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Everything You Need to Know about China Sourcing Agent

2023-12-22
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Everything You Need to Know about China Sourcing Agent

If you are sourcing from China, then the success of your business will depend on finding the right supplier in China. The supplier will be responsible for supplying high-quality products and fulfilling orders on time. Both are imperative for customer satisfaction.

However, if you have never been to China, then finding a good supplier may be a challenge. You will have to draw up a list of potential candidates and then single out the right one from all these possible choices. It seems like a daunting task.

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 must do. It also reduces the risk involved in finding a new manufacturer. 

What Is a Sourcing Agent?

A sourcing agent is a third party that helps businesses outsource products to other countries, it provides services on product sourcing and quality control. A sourcing agent handles all functions like supplier prospecting, contract negotiation, production follow-up, quality inspection, shipping, and anything that is involved.

How Can a Sourcing Agent Help?

Here is what a good sourcing agent can do for you.

- Find a reliable factory who makes high-quality products.

- Negotiate prices so that you can get a feasible profit margin while selling at competitive prices.

- Draw up a comprehensive contract between you and the factory so that it includes all necessary contents to protect your interests.

- Negotiate with the supplier on production control, and visit the factory to conduct quality inspections.

- Arrange all necessary documentation and take care of all legal matters pertaining to shipment.

How Can You Benefit from Using a Sourcing Agent?

1. Timesaving

When you have decided to source the product, the initial step is to look for a good supplier. Without a sourcing mediator, you will have to spend hours searching for suppliers online. Once you find a match, your job increases to contact them through emails. The difficulty arises when your supplier doesn't speak English. However, when you hire a sourcing agent, you can avoid all these hassles and spend more time in your core business.

2. Cost effectiveness

When you hire a sourcing agent, you tell them your requirements and they start searching for suppliers accordingly. Once they find suitable matches, they get several quotes and 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. 

3. Network in industry

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 effectively and efficiently. 

4. Communication

China sourcing agents can speak English well. When both parties speak a common language, it is easier to communicate and understand better. Sourcing professionals that communicate effectively with you excel in business negotiations and order follow-ups.

5. Transparency

A reliable sourcing agent will always keep you in the loop with every process so that everyone is on the same page. They are not middlemen so they can work with you to give the best outcome for your business. 

How Do Sourcing Agents Charge?

To be honest, there is no standard charge of a sourcing agent as there are thousands of them competing around the world. The sourcing agent fees greatly depend on the service scope, product category, value of the order, and way of cooperation.

Many buying agents attract clients with low service fees and sometimes free service for trial orders. However, in the end, the clients find out that other procurement costs are added which is not as low as it was mentioned.

Therefore, it is always good to set up a sourcing agent service fee based on these points:

1. Fixed fee

Some sourcing agents have a fixed salary. It is 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 professional as the sourcing agent and business are on the same page. 

2. Percentage based on order value

Most sourcing agents charge a certain percentage on the order value. This is a common practice because all services like production, quality control, consolidation, shipping arrangement, etc. are all done by them. 

The service charge commonly found in China is 5 to 10% of the order value. This service fee can also be affected by the product categories and the frequency of the orders placed. For example, if the order for the product is high in demand or the value of the order is above 5 million dollars, then the service charge can be less than 5%.

When Do You Need a Sourcing Agent in China?

1) Less experience in import business

China may be the cheapest country in terms of material and labour, but it is not easy to do international business in China. It has its laws and following them along with your local laws is a complicated process. It is not easy to visit the factory and warehouse now and then. This is the reason why businesses need sourcing agents to work with the factories and take care of the matters. Your lack of experience in these areas can be covered up by veteran sourcing agents.

2) Multiple product supply

If you are dealing with more suppliers for one product category, then you need a reliable sourcing representative in China. It is not easy to handle multiple suppliers while residing in another country. But a local sourcing agent 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.

3) Special product category

If you are dealing with special products which need complicated testing and certification, you will need a very reliable supplier as if quality issues happen, you may be involved in legal obligation. Finding such a supplier is a tedious task, but with the help of a sourcing agent, this search can be easier. They not only find you the right suppliers, but also keep strict checks on the quality.

How to Choose Sourcing Agents in China?

1) Start in right way

If you're looking for a sourcing agent, start by understanding exactly what you need help with. Start finding agents 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. Set a trial period with them to evaluate the performance, this will help to find the right sourcing professional.

2) Communicate directly

Although sourcing agents are helping you with your business by checking the products and shipping the products on time, it is better if these agents can connect you directly with the manufacturers. This way there is no chance of communication gap or misinterpretation of any specifications. 

3) Understand quality checking process

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 some 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.

Spend some time and don't rush while finding a sourcing agent. It must be a long-term project so rushing will get you wrong dealers.

Getting advice from a sourcing agent is paramount, especially if you have never been to China. Not only will you be able to get a lot of valuable information on how business is done in China, but also you will be able to avoid many mistakes that novices often make while selecting a supplier in China.

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