Sourcing agents for companies play an important role in managing international supplies. However, various businesses are still confused about hiring sourcing agents. When starting an import business, it is imperative to find good resources which are required for manufacturing. Unfortunately, business owners cannot manage all things by themselves, especially when there is international outsourcing involved.
This requires the help of a third party who can efficiently find a suitable supplier that can export products at a reasonable rate, yet with high quality. Hiring a sourcing agent eliminates all the tiring work that a business has to do. It also reduces the risk involved in finding a new manufacturer.
A sourcing/buying agent is a third party that helps businesses outsource products to other countries. Many businesses try to source products from other countries, especially from low-cost regions like China. This is because the manufacturing cost in their country is inexpensive compared to others.
However, finding a manufacturer that can source products internationally is also a tedious task. The business owner has to review, inspect and confirm the quality of the product before finalizing the deal. Moreover, for every business deal, the business owner may have to travel internationally or have to send their executives to handle the process. Above all, if the business owner finds out that the product is defective after it reaches its destination, then it is resent for amendments which are again a waste of time.
To cover up all these problems and to minimize the risk involved, businesses hire sourcing agents from the same region where they have hired a supplier. A sourcing agency will assist you to get the product to your destination seamlessly. They handle all functions like supplier prospecting, contract negotiation, managing production, quality inspection, shipping, and anything that is involved from buying raw materials to Logistics.
Many businesses wonder if it is necessary to hire a sourcing agency. We have some valid reasons to hire them.
When you have decided to source the product, the initial step is to look for a good supplier globally. Without a sourcing mediator, you will have to spend hours searching for suppliers online through various media, social channels, and references. Once you find a match, your job increases to contact them through calls or emails. The difficulty arises when you are hiring a supplier from a country that doesn't speak English. However, when you hire a sourcing mediator, you can avoid all these hassles and spend more time in your business.
When you hire the sourcing negotiator, you tell them your requirements and they start searching for suppliers accordingly. Once they find suitable matches, they get several quotes from them which help you understand the pricing structure in detail and save you from a bogus market. Sourcing representatives can also negotiate pricing for you with the supplier and get you a reasonable discount without compromising on quality.
When you are sourcing products internationally, you have minimum knowledge about the manufacturer. There can be a chance where you pay a good amount to the supplier and later the factory is closed for violating local laws. Even if you try to file a case against them, it will be in their local region which is again a hassle to handle from another country. However, a reputable sourcing representative can reduce this problem by being a mediator. They will find a supplier who is registered and verified by the regulatory bodies.
You will not hire a sourcing agent who is new in the profession. Sourcing agents who are experts in the profession have channels of networks in the industry. It is easy to get desirable manufacturers through a mediator without hunting for months. Since they have years of experience, they know exactly what the business is looking for and work immediately without wasting time.
We all have come across Chinese products in the global market because it is known that it manufactures the cheapest wholesale products. Even while exploring e-commerce websites, we can find various products sourced from China because it is known as the world's factory.
Novice business explorers often want to connect with high-quality manufacturers who can supply the right type of product without any defects. It is the manufacturer who can make or destroy your business, so it is extremely important to find a reliable outsourced supplier.
Globalization has helped us in expanding our business into various regions, among which China has become the major sourcing center globally. Most western companies are dependent on China to provide electronic supplies for their devices and gadgets. This is because the part which is expensive in a western country is available at a one-third price in China.
Here are some valid reasons to source from China
The country has countless factories that engage themselves in the manufacturing and assembling of consumer products. China supports a wide range of industries resourcefully and they can handle huge supplies and logistics efficiently.
The labour cost in China is cheaper than in other countries and it is easy to find manpower in China even when there is a sudden bulk order.
China's robust infrastructure of roads, railways, and ports enables the country to handle smooth logistics and supply chain management.
China is known to have advanced technology compared to other countries. Therefore, the manufacturing capabilities and efficiency are much better in China.
Now that we know what a sourcing agent is and how they can help us in minimizing our cost and time management, it is necessary that we also understand the right way of finding a sourcing company.
Google search engine is the first thing that comes to everyone's mind when people have to find some relevant answers related to their problems/queries. Google provides useful and relevant information even if it is to find sourcing companies in China with reasonable sourcing agent fees. If the business is listed in Google My Business, you will also get relevant content like company's photo, contact information, infrastructure, customer reviews, blogs, testimonials, etc. Remember, only a good sourcing company will invest money to optimize their website on SEO.
Fiverr and Upwork are freelancing websites where you can also find sourcing mediators who are working as part-timers in the relevant country. They also have a good channel of networks that can get you a reliable supplier. However, since it's a freelancing website, you need to ensure the company is authentic.
If you want a sourcing agent from China, you can visit the Canton Fair, the Yiwu International fair, and the Hong Kong fair. Authentic and reliable sourcing companies set up canopies in trade fairs and events. Since they have to spend a lot of money to set up a canopy, therefore you can rely on their authenticity.
Look for a sourcing mediator that has years of experience and can provide their track record. Years of experience make them experts in their field and they're able to develop relations with various networks and manufacturers. This saves your time since they already have manufacturers ready on their list.
Hire a sourcing company that is specialized in your industry. A company that deals with electronic suppliers may not be able to handle beauty products manufacturers. This is because their area of specialization is different. When you hire a sourcing company that specializes in your industry, you would be reassured that they have complete knowledge of this industry and can handle everything from raw material to logistics.
First, always hire a sourcing company that can speak your language. When both parties speak a common language, it is easier to communicate and understand better. Sourcing mediator that communicates effectively and confidently with you excels in his/her business contacts, suppliers, and manufacturers.
A good and reliable sourcing mediator will always keep you in the loop with every process so that everyone is on the same page. This again depends upon excellent communication. They are not middlemen so they should be working with you to give the best outcome for your business.
This is an interesting fact which most business owners ignore. To be honest, there is no standard charge of a sourcing company as there are thousands of them competing around the world. The sourcing agent fees greatly depend on the service scope, product category, quantity of the order, and cooperation method.
Many buying agents attract customers with low service fees and sometimes free service for trial orders. However, in the end, these customers find out that other procurement costs are added which is not as low as it was mentioned. Some unreliable sourcing companies start adding overhead charges and recurring costs which later get expensive. It is also extremely dissatisfying when the customer receives defective products even though the sourcing company had guaranteed good quality inspection.
Therefore, it is always good to set up a sourcing agent service fee based on these points:
Most sourcing agents have a fixed salary for every product or a term. It is a lot cheaper to set up a fixed service fee than to pay according to the amount of work being done. When you set up a fixed service fee, it builds a healthy business relationship directly. It is way more professional as the sourcing agent and business are on the same page and there is no chance of discrepancy with every order.
Sometimes, it is difficult to find the competing sourcing company that charges less than what the current sourcing mediator has quoted. If you find a sourcing company that provides good suppliers with better competitive rates and good quality which is impossible to find through other channels, then instead of negotiating come up with decent competitive prices.
Most sourcing companies charge a certain percentage on the whole order value. This is a common practice used by sourcing companies because other services like production, quality control, consolidation, shipping arrangement, etc. are all done by them. These services also cost money, so they charge a required percentage of the value for the goods as the service fee.
The service charge commonly found in China is around 5 to 10% of the whole order value. This service fee can also be affected by the product categories and the size of the order placed. For example, if the order for the product is high in demand like steel or electronics or the value of the order is above 5 million dollars, then the service charge can be less than 5%.
There may be some companies who may charge you less than a 5% service fee even for an ordinary product like toys. Gradually, you will find out that the product delivered is of poor quality compared to the sample that was shown.
It doesn't matter what the sourcing company charges. You should be concerned about the procurement cost, product quality, and supply chain. As long as the product delivered is up to the mark paying a decent amount as a service fee is not a loss.
China may be the cheapest country in terms of material and labour, but it is not easy to do international business with countries like China. Each country has its laws and following them along with your local laws is a complicated process. It is not easy to visit the supplier’s factory and warehouse now and then. This is the reason why businesses need mediators who are not middlemen, but a part of the business as they're doing your job.
They will find the right suppliers to work with and take care of the quality of product inspection, negotiate the price, arrange backup, and deal with shipping issues. Your lack of experience in these areas can be covered up by sourcing agents to fulfil your requirements.
If you are dealing with two or more suppliers for one product category, then you definitely need a reliable sourcing representative in China. It is not easy to handle 2-3 suppliers while residing in an international country. But a local sourcing dealer can deal with the suppliers at one time by sending their co-workers to handle the tasks. They will also keep you in the loop with every process and movement. A sourcing agent can also get you, several suppliers, in no time. Instead of hunting different websites, search engines, and trade fairs, you can approach one sourcing company to connect with several suppliers.
If you are dealing with specialty products like medicine, building raw materials, or electronic gadgets, you will need a special supplier that deals in specific raw materials. Finding such a supplier is a tedious task, but with the help of a sourcing company, this search can be a lot easier. They not only find you the right suppliers, but they also keep a check on the quality. These categories are special and their raw materials cannot be compromised.
Since you are dealing internationally, there are chances that the end product that you receive may not match the specifications you had provided to the sourcing mediator. This can be a hassle and time-consuming process because the products will be returned to the supplier for amendments. Since you are sourcing from China, this may take more than weeks and your business can experience heavy loss for it.
To avoid such problems, it is wise to suggest your agent provide the sample before finalizing. The first sample doesn't need to be perfect, but you'll get an idea of their product quality.
Although sourcing mediators are helping you with your business by checking the product, raw materials, and shipping the product on time, it is better if these agents can connect you directly with the suppliers and manufacturers. This way there is no chance of communication gap or misinterpretation of any specifications.
It is the sourcing company's job to check the quality of the end-product before finalizing and shipping it. Sometimes, we come across agents in China who are not capable of quality control checks which leave us devastated. As a business, you should also have little knowledge about quality control to fully understand its importance. This way when you start questioning agents about the quality control process, it will give you an idea if they have proper knowledge about it.
If you're looking for a sourcing mediator, start by understanding exactly what you need help with. Start finding mediators accordingly and understand the services provided by them. It is better to meet them personally or initiate a video call. Approach sourcing companies that can speak a common language as yours don't require a translator or an interpreter. Set a trial period with them to evaluate the performance, this will help to find the right sourcing representative.
Spend some time and don't rush while finding a sourcing company. It has to be a long-term project so rushing will get you, wrong dealers.