What is a Trading Company?
A trading company is a company that engages in the buying and selling of various types of securities (such as stocks). Most trading companies have their own stocks, shares, or futures accounts. These companies operate throughout the world but typically trade in the United States. Although there are many trading companies that have been established internationally, the majority of trading companies do their business within the United States.
A trading company is a corporation, partnership, or other entity that buys and sells goods, not for resale purposes, but for the purpose of making international sales. Trading companies purchase a wide range of goods, maintain a warehouse or a store, and deliver goods to buyers all over the world. In order to trade internationally, what is a trading company does is purchase goods at a wholesale price, and then resell those goods to consumers or other entities at higher prices.
For example, what is a trading company that buys and sells goods from China, India, and other countries? A wholesale importer/exporter, a manufacturer who purchases raw materials and goods from China, a distributor, a middleman who buys Chinese goods from factories in Hong Kong, and a retailer who sells them in the U.S. All participate in what is a trading transaction. The wholesale importer ships the goods from China to Hong Kong, where the factory stores them. There are many middlemen involved, but they are not distributors.
At the factory, what is a trading company makes contracts with the factories that will manufacture the goods for resale. The manufacturer ensures that the factory meets all of the required minimum order quantities. The importer ensures that the factory delivers the goods on time, and with quality. Distributors ensure that the factory ships the products to the final destination at the correct quantity.
What is a good trading company? It is a manufacturer who meets the minimum order quantities required by importers. It is a distributor who ships goods to the final destination. It is a retailer who sells to the final destination. A good trading company will never allow the factory to have a monopoly in any aspect of manufacturing. Good trading companies recognize that manufacturers who participate together in a cooperative effort are better able to meet the quality standards necessary to sell consumer goods.
What is a good trading company in terms of its relationship to the factories? A cooperative effort is one where the manufacturers have less control than the importers. This means that the manufacturer is buying directly from the factory, not through the importer. In such a situation, what is a good relationship between the factory and the importer is less control over quality issues, and often less control over shipment problems as well.
What is a good quality trading company for its relationship to the importers? A cooperative effort means a higher price level; this means higher prices of goods sold and higher profits for the manufacturer and retailer. A manufacturer who is directly involved with the supply chain has a clear advantage over one who does not. Therefore, it is important for the importer to work with such a manufacturer.
Why should anyone care about what is a trading company? Higher profits are the most obvious benefit of trading. However, working with a trustworthy, credible trading company can have significant beneficial impacts on both the manufacturer and the retailer. The manufacturer knows that its factories and suppliers are supplying good quality goods. The retailer has access to reliable and established contacts and the assurance that its goods are being delivered on time.