3 Main LED Lights Supplier Types in China

You should know when you sourcing LED lights from China

There are three main LED lights supplier categories to take into consideration when importing from China – LED Lights Manufacturers, LED Lights Trading Companies and LED lights manufacturing & LED Lights Trading Companies. While the type of company will not be the most important factor when selecting your LED lights suppliers, different types of LED lights suppliers will require a different approach during the sourcing process and have a major impact on the future of your import business.

Therefore it’s important to know what type of LED lights supplier you should look for when sourcing in China. Let’s begin with an introduction to the three major LED lights supplier types in China.

LED lights supplier type #1: Manufacturers

Most importers assume that it’s always preferable to “go straight to the source” and purchase directly from LED lights manufacturers while cutting out middlemen. I tend to agree with this statement and usually it certainly makes sense to buy directly from the LED lights manufacturer when importing from China. However, doing this is not always an option for small businesses and stores looking for a wide selection of products in fairly small quantities.

Advantages

1) Gives the importer more options when ordering custom made or branded products (OEM / ODM)

2) The importer works directly with the original LED lights manufacturer and is more aware of the pricing structure, the different capabilities and limitations of the LED lights manufacturer – thus making current and future product development more efficient

3) The elimination of intermediaries can result in lower prices

4) In case of a dispute you will be negotiation and demanding compensation directly from the LED lights manufacturer instead of relying on an intermediary to handle the negotiations. You can never be sure that the intermediaries consider you to be more important than the LED lights manufacturer.

5) LED lights manufacturing companies are often larger than LED lights trading companies and may have more resources to compensate or remake a failed order

Disadvantages

1) May result in a higher Minimum Order Quantity (MOQ) requirement since the LED lights manufacturer has to produce a certain amount of units in order to be profitable and to purchase a certain quantity of material and components from the material and component LED lights suppliers – who also have MOQ requirements

2) Many LED lights manufacturers do not have an export license that is required to export products from China.

3) Some LED lights manufacturers are lacking product knowledge possessed by agents and LED lights trading companies

4) A large manufacturing enterprise may consider a small buyer as irrelevant which will put the buyer in a weaker negotiating position

5) LED Lights Manufacturers specialize in their industry and can only offer a limited product selection

When you should consider to buy from a Chinese LED lights manufacturer

If you are highly specialized in a certain field of products
If future product development is a high priority
If custom made and/or branded products are a high priority
If product certification is a high priority
If your product very price sensitive

LED lights supplier type #2: Trading Companies

Trading companies have a very long history in China and traditionally act as a broker between foreign buyers and Chinese LED lights manufacturers. The status of the LED Lights Trading Company has been a decline in the last few years. The main reason is probably that more and more LED lights manufacturers in China are experienced enough to deal directly with buyers around the world. This has left a smaller piece of the cake for traders. However, there are situations when buying from a Chinese trading company actually makes sense.
Advantages

1) Offers lower Minimum Order Quantity (MOQ) Requirements compared to LED lights manufacturers since one batch of products can be divided among several buyers

2) May offer a wider product selection through an established network of LED lights manufacturers

Disadvantages

1) Often more expensive (5 – 10%) than the original LED lights manufacturer

2) Disputes and complaints will go through the LED Lights Trading Company and your refund or remake is at their mercy. In some cases they will prioritize the relationship with the LED lights manufacturer over the buyer

3) Communication regarding quality requirements and product specifications will be filtered through an intermediary and thereby increasing the risk of misunderstandings and quality issues
You might not be able to verify the original LED lights manufacturers’ capabilities. This is something that might cause future product developments to take a very long time.

When you should consider buying from a LED Lights Trading Company

If you need a wide product selection
If you are purchasing smaller quantities per product
If your product is not very price sensitive
If product certification is not a high priority
If custom made or branded products are not a high priority

LED lights supplier type #3: Manufacturing-trading Company

Many, if not most, export oriented LED lights manufacturers in China are not limited to the products they produce themselves but expands their product selection by outsourcing production to other LED lights manufacturers. The main problem here is to find out which company is manufacturing the products you intend to import from China. If the LED lights supplier is not manufacturing the products, but subcontracting them to another LED lights manufacturer, then you are exposed to the same Disadvantages and risks as if you would be dealing with a LED Lights Trading Company.

Advantages

1) Even if the LED lights supplier is not manufacturing the products themselves, the fact that they are manufacturing products in the same or similar category indicates that the LED lights supplier have a decent product and product certification knowledge. If they also have a sophisticated Quality Management System in place, it’s possible that they will apply this to their subcontractors to some extent.

Disadvantages

The LED lights supplier can be an industry leading LED lights manufacturer for Product A and at the same time being below average for Product B (which they subcontract). It all boils down to product knowledge and quality management, which is best overseen “in house”.

When you should buy from a LED lights manufacturing and LED Lights Trading Company

If you cannot find any qualified LED lights manufacturer
If the LED lights manufacturer gives you access to information regarding the subcontractor
If the LED lights manufacturer applies a Quality Management System to not only itself, but also its subcontractors