Read the business scope on the supplier's business licence. A scope that includes production or manufacturing terms, 生产 (production) or 制造 (manufacturing), with the relevant product category describes a company registered to make things. A scope limited to 销售 (sales), 进出口 (import and export) or 贸易 (trade) describes a company registered to sell things made elsewhere. Then check that the registered address and the customs records agree with what the scope says.
Why This Matters
Many Chinese suppliers presenting themselves as factories are trading companies, and many trading companies are good counterparties. The distinction matters for two reasons. The price stack is different: a trader's margin sits between you and the factory, which is sometimes worth paying for consolidation, language and small volumes. And the quality liability is different: the party you contract with is not the party that made the part, and the factory's identity may never be disclosed to you.
Being told you are buying from a factory when you are buying from a trader is a finding about the supplier's candour, whatever the merits of the arrangement.
How It Works
| Signal | Points to a factory | Points to a trading company |
|---|---|---|
| Business scope | Includes 生产 or 制造 with the product | Only 销售, 进出口, 贸易 |
| Company name | Product or process terms; 制造, 实业 | 贸易, 进出口, 商贸 |
| Registered address | Industrial zone, numbered plant or workshop | Office tower, serviced office, residential |
| Registered and paid-in capital | Consistent with plant and equipment | Small relative to claimed output |
| Customs records | Exports in the product's HS codes under its own name | Exports across unrelated categories, or none |
| Certificates | ISO 9001 scope covers manufacturing at the site | Scope covers trading, or certificate is the factory's |
Ask for the business licence and read the scope, which is a structured field on the official registry at gsxt.gov.cn. Then look at the registered address on satellite imagery. Then, if you have access to import-record data, check what the company has shipped under its own name. A factory's scope, address and export record usually agree; a trader's usually don't, and a group with a manufacturing entity and a trading entity will show two different licences.
If the supplier is a trader, ask which factory makes the part and whether you may verify it. A trader that names the factory and allows an inspection is usually a reasonable partner. One that won't is asking you to take the quality of an unknown plant on trust. The full verification route is in verifying a Chinese supplier in 2026; the RFQ side of dealing with an intermediary is in when to transform and when to redact an RFQ.
FAQ
Is buying from a Chinese trading company a mistake?
No. For small volumes, mixed orders, or when you need one counterparty across several factories, a trader can be the better choice. The mistake is not knowing which one you have, and paying a factory's expected price for a trader's service.
Can a company have both manufacturing and trading in its scope?
Yes, and many do. A scope that includes 生产 or 制造 along with sales and export terms describes a manufacturer that also trades. Check the address and the customs record to see which activity dominates for the product you are buying.
Does "factory" on Alibaba mean the supplier is a manufacturer?
Not by itself. Alibaba's Verified Supplier programme includes inspection reports by firms such as SGS or TÜV that confirm premises and equipment on the day of the visit, and those reports are worth reading. The business type declared on a profile is the supplier's own claim, and the licence scope is the record.
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