If you are in the adhesive tapes industrial for years and purchase many times from China, I believe that sometimes you received a cheaper price from the trading company than the factory.
It’s quite surprised, but why?
Here are some reasons:
- Factories Positioning
For example, for the double-sided tissue tape, there are several factories in China, some are targeting to the low quality market such as India, Pakistan etc, some are targeting to the high quality market such as Europe, USA etc.
If you are from India, but you are contacting the double-sided tissue tape factory whicch is targeting to Europe, then definitely that price is too high for you.
- Relatives Relationship
In China, in many cities, people like to get together. One person get rich and running a big factory, all his relatives or people coming from the same village will go to his company also. After worked few years, some of them will leave and open their own trade companies. Usually this factory will give like 20% discount price to support those trade companies. So all of them can grow together and quickly.
If that trade company add 5% profit only, then quote to you, definitely his price is cheaper than the factory.
- Distributor Limits
As we know, lots of famous brands for adhesive tapes have their distributors everywhere. For example Sekisui Brand from Japan, they have distributors in China. The first-grade distributor, the second-grade distributor, the third-grade distributor etc. Usually the first-grade distributor has the lowest price. But nobody will tell you which grade they are in. So If you are contacting the third-grade distributor, then the price you got will be pretty high.
- Friendship or Partnership
In most of Chinese adhesive tapes factories, the salary rules is like this: for example 5000RMB per month as a basic salary,0.5% commission of total sales amount.
Usually the sales know the possible lowest price. If we are very good friends with that sales, he’ll give the lowest price directly to support. Because the low price has very little effect for his commission,so his main focus is helping his friend and also get the order.
So if their commission is based on the net profit, then things will be totally different.
- Export Methods
There are at least 4 kinds of export methods in China which will make the cost totally different. For 2 pallets of adhesive tapes exporting, some need around 2000RMB for export cost, some need 200RMB only. It’s a big difference. Even for the suppliers, many of them don’t know all the methods. This factor is actually quite important and have big effect.
- Raw materials and scale
For adhesive tapes producing, usually the big factory has lower cost. It’s easy to understand, for example you go to the fruit market, you buy 5000units of banana, someone buy 500units, you’ll get the better price. Also the big factory usually use much faster machine which can increase the production efficiency to save the cost such as electricity, water, labor cost etc.
- Special situation
Sometimes the factory will give a price which is unreasonable and lower than the market, because they don’t have many orders, if the machines stopped, workers don’t work, they still have to pay the salary. So that super low price is just used to get the order, keep everything running to cover all these costs.
Many other reasons……
Since the price could be so much different according to so many complicated situations, so do you still think the price from the factory is lower than the trader? Leave your comments below :)