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  • Writer's pictureBen Chu

More than half of the supplier you source are just middleman - face it!

Updated: Jun 3, 2020

Okay, let’s face the fact that more than half of the suppliers in any sourcing channel are “middle man,” and very few of them will tell you the truth. What makes it worst is that you have no way to find out the truth, no matter how your sourcing expert told you. (middle man takes many forms, we will come back to this). However, for most buyers, this is still the first few questions come out when they first meet a supplier. “Are you factory?”. Really, what are you expecting? “No I am just a middle man”? If you don’t want to look like an amateur to your supplier, stop asking this meaningless question.

At the very beginning of my career, I worked as a project holder for a manufacturer jointly owned by HK and Japanese. On one occasion, I was asked to receive a Japanese “customer” from HK and take him to our Dongguan factory. During the trip, I understood that this tiny old man is very knowledgable in the field of our business (metal processing), and he owned a small workshop in some remote site in Japan. He said that his “customer,” who is a huge and renowned brand name in Japan and worldwide, was waiting for us in our factory. I had no clue what he is talking about. By the time we arrived in my factory, my big bosses were all there together with that old man “customer.” During the “aisatsu” (socializing, opening, warm-up..many ways to explain this Japanese business manner), the old man surprised me by showing up a business card of himself, with MY COMPANY NAME AND TITLE.

So it is pretty clear that this old man was a middleman. His little metal workshop in Japan makes him very likely to make up story and obtain trust from the customer of his country. Now think about this - will the end customer (the big Japanese brand) know about this? Unlikely. He can claim himself a subsidy of our group, which obviously makes sense consider that my factory is big and famous in the industry. He could also claim he is a shareholder of my company, which customer will very unlikely to ask for proof. Last but not least, he could tell the end customer that he is hired as a consultant to tackle a particular mission or to deal with an exceptional customer. All of these 3 make him carry a business card of our company possible and reasonable.

During my long experience in sourcing, I see a lot of tricks like this, and especially from Taiwan trading company. This could be as simple as telling you, firmly and without a blink of eyes, that this is their factory (which actually just a supplier of them). The trick could also be creative as that the factory is belong to his father and is now occupied by his evil step-brother or so (I love this one). So let me tell you, audit and anything else doesn’t work.

You will have a good chance to work with middleman anyway, and just face it as a fact. Question is: is it really that bad to deal with a trader?

I will write more in the next article.


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