Are you interested in importing consumer electronics made in China for your retail, wholesale, or online businesses? Are you aware of which city is referred to as China's Silicon Valley?
Welcome to Shenzhen, a city in southeast China that is well known for its technological goods and makes up the eastern portion of the Pearl River Delta.
Shenzhen is home to the world's largest electronics market and numerous manufacturers. The Shenzhen River and Sha Tau Kok River form a natural boundary with Hong Kong. South of Guangzhou, Shenzhen is around 136 kilometres away.
However, if you want to do any business with any Chinese manufacturers, you will have to take the support of any sourcing agent in Shenzhen. Although China is doing business with many western countries, there are only a few people in China, who can converse in the English language.
Besides, the business culture in China is entirely different from western countries and hence you may be totally at a loss if you do it without any support from a sourcing agent. However, it is in your best interests to do business with reliable sourcing agents that have their own office in China.
They will be more reliable and will provide total support and conduct quality checks at every stage, starting from product design, sampling, mass production, warehousing, and shipping of consignment. Similar to how it takes time to identify a quality product, it takes work and judgement to find a quality sourcing agent.
In this post, we will discuss a few things that you should know to find a reliable sourcing agent in Shenzhen. The following are 6 qualities you must check on your prospective sourcing agent before you hire.
A buyer should choose a sourcing agent based primarily on the firm’s level of trustworthiness. The trustworthiness is of importance here because they will be your support system to find the right manufacturers and to ensure that the production is completed on time, without compromising on quality at any stage.
Don’t fall into the trap of those few agents offering unreasonably low-cost or even "free" sourcing services. They will not reveal critical information that the clients must know before venturing out into the manufacturing markets in China. Go for the agents that are transparent and provide information like -
Total number of factory employees
Reputation on the market
The actual type of business
Original product price
Your sourcing consultant will be your eyes and earns in China, which is why the trustworthiness is an important factor while choosing one for your business needs.
Instead of giving up too soon before determining the best options, a great sourcing agent should put forth all of their energy into searching for and speaking with the optional providers. It is important to conduct a thorough study on the following information:
Official registration details
Actual business type
Year of establishment
This is necessary to make sure the necessary products can be produced to the best possible standard and quality.
Additionally, after the buyer selects a supplier, a good sourcing agent must make the effort to conduct China factory audit and inspect the following too.
Assembly lines of supplier
Quality control standards
The sourcing agent must provide the buyer with the most recent information and analysis along with photos, meeting minutes, and written reports for assessment and decision-making of the client.
Accountability right from pre-sales to after sales service
The job of a sourcing agent does not end with the transfer. He should be in charge of monitoring the manufacturing and delivery of the products, working with the suppliers to provide technical support for problem-solving, and helping to set up returns and refunds in accordance with the terms and agreements between the parties.
When a buyer transacts with any technically unsound factory where no one can speak English, this concern can be very important to take into account. Particularly when it comes to product development in China, timely, thorough and making effective communication between your sourcing agent and the engineers are crucial to ensuring the products function perfectly to meet your consumers' expectations.
In order to maintain the growth of their firm, the purchasers might commit to acting professionally, being accountable, and having a good reputation in their local market.
Becomes a buyer’s colleague
Being a buyer's colleague is an easy goal for the sourcing consultant to strive for. He is merely a bilingual co-worker of the buyer who works in the procurement/buying office, but he is expected to properly represent the buyer's interests in the business operations.
The sourcing agent must discover any information that the suppliers are trying to keep from the buyer throughout the course of the whole business negotiation or any technical communication and also report it promptly to his client but also at the appropriate moment.
However, in these circumstances, the buyer should still decide how to respond. The sourcing agent must not make that decision without the knowledge of the buyer.
Be a good friend to the suppliers too
Business culture in some nations is strongly influenced by ties and relationships. Some businesspeople have a tendency to give more advantageous conditions to those with whom they are more familiar or who they find to be more acquainted.
Therefore, instead of always applying pressure to the suppliers, the sourcing agent should try to improve those relationships with them alongside the buyer.
The possibility that the supplier will take greater care of the manufacturing, delivery, and service is improved by closer business relationships. For instance, if the buyer deems it necessary, your sourcing agent can give any gifts to your supplier to improve the two parties' commercial relationship, especially before traditional Chinese holidays.
Protect the business secrets of buyer
The importance of information to business people cannot be overstated. The sourcing agent is exposed to a significant amount of information during the course of the cooperative engagement with the buyer including the following:
In order for the buyer to maintain its competitiveness in the market, the sourcing agency must treat whatever the buyer will not want others to know as absolute business secrets.
How much will a sourcing agent in Shenzhen cost?
Small importers, many of whom are Amazon sellers, prefer to concentrate on brand building and marketing. They need someone in China to handle production, which involves selecting the best suppliers and overseeing their daily operations.
At three levels, there is a significant divergence.
1. High cost
The buyer seeks a sourcing representative with at least five years of sourcing experience, excellent English skills, and some background in quality control. However, those who fit this profile often anticipate making between 10,000 and 15,000 RMB each month.
What causes such high salaries? A talented worker in Shenzhen can expect to make multiples of the minimum wage of roughly 2,300 RMB.
Undoubtedly, some junior sourcing agents make between 6,000 and 10,000 RMB each month. However, very few of them have the ability to flawlessly oversee the entire sourcing business of a corporation. Expecting suppliers to respect them is unrealistic. Additionally, they lack expertise in contract drafting or logistics.
Some of the "source agents" do not keep everything in transparancy. Sometime, it is not good for quality control as if the problems are not disclosed in time, corrective and preventive actions cannot be taken at early stage, before the defective products are flood in the market.
The agent should help you close the manufacturing deal for competitive cost. You will need to analyze the feasibility of the entire deal before proceeding further. Also, they should ensure complete transparency during the design, production, packaging, and shipping phase.
3. Legal matters
It is against the law to pay an "employee" or "contractor" in China without first establishing up a legitimate business there. If your business expands and you end up establishing a Chinese firm, it might turn into a significant issue.
Say 3 "independent contractors" are hired by you in China. Three years later, the Chinese government contacts your business and requests that you have employed 3 employees but have not paid employer taxes or withheld employee taxes for the previous 3 years.
Because you have these 3 employees, Chinese authorities may claim that you are conducting business there and must pay company income taxes. Additionally, employer and benefit taxes are about equal to 40% of the salaries you have paid during the past 3 years.
You will also be subjected to a fine and interest from the Chinese government. They may even close down your whole business here and prevent you from leaving the country if you do not pay.
So, this is the solution - Working with a seasoned sourcing agent who bills you for whatever time spent especially on your orders can be the answer in these circumstances.
We hope you have got enough food for your thought before dealing with any sourcing agent in Shenzhen. You may also discuss this with your business colleagues in your own country, who had in the past dealt with Chinese companies to share their experience.