard, and the product return is definitely out of the question if you ask Factory Three to take all the responsibilities from his upstream suppliers.

6. Other Challenges

The challenges of working “directly with the factory“ can go on with issues such as “slow reply from the manufacturer“, “delay in production“, and the worst case scenario, “a payment scam” where someone claims to be the factory’s authorized representative and give you a random account to pay (usually through their personal Alipay or Wechat Account, or a 3rd-party offshore business account, which has no relationship with the factory).

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Doing international business is challenging, especially for SMEs and start-up e-commerce businesses.

But don’t worry. We are here to help you navigate these challenges.

Koh’s Development is a trading and consulting company established in Hong Kong SAR with our affiliated trading companies established in Mainland China with import and export business licenses, which enables us to operate effectively with a mature corporate structure.

To protect you from all the risks and challenges mentioned above and provide you with the most smooth transaction experience, we shoulder the risks ourselves in exchange for a reasonable service fee.

Our Working Process:

1.Generate Sourcing Report (starting from US$100)

After getting the sourcing report, you will have an initial understanding of the supply condition in the market and the amount of money you should allocate for this project.

2. Trial Order

We can facilitate the sampling if you want to procure the product mentioned in the sourcing report after receiving your full and cleared payment.

3. Mass Production

When you receive the sample and are happy with the quality, we can help you arrange production with the factories and coordinate the production process.

4. Logistics

We will coordinate the domestic logistics within China and consolidate the products in our warehouse before sending the cargo.

If you need customized packaging, we can fulfill the orders in our warehouse and arrange an international courier or sea freight to you on FOB, DAP, or CIF basis.

Currently, we do not handle DDP shipments. We suggest you look for an expert's help and find a local import customs agent to handle import customs clearance.

Need a professional sourcing and procurement agent in China?

Talk to us! (WhatsApp)