Does he manufacture or just trade?

The risk: 60% of "manufacturers" on Alibaba are actually traders

A study by Dezan Shira & Associates (China Briefing) shows: on Chinese B2B platforms, many suppliers claim to be "manufacturer" but are in fact trading companies with no own production. They source the product from an anonymous subcontractor, repackage it, and resell with a 15–40% markup. For you as importer, this means: higher price, less control, no direct communication with the actual maker.

Worse: when quality problems arise, the trader is often not liable — they point to the anonymous subcontractor whose identity you never learn.

How to distinguish manufacturers from traders

1. Check the business license (营业执照)

The business license lists the "business scope" (经营范围). A real manufacturer has terms like "manufacturing" (制造), "production" (生产), or specific product categories. Trading companies have "wholesale" (批发), "import/export" (进出口), or "trade" (贸易).

2. On-site audit of the production site

We physically enter production and check: are the production machines present that match the product? An "electronics factory" needs SMD pick-and-place machines, reflow ovens, AOI inspection. A "furniture factory" needs CNC saws, sanding lines, paint booths. If the machines are missing — it's not a factory, it's a warehouse.

3. Employee headcount and specialization

Real manufacturers have production workers, QC inspectors, R&D engineers, warehouse staff. Trading companies are mostly sales people with headsets. The staff distribution reveals a lot.

4. Certificates issued to the manufacturer (not the trader)

ISO 9001, ISO 14001, BSCI audits must be issued to the supplier's registered company name — not to a "partner" or "parent company." We verify against the International Accreditation Forum (IAF) Database.

5. Direct factory output

Real manufacturers can show you production schedules, OEE data (Overall Equipment Effectiveness), defect statistics. Trading companies can't — they don't know the real production process.

Consequences if ignored

• 15–40% markup — you pay the trader's margin on top of the manufacturer's price.
• No direct quality control — the trader can't react in real time to production issues.
• No customization — traders only deliver standard goods. Real manufacturers can offer private label, spec adjustments, OEM solutions.
• Liability gap — for defects, the trader points to the anonymous subcontractor. You have no direct claim.
• IP risk — traders share your specifications with multiple subcontractors. Competitors end up with your designs.

Sources & further reading

• International Accreditation Forum (IAF) — database of accredited ISO certifiers worldwide
• China Briefing (Dezan Shira) — market analyses and supplier issues
• GTAI China — market entry and supplier search
• Quality Inspection Blog — in-depth articles on Chinese supplier verification
• ISO 9001 — Quality Management Systems