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Eliminating intermediaries seems a natural process for every entrepreneur who wants to obtain a product in the best possible conditions. Arriving at the source or, thinking that we have arrived at the source gives us satisfaction and is a priority objective of many buyers in China.
The majority does not get it, however, that same majority thinks that it has done it and that it is buying in the factory.
Today, in the far east, we are going to talk about factories and traders.
How many times have we heard that “I buy at the factory”. Intuitively, it seems clear that buying at the factory is better. We will not see anyone comment proudly buying the intermediary of an intermediary. It is difficult for a television ad to seduce us with a “buy mattress to the best broker in the market”. The normal thing is that they tempt us with a “factory direct”.
Perhaps the first speaker sinned honest and said no, maybe the second too, but I assure you that in this simple mechanism of trial / error the Chinese already understood some years ago, that answering “no” to that question does not work. Therefore, they answer “yes”. And they answer yes in a variety of options tanned by years of experience. Yes and you are here, yes and you can visit us whenever you want, yes and we have many factories, if you look at this business card that says here … and many more.
Yes and you can visit us whenever you want comes also from having learned that when they started to lie and say yes without more, the most well-versed buyers would say: “Well, when can we visit?” And then a bunch of excuses would arise … “is that it is very far, it is that you have to go by plane, it is all displayed on the stand “. The “we have many factories” is a very new trader but you can still find it sometimes. What you see this card that puts it here is sensational, taking into account that at the entrance of the fairground you print 100 cards for $ 1.5 and you can write on them, if you want, that your uncle invented the internet.
In short, I never recommend buying at fairs but it is a good contact with the country.
In my experience in China, I would say that between 7 and 8 out of 10 customers who believe they buy in the factory do not. It’s funny when they try to show you yes, they have visited the factory, they have sat at the owner’s table, they have been at their wedding and many other incontestable evidence that they are really buying at the factory … no, undeniable proof that really the Chinese are smarter than us.
I leave this topic open for future episodes because the objective of this is not to show that we are not really buying in the factory, it is to debate whether buying directly from the factory is what interests us the most.
But if they are not factories who claim to be … what are they? They are traders.
But what is a trader. Because they exist?
Traders are in all countries but it is true that China developed them as a subspecies and gave them a remarkable space in international trade.
A trader is basically an intermediary. Buy the products and sell them. Most of the time neither buy them or at least not acquire them. Many of the traders we work with are a company that consists of our contact person, a briefcase and a laptop. But beware, it is not a parasite, they fulfill a function.
The problem is that we are not used to paying for services or, we think we can make them ourselves saving that cost, traders have a bad reputation.
Where did they come from? Reducing it to absurdity, he used to say that a trader was the clever kid in the town who spoke English, or at least believed he knew how to speak it and was smart enough to run a computer. By creating a catalog of the products of the village factories, he was able to print flyers, present himself at a fair with four samples or, years later, prepare a website and advertise on Alibaba.
In that first opening period, the factories did not have enough vision to hire a fellow who spoke English. It is true that many times, in remote areas, and included the outskirts of Shanghai as a remote area in the late 90s, it was difficult to find someone who spoke English. The traders were the simplest interface to join two worlds.
We must also think about the origin of China’s opening to the world. Leaving aside the privatization of state factories at the time when the Chinese discovered that if you turned employees into entrepreneurs, suddenly, the factories went on to produce 10 times more … the majority of the factories with foreign investment were placed in the area of Guangdong, in the newly created Shenzhen, which went from being a fishing village of 30,000 inhabitants to more than 13 million today. This happened basically because most of the foreign direct investment came from Hong Kong and Taiwan … A fact that we usually ignore when we say that the US and Europe developed China.