China became the world's factory in the early 2000s, attracting western buyers with tax exemptions and pre-built industrial zones. Unparalleled industrial supply chain integration and logistical capabilities solidified the country's image as the leading exporter in the world. It was only natural that China sourcing agentsdeveloped as a facilitating sector, helping western importers connect with Chinese manufacturers and do business with them by overcoming language and cultural barriers.
China remains the the preferred sourcing destination for a large majority of buyers in western countries. Although the internet has transformed how global trade is conducted, successful cross-cultural interactions need a human-led approach. Working with a China sourcing agent enables you to forge successful relationships with suppliers specializing in your product category.
How do you go about choosing a procurement agent that offers comprehensive service and top value? Here are some suggestions.
The first thing that you should look for when finding the best sourcing agent in China is whether they have an office in China as well as in your country.
A sourcing company that has a presence in your country is more trustworthy as they’re bound by the laws of your land. It indicates that they have the resources to establish their footprint and are available in-person to engage with clients in their country of residence.
You should have the means to contact the agent at their office if you cannot connect over the phone or online. Yes, you can visit China to confirm the agent’s authenticity but you shouldn’t discount the possibility that the company may wind up, leaving you stranded. If you decide to sue the company, you’ll have to settle it out in a Chinese court, which can be time-consuming and expensive, not to mention stressful. Why take the risk and keep worrying that your sourcing agent in China will bail on you when you can go through a more reliable company that has an office in your country?
The Chinese market can be a
very difficult terrain for a foreign buyer. That is why you are engaging a sourcing agent in the first place. The company should be able to assist you in ways that you cannot manage on your own. Scrutinize the following:
Number of years in business
Founder and/or senior management profiles
Other international experience (if any)
Online reviews (if available)
An experienced agent is familiar with all relevant laws, regulations, and business practices as they pertain to Chinese suppliers. They will be cautious not to work with factories that have dubious production quality or environmental practices. When you insist on working with the best China sourcing agent, you don’t have to be concerned about losing your money to a scam supplier.
Manufacturers are also open to cooperating with experienced third-parties helping western importers forge long-term partnerships with Chinese factories. This is important given how your agent will perform factory audit and quality inspections on your behalf.
Any China sourcing agency worth its salt will specialize in specific products or segments only. Beware of agents that promise to help buyers in ‘any’ industry.
Look for a sourcing agent with a good track record in your industry and positive reviews from clients. China is home to industrial zones that cater to different products and sectors. The sheer variety of what the country can manufacture is astonishing. It is impossible for a sourcing company – no matter how experienced – to have a finger in every pie, so to speak. So, the golden rule is to find the sourcing agent in China that specializes in your field.
The company should mention their area of expertise in their website. If this isn’t clear, make sure you contact them for a confirmation. Any claim that they can help you find suppliers in your industry can be verified. Ask them questions and see whether they appear knowledgeable about your industry.
Many reputed China sourcing agents will have invested in a blog that showcases their depth of knowledge. It is an indication of their commitment to enlightening and educating prospects and existing clients.
In the past few years, labor costs in China have risen with the increasing demand for technical expertise and sophisticated work. The country is slowly but surely moving towards high-tech manufacturing. If you sell a product based on new or advanced technologies, you should have no trouble finding a China sourcing agentthat caters specifically to your buyer segment.
As you would for any B2B relationship, see if you can find reviews of the company to validate any opinions (or gut feeling) that you’ve formed about the agent. They may have included client testimonials on their home page, so that should make your job easier. If not, request the agent directly. They should be able to share the emails of current clients or even a former client.
Talk to the clients and find out what products they have sourced, how long they have been using the services, how was their experience, and whether they would recommend the sourcing agency to other businesses.
There may be issues around sharing the contact details of another buyer without their explicit consent. But workarounds are possible, and a reputed sourcing agent in China should be able to provide you at least a few testimonials.
Sourcing agents must know what documents are required for formalizing business relationships between buyers outsourcing production to China. China has strict business laws and you don’t want to fall foul of them.
Without the proper documentation, your business may find itself in a tough spot if a dispute arises over product quality. The best sourcing agents in China should be able to guide you in this regard and help you understand some of the important points that must be included in the supplier contract. Of course, their legal knowledge is limited. You should have a lawyer draw up a solid contract.
Make sure the contract establishes supplier liability for various situations. As an example, the manufacturer cannot use your product design to make a similar product and sell it in your market.
The contract should be in English and Mandarin Chinese; both versions are needed. There should be no ambiguity in the language used in their documents. All the information they provide should be clear and correct. Never give a supplier the go-ahead without first drawing out a manufacturing agreement.
What is the extent to which the China sourcing agency assists buyers? Reputed companies provide comprehensive service, such as:
Performing a factory audit to inspect the facility's production line and equipment
Communicating buyers’ requirements to the factory manager
Conducting a quality inspection of the first batch of products
Inspecting products selected at random prior to the order being shipped to you
Inland transportation and shipment
Assisting with dispute resolution
The company's sourcing process reflects their experience and professionalism. A reliable sourcing agency in China will enquire about your quality standards, certification requirements, product specifications, and everything else that would help them decide which supplier to target.
They don't have 'preferred factories' that may even offer them a commission to get clients. Rather, they connect you to a supplier based on an objective assessment of your requirements.
It is essential for a sourcing agent to have all the license and permits to offer the services they advertise. Before you zero in on a suitable sourcing agent, make sure to check if they have a valid license to trade. Check if the license is the one needed to render the specific service. You can have your lawyer perform these checks.
We have already mentioned how Chinese business laws are strict. While the country welcomes foreign businesses with open arms and incentives, the government expects its own businesses to comply with stringent income tax laws, and in recent years, environmental and labor laws.
Given the regulatory climate, factories have to adapt their processes and stay on the right side of the law. However, there are offenders too and you want to steer clear of them. Your China sourcing agent should, under no circumstances, connect you to a factory that it is aware has dubious practices. In the event that the factory has to shut down or operations are affected due to government action, your business will be in trouble.
For a foreign buyer, communication is the biggest hurdle in dealing with Chinese suppliers. A key reason to engage a sourcing agent is to translate your requirements accurately into Mandarin Chinese. The supplier should understand the context of your message and confirm the same. As Chinese manufacturers are known not to be forthcoming about seeking clarifications because they don't want to 'lose face', the onus falls on your sourcing agent to verify whether the factory has understood your requirements clearly.
Needless to say, the China sourcing agency must possess excellent communication skills, English and Mandarin. This is essential to build good relationships and ensure smooth communication on both sides. Client-facing staff should be able to grasp client requirements quickly, which is possible only if the agent has at least some industry-specific experience.
Additionally, the company should be adequately staffed to respond to your queries in a timely manner. Whether you contact them online or at their office (in your country), your engagement experience should leave no doubt about the agent’s professionalism and ability.
The best sourcing agent in China helps resolve buyer-supplier disputes efficiently. They step in to clarify your position and communicate suppliers' stance to you.
The main issues that arise in sourcing are concerning product quality. Though a reliable Chinese supplier is likely to meet your expectations, confirm whether the sourcing agent has a policy for quality assurance and assistance in the event of a dispute. It goes without saying that they should only source products from manufacturers that guarantee good quality. You should also make it clear to the sourcing agent what standards of quality your business adheres to, and that no lapses in this regard will be accepted.
As much as possible, you should avoid filing a lawsuit against your supplier, even when their fault and liability can be proved. For one, you will have to fight the case in the Chinese courts, which do not accept the judicial decisions of western courts. For another, you may need to navigate laws that pertain to the supplier’s jurisdiction. The costs of pursuing litigation, not to mention the stress and time involved, can be overwhelming financially and emotionally.
Your manufacturing contract should include a dispute resolution mechanism that requires your supplier to settle the matter out of court. Your sourcing agent in China should ideally mediate and provide the support you need to resolve the issue.
The sourcing agency is responsible for ensuring that the products they ship meet the quality standards of their clients. To ensure this, the agency must have offices close to the manufacturing sites so that they can perform regular quality inspections and factory audits.
The office in China should have adequate members of staff to manage shipping and logistics to ensure on-time deliveries. They also need to the necessary communication infrastructure to engage with you via Skype, WhatsApp, email, Zoom and other communication tools and methods. So, when you’re looking for a reliable sourcing company in China, ask about their communication protocols, how long they take to reply to your questions, and how they respond in any emergency. Also inquire about their data privacy practices.
The best sourcing agent in China acts as a valuable ally in supporting business growth. Take the time and effort to find the right company for your needs. If possible, always visit them at their office. After the agent has come on board, try to build a good relationship with the representative/project manager who will be handling your account.