12/05/2026
I was in a factory in Zhengzhou last spring โ household goods, around 200 workers, three production lines running.
The buyer I was with had been ordering from a trading company in Guangzhou for four years. Consistent product, reliable delivery, a working relationship he trusted. He had no complaints.
That morning, we sat with the factory owner and ran the numbers side by side.
Factory gate price on his main SKU: $4.20 per unit.
The price he was paying his Guangzhou intermediary: $6.80 per unit.
That's a $2.60 gap. On his quarterly order of 10,000 units, that's $26,000 per order going to a company that forwarded his purchase orders, collected their margin, and contributed nothing to the product โ no QC at the factory, no logistics management, no design input. They sent emails and invoices.
He had been doing this for four years. At four orders per year, that gap had cost him roughly $416,000. Not from product defects or shipping losses. From a layer in the supply chain that added no value.
I've seen this pattern across Henan, Guangdong, and Shandong more times than I can count. The trading company model is not dishonest by Chinese business standards. It's how the system was built. But buyers sourcing through intermediaries without ever checking the factory price pay for a layer they can't see and don't need.
The fix for this buyer took two days. We verified the factory โ business licence, production capacity, bank details, sample production run, payment terms. He placed his next order direct. ๐๐ฎ๐ป๐ฑ๐ฒ๐ฑ ๐ฐ๐ผ๐๐ ๐ฑ๐ฟ๐ผ๐ฝ๐ฝ๐ฒ๐ฑ ๐ฏ๐ญ%.
Same product. Same quantity. Same factory.
What he did with that margin is his business. He launched a second product line six months later.
The obstacle that stops most buyers is a confidence gap. They don't know how to approach a Chinese factory without an intermediary in the way โ what to check, what to ask, how to protect themselves on payment before goods ship. Eighteen years of factory visits and supplier verification across Zhengzhou and Shenzhen is the gap I close.
If you source from China through an agent, trading company, or Alibaba storefront, one question worth sitting with: when did you last know the factory gate price on your main product?
If you don't know, the gap is likely costing more than you'd expect.
Drop a comment or send me a message if you want to understand what a direct factory verification process looks like for your product category.
Have you ever asked a supplier for their factory gate price directly? What did you find when you did?