How to Tell a Real Factory from a Trading Company

Search any product on a B2B marketplace and most sellers will call themselves a manufacturer. Many are not. That is not always a problem — a good trading company can be useful if you are buying across many categories — but you should know which you are dealing with, because it changes your price, your lead time, and how much you can customise.

Why does it matter?

A trader adds a margin, typically 20 to 40 percent. They also sit between you and the people who actually make the product, which slows every technical question and makes real customisation harder — if the factory says a tolerance is not achievable, that answer reaches you filtered and late. When something goes wrong mid-production, a trader can only relay messages. Direct factory contact means decisions get made on the floor the same day.

Ask for a live video walk of the floor

This is the single most effective test. Ask for an unedited live video call, not a pre-recorded clip, and ask them to walk from raw material to packing while showing the specific process your product needs — cutting, grinding, engraving, whatever applies. A factory can do this on request. A trader will offer a polished video file, reschedule repeatedly, or show a floor that does not match the product they are selling you.

Ask a question only a maker can answer

Pick something specific to the process. For gemstone dice, for example: which stones chip most during grinding and how do you compensate, what is the actual engraving depth in millimetres, how do you handle natural fractures in the raw block, what is your scrap rate on a hard stone. A production manager answers immediately and with numbers, often adding a caveat you did not ask for. A trader gives a vague reassurance or says they will check and come back tomorrow.

Check the business licence

• Ask for a copy of the Chinese business licence and check the scope of business — manufacturing (生产) rather than only trade (贸易).
• Compare the registered address with the factory address they gave you.
• Check the registered capital and founding year against what they claim.
• Cross-check the company name on a Chinese company registry lookup.

Look at the range they sell

This is a quiet but reliable tell. A real factory has enormous depth in what it makes and nothing in unrelated categories — a gemstone workshop offers dozens of stones and shapes but will not also sell electronics and textiles. A catalogue that spans many unrelated materials almost always means sourcing from multiple suppliers. Ask directly: which of these do you make in house, and which do you buy in. An honest factory will tell you plainly, because most factories do outsource something such as printed packaging.

Watch the sample lead time

A factory making an in-house product can usually sample quickly, because the material and the machines are on site. If a simple sample consistently takes weeks with no clear explanation, the supplier may be ordering it from someone else. Ask what specifically drives the sample lead time — a maker will name the step, such as waiting for a stone block or for an engraving fixture.

The warning signs

• Refuses a live video call but sends polished photos and videos.
• Cannot answer process questions without checking first, every time.
• Business licence scope is trade only, or they avoid sending it.
• Asks for payment to a personal account rather than the company account.
• Sells a very wide range of unrelated product categories.