For an importer who wants the best quality for their products, a sourcing agent can be quite useful. The right manufacturer is the foundation for good business. He or she controls the stock and controls where customers will develop demand for your products. In China, the sourcing agents will work as a shortcut to connect you to a good supplier. They do all the work while also reducing the risk that goes along with finding a factory. The other option that exists is to source for everything via the internet. However, there is a danger of you falling into a scam. The other option is sourcing for things online and then going to China by air to complete the process. It can be time-consuming and confusing, especially due to things such as the language barrier and the inability to understand the laws in China.
What does a Sourcing Agent actually do?
The main task of a sourcing agent is to find and assess a reliable partner to manufacture the desired products of the client. The agent will assist a company to find the source of supplies and products at low prices. This way, the company saves money on the production process. The agents may represent an employer, or they could work independently for various companies. It requires knowledge of man languages and good coordination skills. The sourcing agents are usually paid a commission based on the value of the order.
One benefit of sourcing agent is that they can help one to get the best prices for their products. They usually have great connections with local companies and understand how to source various supplies. Companies are able to negotiate with a supplier, and they can get discounts and various friendly deals. It can save a lot of money and create a long-term contract for suppliers. As a result, both sides will have the incentive to work with the agent.
Sourcing agents can also be used to locate other companies aboard with which they can work with. The agent will usually assess the needs of a company, find suppliers, and meet them to see if they can take orders. Sourcing agents also often inspect a factory to ensure that it meets your standards. The standards can include ensuring your ethical concerns such as anti-pollution measures are met. It could also include the labor conditions and ensuring there is no use of child labor.
Sourcing agents also deal with issues of paperwork such as tariffs, duties, and ensuring taxation forms are filled out. The process can be quite a challenge for a company that is new to China. The skills and experience of an agent can help to reduce overhead and ensure that goods get through the ports much faster. Additionally, they help to reduce the risk of hold-ups in the supply chain. In places where corruption causes complications, sourcing agents are usually quite useful. Their understanding of local customs can help to cut through the red tape much faster.
Why Sourcing Agents Are Usually Pretty Bad
The wrong sourcing agent can be a huge liability. Most of these sourcing agents will get kickbacks when they pick a given supplier. Thus, it means they will not have an incentive to select the best clients for their customers. They will just pick a supplier that pays them the most.
There are many reputable sourcing agents in China. However, many others do not work quite well. They end up exposing the customer to a lot of risks. Product sourcing is a complex process that usually takes about 100 hours of work. As a result, some sourcing agent can be quite expensive. This might not make sense for a small business. Depending on the nature of the project, they can change tens of thousands to customers.
However, it is still important to balance quality and expenses. A cheap sourcing agent will rarely deliver the quality you want. In some cases, you might have to roll up your sleeves and do everything yourself. It might take a lot of time and work, but at least you will not lose your money.
The other issue is blind markup for products. This is because you are working with a middleman who can decide to hike prices. You have little or no contact with the factory. Any price you are told could come with a markup. As a result, this negates ay time and cost saving the agent provides.
In some cases, a sourcing agent can slow the shipping process. The company doing the shipping liaises with the supplier for delivery date. However, a sourcing agent will act as the middleman between your shipping company and the supplier. Since the sourcing agent does not have all the data from the supplier, it can cause a lot of back and forth. Before the right information reaches your shipping company, a lot of time could have been wasted.
The sourcing agent might not tell you who the supplier is. The agent might not want you and the supplier in direct contact since it could deny them revenue. As a result, you will never tell if you could have negotiated for a lower price. It could mean that you are never able to confirm whether your ethical concerns are being addressed. For instance, you cannot confirm the nature of the working conditions.
How to do everything by yourself
One of the most important aspects is to bring a translator with you. It will help to ease the negotiations. Most companies in China will hire young workers who speak English. However, there can be issues with the translation at the time. Thus, bring a translator with you whenever possible. You also need to send reminders to the factory. The reason for this is that the factories usually get many requests daily. Thus, your message might not have been seen. Do not be afraid to send up to three or four reminders. It may seem like factories are ignoring you, but it is just that they have too many requests.
Always conduct a factory tour. While negotiating online is cheap, it is usually not enough. Book a ticket to China and visit the factory. You will be able to determine if the factory can provide the quality that you need. While many have accused Chinese products of being low quality, it all depends on the factory you pick. Most factories produce low-quality goods since that is what people want. However, if you want quality, you must be willing to pay a bit more. Thus, if you get an offer that looks cheap, be sure that the quality might not be so good either.
Do not negotiate too hard. If you do, the factories might turn down your business. For instance, some people try to overstate the volume they will order in order to drive down prices. Most factories in China are already aware of this ruse, and it will not work.
You can opt to do all the legwork yourself, or you can decide to use a sourcing agent. However, it is advisable to use a sourcing agent in order to ease the process. The Chinese legal system is also different from what you are used to in your country. This could cause you huge delays and even land you in legal problems. Always opt for the services of a sourcing agent if you want to gain an edge over the competition. It will speed up the delivery of products to your customers while at the same time saving you money.
Having questions? Let's have a quick call via WhatsApp, WeChat or Skype and let us help you. Or use the contact formular on the bottom.
WhatsApp: +49 177 2950 951