A gym equipment supplier in Berlin was paying three layers of middlemen until our agent proved it. Once he bought direct from the actual manufacturer, his unit cost dropped by 28 percent on the first order. Nobody had ever sent him an invoice for that 28 percent. It sat inside a price he took to be the factory's price.
That is the trading company question in one order. A trading company buys from a factory at one price and sells to you at a higher one. Our guide to trading company vs factory in China puts that margin at usually 5 to 15 percent, sometimes more on custom goods. On an $80,000 order, that is $4,000 to $12,000 for a layer that never shows up as a line on your invoice.
Mila Sourcing runs the same order the other way round. The factory quotes you its own ex-factory price. You transfer the money straight to the factory. Our fee is a separate flat fee, disclosed up front on the pricing page, and we take no commission or kickback from any factory.
Where the real difference sits in an order
Both routes can get your goods onto a ship. The difference is who holds the information at each step, and who holds the bargaining power when something goes wrong. Follow one order from quote to reorder and it shows up four times.
The quote: a resale price or the factory's own
A trading company sends you one figure. Nothing under it shows what the factory charged. If you win a discount, you have no way to know if it came out of production cost or out of the trader's cut. Raw material prices drop and the factory's cost drops with them; the trader decides whether you see any of it.
With Mila, a verified agent on the ground in China goes straight to factories that make your product category. You get 3 to 5 competing quotes from those factories, in WhatsApp, in about 10 business days. Several quotes against one spec show you the real price band for your product. One resale figure can never show you that. Clients typically pay 20 to 30 percent less than Alibaba pricing; the figure varies by factory and product category.
The incentive runs your way too. A sourcing agent paid by the factory has a reason to keep your price high. Mila is paid by you, so our job is the lowest verified ex-factory price.
The factory: named and checked before you pay
For a trader, the factory contact is the business. Name it, and you could order from that factory yourself next season, so many traders keep it to themselves. Without the name, the checks that matter are closed to you. You cannot look up the business license on gsxt.gov.cn, China's official company registry, to see whether its registered scope includes manufacturing. You cannot send anyone to stand on the production line.
With Mila, each quote comes from a factory you can name. Before any deposit moves, your agent checks the license scope against the registry and confirms that the bank account name matches the registered company. Then the agent walks the line on video. The GPS location is captured inside the app at the moment of recording, so you can match the address to the license yourself. Our answer on how to tell a real factory from a trader lists the same checks if you want to run them on a supplier you already use.
Payment and contract: who holds your money
With a trading company you pay the trader, and the trader pays the factory on its own terms. Your contract, if you have one, is with the reseller. The reseller's contract with the factory is a document you have never read. If the goods are wrong, you cannot hold the plant that produced them to anything.
With Mila you pay the manufacturer directly, and Mila never holds your funds. Before any tooling or production deposit releases, a bilingual NNN agreement in English and Mandarin is signed with the factory. Local Chinese lawyers draft it, and it is enforceable in Chinese courts, which a Western NDA usually is not. Mila's own fee is paid per step through Stripe inside the app, so no large sum leaves your account up front for our service.
Defects and reorders: who can stop the line
When a batch fails, only the factory can fix the cause on the line. Through a trader, your complaint is relayed to a supplier the trader cannot afford to lose, in a language you do not share. The trader's interest is to keep the order moving.
Reorders carry a quieter risk. The sample you approved came from one factory. To protect its margin, a trader can place your next run with a different factory and not tell you. The goods arrive different from the sample, and you have no factory name to point at.
Mila runs 3-stage AQL quality control. The first stage signs off materials and a golden sample before production starts. The second is a mid-run inspection while goods are still on the line. The third is AQL sampling before the container loads, and if it finds a defect, the container does not load until corrective action is agreed. On an LED beauty lamp run, this kind of work took the defect rate from 8 percent to 2.5 percent before mass production. Your agent speaks to the factory directly, in Mandarin, so nothing is relayed.
When a trading company is the better choice
A good trading company earns its margin, and plenty of importers use one on purpose. It is often the better route in these cases:
- Small mixed orders. You need a few hundred units spread across unrelated products. A trader consolidates several suppliers into one shipment and handles the export paperwork, so you do not manage ten factory relationships to fill one container.
- Quantities below factory MOQ. A trader that pools demand from several buyers can sell you a share of a larger lot.
- Very small first orders. On a tiny run of a simple product, any structured service fee becomes a large share of the total.
- An open trader. If it says it is a trading company, names the factories it uses and lets you audit them, the margin buys real coordination.
If your order fits one of these, we will tell you. For samples and very small batches, a Strategy Call is the usual starting point, and it maps whether factory-direct sourcing or a small-batch trading route suits your volume.
Mila wins once the hidden margin and the unnamed factory start to cost real money. For orders above roughly 25,000 US dollars, a flat fee usually costs less than a percentage built into the price. The gap widens on custom goods, where the spec has to survive the trip from your drawing to the line, and on repeat runs, where you need the same factory every time.
That is the work of Full Production Management. You get a named factory with a contract you hold directly, and three inspections in China before anything ships. Freight booking and customs documents are handled too. Typical electronics or consumer goods run 6 to 12 weeks from contract signed to container shipped.
The whole order runs inside one WhatsApp thread you watch and act on, with nothing to install and no password to remember. Quotes and audit video arrive in the thread and by email. Mila has 37 verified agents across Shenzhen, Yiwu, Guangzhou, Ningbo and Dongguan, each matched to a product category and region, and a match happens within 48 hours. There is an operational team in Guangzhou, under Mila Sourcing Guangzhou Co., Ltd. The EU contracting entity is Mila Sourcing OÜ in Tallinn. The founders are reachable at any step, in the same thread.
Before your next deposit goes to a trader, ask for the ex-factory price and the registered name of the factory, in writing. If either request gets a vague reply, send us your spec on WhatsApp and compare it against factory-direct quotes.
Questions importers ask
Should I buy from a trading company in China?
Yes, if your order is small and mixed across unrelated products, or below what a factory will accept. A good trader consolidates suppliers and handles export paperwork. For larger or custom orders, buying factory-direct usually costs less and gives you a contract with the plant that makes your goods. The real risk is using a trader without knowing it, so check the business license scope before you pay.
How much margin does a Chinese trading company add?
Usually 5 to 15 percent on top of the factory price, sometimes more on custom goods. On an $80,000 order that is $4,000 to $12,000. You rarely see the figure, because the quote arrives as one price with no ex-factory cost under it. Ask in writing for the ex-factory price and the factory's registered name. A trader that will not give either is keeping its margin out of view.
Is a sourcing agent better than a trading company?
It depends on who pays the agent. An agent paid by the factory has a reason to keep your price high, which brings back the trader's problem. Mila Sourcing is paid by you through a flat fee disclosed up front. It takes no commission on the factory invoice and accepts no kickbacks. You pay the factory directly, and the factory quotes you its own ex-factory price.
How can I tell if my Chinese supplier is a trading company?
Read the registered business scope on its business license and check it on gsxt.gov.cn, China's official company registry. A factory's scope includes manufacturing or processing. A trader's says wholesale or import and export. Then confirm the bank account name matches the registered company, and ask for a live video walk of the production line with no notice. A trader will usually stall or send photos.
What if my order is too small to buy factory-direct?
Mila Sourcing does not set its own MOQ. Typical first-run MOQs we secure are 50 to 500 units for consumer goods, 100 to 1,000 for electronics and 30 to 200 for industrial products. For samples and very small batches, a Strategy Call is the usual starting point. It maps whether factory-direct sourcing or a small-batch trading route makes more sense for your volume.
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