A. Using a trading company

Trading companies usually specialize in a certain industry – so they can find the right products quickly. Sometimes a trading company can help if the original supplier does not have an export license. A buyer can also make use of a trading company, especially when the trade value and volume is very small, in which case suppliers might be unwilling to supply directly.

However, there are pitfalls when doing business with or through trading companies. First of all, they do not usually reveal the original suppliers’ information and prices to the end buyers – their direct client. They might make a large profit from the price differences. In addition, quality is another concern, since a trading company would usually prefer to source material or goods with the lowest possible price. I know of some trading companies that supply bad quality products while using fake certificates.

Strategic sourcing is very popular now. Sometimes the buyer needs to work with the original suppliers closely for products innovation, new market development, or other strategic purposes. A trading company operating between the buyer and supplier would then represent a barrier, especially since efficient, direct communication between the buy & supply parties is absolutely essential.