If you are new to the business of sourcing products from China, then you might be thinking whether you need the help of a sourcing agent or you can manage it yourself. How difficult could it possibly be?
A supplier search on Alibaba or Global Sources from your office in another country is not going to be too easy. You must be able to devote one to three hours each day to supplier procurement and management for each provider.
This time will usually be made up of the following:
- Identifying certain new suppliers, who will be able to make your products of the right quality level at the correct price
- Can help you to develop certain new products/styles with the help of these suppliers
- Management of your supplier relationships like communication, shipment, quality control, follow-ups, and resolving crises
What does any sourcing agent do?
A manufacturing sourcing agent or sourcing agency will be a company or a person who finds the product that you prefer to source from any of your preferred countries for you.
Therefore, it is the most important task for the hired agency to find suitable suppliers who can meet your requirements, and here is how the basic procedure works:
- Step 1: First you think of any product that you like to sell after importing and consider the material, sizes, uses, etc.
- Step 2: You may then describe your product specification to your sourcing company.
- Step 3: Your sourcing specialist will do research to suggest you 5 to 10 suppliers to you that can meet your specification for price, quality, scope of services, and also delivery time. You may also add a few ethical aspects e.g., working conditions, safety, etc.
- Step 4: You select your supplier from the above list that your sourcing agent has provided to you.
- Step 5: Your sourcing agent will then act as an intermediary between the supplier and you. They will facilitate the necessary communication between the supplier and you.
- Step 6: You will get your selected product meeting with all the necessary specifications that you wanted. Many sourcing agencies can offer more services in addition to just connecting you with a certain supplier.
These services will mainly include the following:
- Communicating and negotiating with suppliers
- Regularly overseeing the production
- Regularly providing you with necessary updates
- Arranging storage and shipping
- Performing needed quality inspections
Whether it makes good sense to delegate all of those responsibilities to your sourcing agent can be determined by how you compensate them. You should not use them for any quality inspection if they work based on commission. The reason for this is that if there is any problem with the product and you do not pay for it, the supplier will also lose their commission.
If with the help of your own team it is impossible, perhaps then you must consider bringing a certain third-party manufacturing sourcing agent in China. You have got the following options to source products from China:
1. Purchase direct
This is something that 80% of importers mostly try to achieve. They want to be in charge of the entire process and try to avoid paying any middlemen or agent commissions.
This is perhaps the best choice for you if you are structured enough to handle suppliers and if you are not able to meet suppliers’ minimum order quantities.
2. Use any commissioned sourcing agent
Many people in China are attempting to support themselves by offering this service. You can use their contacts and save your time if they are in the correct industry. They can also serve as your representative in the country.
Unfortunately, the factory pays a secret commission to almost 90% of them. In China, this is “regular business.” As a result, they frequently defend the factory when things ever go wrong! As a result, caution is urged.
How you must qualify any sourcing agent?
You can ask your prospective manufacturing sourcing agent a few set questions before you hire them:
- How will the sources be paid, and who will pay them?
- Can you visit the factories either before or during production?
- Can you provide any referrals/testimonials from your satisfied customers who have been using your services and also who are buying a similar type of product like me? Make sure that they send at least two such contacts from whom you can confirm.
- Whether your customers do quality inspections all by themselves? Or do they take help from any specialized third party?
- Will you send regular weekly updates on the status of production?
- Can you share your management system with me? It is essential that you must ensure that the agent has a certain process in place. Most agent never follows any established systems and procedures.
- What guarantee will you offer if any supplier scams me?
- What will you do if shipments are much behind schedule?
- What action will you take if we receive junk products?
- Are you located in the same area where my products will be manufactured?
- If we keep re-ordering from the same source, will you charge less for your entire services after the first order?
By getting their answers will help you to guess how genuine the manufacturing sourcing agent is
1. Purchase from any trading company
If you can’t meet the MOQs, such as if you are a start-up company or an entrepreneur placing for your early order, this is an excellent choice.
A small workshop that accepts modest orders can be used by a trading corporation to produce goods. Aside from this instance, I would not recommend working with a middleman.
2. Use any service company
A few China sourcing agencies demand a fee for their services. Everything is in plain sight. It will be a financial commitment for your business before manufacturing begins, but it is a viable choice if you anticipate substantial orders in the future.
Such agents will be quite rare, but we are confident that they are going to become more prevalent in the future. The finest ones are properly organised and function as your procurement office.
If you can manage to find a good manufacturing sourcing agent from China then your business can really flourish. As such conducting business directly can be very difficult for many western countries because of language and cultural differences.
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