Conducting a supplier search on Global Sources or Alibaba from your office in another country isn’t going to help. There are lot many things to handle like finding new suppliers who can produce your items at the proper price and quality level, working with these suppliers to develop new products and designs, and maintaining the supplier relationships by managing communication, quality control, shipment follow-up, and crises, if necessary. Alone a buyer cannot handle all these things, as a result, they often face glitches in their order.
Sourcing from Chinese manufacturers is quite common. However, there are many obstacles that every buyer must face, especially if they are from Western countries. These obstacles include language barriers, cultural differences, etiquette, and business norms. Thus, hiring a third-party product sourcing agent in China sometimes becomes mandatory for certain businesses. They not only handle the business protocols mentioned above smoothly but being local gives them the freedom to mingle with these people easily.
Still, buyers have four options when sourcing products from China. Each option has its importance –
Direct Buying – Approaching the source directly.
Buying directly from the source helps in the best pricing and long- and short-term supply chain control. But importers need to be well-organized to accomplish this. They should have effective management, processes, and procedures in place to guarantee good results.
Direct purchasers have their own sourcing offices in China, or they use third-party representatives or on-site product sourcing agent in China to communicate with the factory and manage the process.
Trading Company Purchase – Buying from middlemen.
In China, trading firms serve as a middleman between suppliers and manufacturers. They buy goods in bulk from several companies and resell them under the brand of their company for a profit. To increase sales, trading organizations work with a variety of suppliers and manufacturers. They use sales agents to handle their channels in the national and international markets.
Commissioned Agent – hiring a sourcing agent.
A good Chinese commission agent will charge a fair commission rate, between 5% and 10% of the product’s retail price. The commission cost varies slightly depending on the product type, the overall order amount, the project duration, and the purchasing agent’s level of expertise. Product sourcing agent in China has duties like marketing analysis, lead generation, cold calling, proposal creation, involvement in sales negotiations and closing, product delivery, and account maintenance.
Benefits of Employing a Sourcing Agent in China
- Matchmaking: Either through an established network or a more rigorous approval process that includes supplier pre-qualification, background checks, and factory audits.
- New product development management: Many Western customers struggle to have effective conversations with Chinese producers, and it is also annoying and time-consuming to communicate with the help of a translator. Some sourcing firms and trading companies excel at improving the effectiveness of this procedure.
- Fulfilling product specifications: Most importers don’t bother to outline all their requirements, but a decision must be made regarding the packing materials to be sourced. Relying on the factory is extremely risky, instead, hire a QC company to define it precisely once and for all.
- Quality check: Quality control is carried out by internal workers or independent inspection companies. The likelihood that a batch will be rejected after being accepted back in China is decreased by using statistical tools that are used by retailers in the importing country.
- Reducing payment risks: It requires purchasers to use tools like OEM agreements or letters of credit, particularly when a relationship is just getting started and confidence is lacking.
- Hassle-free: The ability of a good intermediary to help people get out of sticky situations is probably undervalued. An importer who is not in China cannot simply resolve issues through emails and phone calls when they arise.
Importers can handle the sourcing business alone, but they should be prepared for all the obstacles that will come along. Hiring a product sourcing agent in China not only saves you time, but can also help in building a long-term relationship with the supplier and country.