Leaving Middlemen Out
The main point of the article, “Avoiding Middlemen- what most China sourcing agents, trading companies and brokers don’t want you to know!” by Mike Bellamy, is to warn buyers of middlemen, or intermediary traders, and to give them guidance on finding proper factories to supply their products. As stated in the article, and learned in class, middlemen, or intermediary traders, are only interested in matching up buyers with factories to make a profit for themselves.
The four reasons buyers should avoid middlemen as stated in the article is due to cost, quality, security of their designs, and communications. Buyers who work directly with factories and without a middleman would end up paying less for their products, thus reducing cost. In terms of quality, middlemen are more focused on making a profit than the quality of the products produced at the factories, thus middlemen may end up matching the buyers with factories of low quality options. Also using middlemen makes the designs of the buyers products less secure as middlemen can share designs with others, resulting in knock offs being produced. And finally with middlemen, if there is an issue with the design of the products, the buyers have to communicate through their middlemen, who have less knowledge of the production of the product, rather than directly to the engineers on the production line. The article then continues on listing ways on how to spot middlemen.
This article relates to the topic of intermediaries covered in class because in class we discussed the scenario of traders buying items from sellers and then selling items to buyers while trying to maximize their profit. This is the same as the article where we have buyers wanting to have their products produced, and then many of them end up paying middlemen to supply them with their products, where the middlemen have set up deals with sellers, or factories, to have the buyers’ products made. This article claims that the buyers should try to avoid the step of working with middlemen and negotiate directly with the sellers or factories.
-el92
http://psschina.com/files/avoiding-middlemen.pdf