Middlemen in China Manufacturing

Avela Corporation is a sourcing company, but we are often asked if we are middlemen.

We are not.

But before we go into the difference between a sourcing company and a middle man—also known as a trading company—allow me to explain why middlemen exist on the China Manufacturing scene.

Probably the biggest reason for a middleman is that less than one percent of the people in China speak English. If you have traveled in China you may have encountered a high percentage of English speakers in the major urban areas, but their numbers drop quickly in the hinterland where the factories are located.

There may be no business reason for a Chinese factory to have anyone fluent in English for the day-to-day operation of their business. A middle man can add value to a transaction by serving as a translator. Your question then becomes: how effective is my communication through the middleman and what is costing me?

You will probably never know, and that brings us to the biggest issue with middlemen: transparency. Or, to be more accurate, the lack of transparency with middlemen.

They tend to present themselves as the manufacturer, so you are fooled into thinking you are dealing direct with the factory and saving money. If you made your contact with a Chinese factory through Alibaba, the odds are very high that you are actually working with a middle man.

Again, they can add value to a transaction, but you also need to know that they are not working for you—they are working for the Chinese manufacturer.

It is something like buying a car in the US: you go into a dealership and the salesperson is representing the automobile manufacturer. They are only going to show you the manufacturer’s models, and they are going to try to talk you into the most expensive model in the showroom. That’s their job, and you probably knew and accepted that when you walked in the door.

One of the problems with middlemen is they don’t tell you that. Chances are you won’t figure it out until there is a problem and the middleman disappears and you have no idea who was actually responsible for making your product.

This brings us to how, as a sourcing company, Avela is different from working with a middle man. First and foremost, we work for you and we provide transparency. We tell you what our fees are and we tell you how we earn them. Then you decide whether our service is worth it to you (we are pretty confident you will think it is).