Recently, Chinese sourcing agencies or companies are playing a crucial role in handling international supply chains. Unfortunately, there is so much unclear and outdated data available online about sourcing agents. So, many small businesses are deterred from purchasing products from China. However, the environment has changed and now you can identify a good sourcing agency.
An ethical sourcing agency carries an official business license, and they willingly share reference proofs and offer transparency. There are some unethical companies but do your groundwork, request a quote, and compare and check their business licenses. Negotiate payment terms and have everything written in the contract.
What’s a sourcing agency in China?
Unlike an individual sourcing agent, the Chinese sourcing agency has a team of specializing experts managing distinctive departments like sourcing, production, quality control, warehousing, and logistics. The supplier’s resources are integrated more efficiently. The sourcing agency team is competent to serve multiple different buyers. In general, sourcing agencies are located in popular industrial clusters like Shenzhen, Guangzhou, and Yiwu.
Sourcing freelance agents and sourcing agencies are the essential links between suppliers and buyers. It is up to the buyer, whom they prefer to choose.
What kind of end-to-end sourcing solution does the Chinese sourcing agency offer?
Most of the sourcing agents in China offer the following basic services.
Sourcing product suppliers
Make price negotiation
Follow up production
Compliance & testing
Warehousing & shipping
Choosing an ideal product supplier
Google search allows finding and connecting with suppliers but it is hard to distinguish between a manufacturer and a reseller. You need a tech product, so it is essential to look for a manufacturer and not a reseller. It is wise to partner with a reliable Chinese sourcing agent because they verify the supplier by examining their factory’s registration records, business license, VAT invoices, audit accounts, and technical expertise to manufacture your product.
Labour and manufacturing cost is low in China, which is a huge benefit of direct sourcing from China. Suppliers have declared minimum manufacturing cost but the sourcing agent you partnered with negotiates a reasonable price along with product quality.
Some buyers are in doubt when the sourcing agency does not share the supplier’s details. It can be because of the chosen service fee charging method.
Many sourcing companies use ‘no extra charge but returns from price difference’. They provide the best suppliers at a competitive rate and good quality, which you will be unable to find via normal channels.
Another common method is charging a certain percentage of total order value as service fees. It is their profit model, so they don’t share supplier details.
If the order is in bulk, the buyers are taken to the factory to understand the production process, even if the supplier’s information is not shared. In case of small orders like $1200 hats or $1400 toys then the buyers will hardly be taken for a factory visit.
Production follow-up, quality inspection, and shipment arrangement
After choosing a reliable supplier, the Chinese sourcing agency helps in making arrangements for product manufacturing. You provide the design and specification and the agency will coordinate with the factory and develop a sample. As soon as the sample is approved the order gets confirmed and a deposit is made. The new project commences and the sourcing experts will monitor the entire manufacturing process and keeps you updated.
The sourcing agent even conducts in process quality inspections to ensure that the product is manufactured correctly without quality compromise. Regularly monitoring the production process makes sure that things don’t get delayed, issues are handled instantly and the order gets completed on time. The finished products are inspected, which lessens the defective percentage before shipping.
Shipping arrangement needs high expertise level. Besides negotiating shipping rates, they need to know the documents and certificates needed for customs clearance like FDA, RoHS, CE, COC, and more.
Besides the basic yet major end-to-end sourcing solutions, some big sourcing agencies also offer other services.
Free product photography
Customize packaging or labels
Who needs to partner with a sourcing company in China?
Overseas imports involve multiple complicated features like finding the right manufacturing supplier, production follow-up, product testing for compliance and quality as well as handling warehouse and shipping arrangement. Besides, there is a language and cultural communication barrier to deal with.
Buyers who need multiple products of different categories will need to contact and verify more than 100 suppliers. It is a tedious task but a sourcing agency can do it efficiently. They can even help to consolidate the necessary products from different suppliers to manufacture a single product you need.
Large retailers and supermarkets need a sourcing agent for better supply chain management. Supermarkets have to buy hundreds of product categories. They cannot visit every factory to verify and buy.
Suppliers belonging to special product categories like the medicine and chemical sector in China cannot be found online or at the exhibition. A sourcing agency specializing in the niche can help your business.
What are the advantages of sourcing agencies?
A reliable sourcing agent can be advantageous in many ways.
Saves time – It means you don’t need to perform deep research online about suppliers or spend time vetting different factories and conducting lengthy complicated negotiations. The sourcing agency experts handle all these tasks on your behalf.
Enhance sourcing efficiency – The local sourcing agency helps to overcome the language and cultural barriers. The professionals know your product needs and can negotiate clearly with suppliers in detail. They even deliver the supplier's message in English, which eliminates the miscommunication cost.
Experts in negotiations – Sourcing agencies are great negotiators. They are aware of the supplier's pricing edge. They negotiate the lowest rates without quality compromise. The local sourcing agent knows the language and can negotiate efficiently and quickly.
Reduce the risk of overseas imports – It is an issue to check licenses and certificates in a language you don’t speak. You can have them professionally translated but is costly and you still will not know if the license is valid or not. The sourcing agency expert can help because they exactly know which criteria the manufacturer has to fulfil, what the official certificate looks like, and which inspection authorities are responsible.
Have experience and connections – Hiring a sourcing agent means you tap their experience and even benefit from their network. They have worked with different suppliers and are well aware of the ones suitable for your product.
What are the traits of a good souring agency?
No one desires to get scammed by bad sourcing companies. Here are some traits that define the reliability of a sourcing agent and enjoy the benefits mentioned above.
License – An ethical sourcing company will eagerly show its valid business license.
Experience/specialization – Experience means the sourcing agency has good knowledge about the bad and good suppliers. Specialization matters because you don’t need an agent experienced in the apparel niche to help when you need kitchen products made in China.
Referral proof – More experience is equivalent to more buyers/businesses they worked with. The sourcing agent will proudly share multiple referrals and testimonials of their past or existing clients.
Language skills – The sourcing company in China is a link or mediator between the overseas buyer and the local supplier. Therefore, the experts must speak English and Chinese language fluently. Just speaking in Chinese perfectly is not sufficient because they cannot deliver the message correctly in your language. Manufacturing is all about the specifications and design detail of the product you desire to have manufactured. If they are unable to communicate properly then the product will not be designed as you want.
Supplier network – As the sourcing agent is experienced they have built good relationships with suppliers. A large supplier network means the specialist can refer to several suitable factories or suppliers.
Location & flexibility – The location of the sourcing company must be close to the factory. It offers the sourcing agent flexibility for quick inspection or follow-up during the manufacturing process. They can handle the issues quickly without any downtime.
Transparency – A good sourcing agency discusses the costs in detail. They even agree to visit the factory, if you desire to go. Transparency is critical in the supply chain.
Red flags to be aware of….
Never hire a sourcing agency that is paid by the supplier they referred. It is a conflicting situation because they would be loyal to suppliers that pay them.
There are good and bad sourcing agencies but don’t be afraid. Do your due diligence and hire a licensed Chinese sourcing agency. A reliable and experienced sourcing agency plays a huge role in China supply chain. They help to get competitive product rates, monitor follow-up processes and an established sourcing agency aims to offer great customer service.