what do you call a "manufacturing" company that doesn't make anything?

January 03, 2019

by a searcher from University of New Hampshire in 101 Rocky Pond Rd, Hollis, NH 03049, USA

I am looking at a target that the owner calls itself a manufacturer but what they really do is outsource the production to a Chinese company. This isn't a political question and I get the argument about offshoring. My question is how to characterize the business - I don't see any R&D expense in the financials so they can't say they are doing the design work and having their contract manufacturer just build it and the target has about $25k in fixed assets on $5M in sales.. To me it looks like a distributor. I'm interested in any one else's thoughts.

Thanks in advance

-Tim

Reply by a searcher
in Winston-Salem, NC, USA

I'd call it a distributor. Distribution not usually an exciting business model for me unless there is a level of separation between the manufacturer and end customer, which it sounds like you have in this case. Importing can be tricky for non-sophisticated buyers, so if this company has solid relationships set up and plenty of infrastructure to maintain stock there is huge value to the end customers to buy through distribution (you) rather than try to buy direct.

Reply by a searcher
from IE Business School in Arusha, Tanzania

It could be a specialised trading house or simply an orchestrator which market products it has got design and manufactured by third parties. What is the level of sophistication and design of their products? Are they differentiated products or commodities?

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