(i) Even before the factories began to be set up, there was large scale industrial production for international market. This period was referred as the period of proto-industralisation.
(ii) During this period merchants from towns in Europe began moving to the country side, supplying money to peasants and artisans, persuading them to produce for an international market.
(iii) With the expansion of world trade and the acquisition of colonies in different parts of the world, the demand for goods began growing. But the merchants coultl not expand production within towns.
(iv) The urban crafts and trade guilds became powerful and exercised monopoly right to produce and trade in specific products.
(v) It was difficult for new merchants to set up business in towns. The proto-industrial system was part of a network of commercial exchange.