Factory (trading post)

Factory was the common name during the medieval and early modern eras for an entrepôt – which was an early form of free-trade zone or transshipment point. At a factory, local inhabitants could interact with foreign merchants, often known as factors. A factory could serve simultaneously as a market, warehouse, customs house, and defense post; it also supported navigation and exploration, often acting as a headquarters or de facto government for local communities.

The factory system had its origins in medieval Flanders, where it evolved from establishments for foreign merchants during inter-European trade into overseas institutions between European trade with Asia and Africa. The factories established by European states in Africa, Asia and the Americas from the 15th century onward also tended to be official political dependencies of those states. These have been seen, in retrospect, as the precursors of colonial expansion.

The etymology of factory has its origins in the Greek pandocheion (pandοxeίο) from which the Arabicfunduq and Latin transliteration fondaco evolved from during the late antiquity period. The Latinfactorium means 'place of doers, makers' (Portuguese: feitoria; Dutch: factorij; French: factorerie, comptoir).