A China sourcing agent is your one-touch point to manage your international supply chain needs. Whether your brand is new to importing products from China or in need of niche products in high quantities – a sourcing company can make your life significantly easier.
Previously, we described popular ‘made in China’ products, the different options to source from China – existing products (dropshipping, reselling, white label), and manufacturing your own product.
In this Tenba Group article, we will focus on the 5 benefits of working with China sourcing agents, which businesses/companies this is suitable for, and more.
What are China Sourcing Agents?
Principally, a sourcing agency or company searches for reliable suppliers and partners, delivering products tailored to the needs of the buyer. This can be high-quality luxurious goods or products with a focus on low price, where the quality must be reliable but not necessarily fulfill the highest standards.
Agents in China can have a variety of tasks, from bringing foreign buyers in contact with Chinese suppliers to actually purchasing the products on behalf of a buyer (company). Other services often include price negotiation, quality control, factory audits, compliance with international regulations, logistics, and any other tasks as required by the buyer.
Who Needs a China Sourcing Agent?
It is relatively easy for international companies to go to Alibaba or AliExpress and order bulk products online. The websites are in English, the suppliers are verified/audited, and often speak good enough English to negotiate product details, terms, and conditions. Even popular Chinese platforms like 1688 are easy to understand and use with a translation extension. So, why should you work with a sourcing partner?
Sourcing agents or companies are experts in the Chinese sourcing process, and typically have a large network of trustworthy and reliable suppliers. This comes in particularly handy, if you want to manufacture your own product, modify an existing product with your branding details, or simply want to order standardized goods for wholesale, individual selling or company use.
Besides, with their knowledge of the Chinese market, language, and culture, they can ease the communication, improve negotiations, build trust, and establish a long-term business relationship while getting your sourcing needs fulfilled.
In other words, you can save a lot of time and money, while connecting you quickly and efficiently with the best suppliers for your specific needs.
In particular, the following groups can benefit from working with sourcing companies in China:
- Companies who are new to importing products from China
- Businesses with a diverse product portfolio
- Brands with niche products
- Businesses in need of extra-large quantities
Let’s look at these groups in a bit more detail.
1. Companies who are new to importing products from China
Especially if your business has no subsidiaries in the Middle Kingdom, searching for, auditing, and building a relationship, which is so important in China, is near impossible. Of course, you can conduct several business trips to be in the country – if the Covid and travel restrictions allow it, but that’s neither efficient nor effective.
Plus, if you don’t speak Mandarin it’s near impossible to find your way around the Chinese business landscape and research, understand, and conduct the often lengthy and complicated logistics processes around shipping and customs, as well as understanding, interpreting, and following the Chinese laws correctly.
This is typically the case for new Amazon Sellers and those who are generally new to the international trade business. Read up more on Amazon FBA here.
2. Brands with a diverse product portfolio
If your company only offers one product in different colors or other variations, finding a high-quality supplier may not be as challenging.
But imagine, if you have a large range of product categories, what would you do? Would you try to find several different suppliers with expertise expertise in that specific product category or would you try to source a supplier who can produce all your different products, possibly at a slightly lower quality?
Or would it maybe even be possible to find one supplier in China who can produce all these products reliably at the best quality? A China sourcing agent can answer this question for you and take this burden off your shoulders.
3. Small Businesses with niche products
If your company is seeking to use or distribute niche products, for example, chemicals or medical supplies, it’s possible to source these products from China.
However, knowing the local legislation and import regulations is another story. Make your life easier and take advantage of the expertise of a specialized sourcing agency or company.
4. Companies in need of extra-large quantities
Businesses like wholesale markets or large supermarkets may require especially large quantities of a certain product or various product ranges. Improve your supply chain and margins at the same time while satisfying your customers with high-quality products.
Typical Services of a Sourcing Agent
A Chinese sourcing agent or company connects international businesses with Chinese suppliers. Their main services include
- Searching for and verifying product suppliers in China on behalf of international companies
- Negotiating terms and conditions with these suppliers including contract preparation
- Factory inspection, audits, and quality control
- Overseeing the fulfillment of the agreement including the logistics process
Next, let’s look at the advantages that collaborating with a Chinese sourcing agent has in general.
5 Benefits of Working with China Sourcing Agents
When sourcing products from China, you can either go through this process on your own or through one of your employees. However, working with an expert, who is located in the Middle Kingdom will add much value, including
- Save time & money and increase efficiency
- Source high-quality products at an affordable price
- Avoid misunderstandings due to language & cultural differences
- On-site audits and verification of certificates to avoid scammers
- Risk minimization
1. Save time & money and increase efficiency
In business, time is the most valuable resource. With it, you can always create more value and money. Don’t waste it! Yes, a China sourcing agency doesn’t work free of charge. But with their expertise, you can avoid time-consuming and expensive mistakes. They already have an extensive network of partners and knowledge of the Chinese sourcing market, from which you can benefit.
Since they are located in mainland China, and regularly travel between the major business hubs, they can visit potential factories or sourcing partners for your needs quickly and easily. Their job is to get you the best deal, which is normally in the agents’ best interest as it is often part of their payment (commission).
2. Source high-quality products at an affordable price
As a Western company, you are typically looking for competitive buying prices at a good to high quality. Sourcing agents are experienced in working with international companies and therefore know their general requirements well. They know the kind of information and structure you require to sign a sourcing contract and be satisfied with the deliverable.
3. Avoid misunderstandings due to cultural differences
Sourcing agents speak Chinese, so they can speak and negotiate with potential producers/factories directly and without the need of a translator. This avoids misunderstandings, which often occur in particular in China/Chinese due to the very different language and culture.
But more importantly, a Chinese sourcing agent is familiar with the etiquette of doing business in China, including negotiations. There are many more pitfalls than you may expect. Likewise, sourcing agents speak English very well and can provide you with proposals and product details in your language.
4. On-site audits and verification of certificates to avoid scammers
Most Chinese suppliers are honest and happy to do business with large international companies and brands. But like in every industry, there are black sheep.
Due diligence is an important aspect in doing business everywhere, but in particular, if you are on a different continent and collaborating with a supplier or partner for the first time.
A local sourcing agent can easily visit the factory, do on-site checks, verify their documents and audits. Likewise, a sourcing expert has experience with the international logistics processes and knows which kind of documents are typically needed at airports and seaports, and how to prepare them in a way that they will be accepted immediately, including ISO certificates and taxes.
This is when working with experienced suppliers, who have these kinds of certifications, pays off, even if their per unit price is a little higher compared to a smaller non-experienced supplier who is unfamiliar with international standards.
5. Risk minimization
You have your own experience when buying personal products from abroad. There’s always a certain unknown when purchasing products from Asia. The suppliers are far away and not only through the language barrier there is an ample chance of misunderstanding. Or even worse, some so-called businessmen or -women may even set out to scam others on purpose.
So, how do you prevent this risk and ensure that your partners are legitimate, reliable, and trustworthy, fulfilling the agreed deliverable? That’s right, an experienced agency, who is oftentimes registered and has a reputation to lose, can help you to take care of your due diligence.
We also recommend ensuring the supplier you’ve selected is the actual manufacturer and not sourcing out your order to a third-party supplier. And if this is the case, that you are made aware of it transparently, and can check the credentials of this third-party supplier.
How China Sourcing Agents Make Money
Of course, no one works for free. With all the added benefits that sourcing agents provide there are several pricing models of sourcing agents in China. The most common ones are:
- Flat fee per sourcing project (most common)
- Hourly rate
- Commission on price difference or product value
Our Tips for You
- No matter which pricing model you choose, make sure to define the scope clearly (time, deliverable, etc.), what is included in the sourcing project, and what is not.
- Avoid sourcing agents who work on kickback commissions with the manufacturer, as they will be less likely to take your side in case of a conflict of interest.
Questions to Ask Potential Sourcing Agents/Companies
- Where do you have your office? Which cities do you regularly visit?
- How long have you been operating?
- Which product categories/industries are you most experienced with?
- How many partner manufacturers/factories do you have and where are they located?
- Please provide a list of references of international brands including contact information.
- Is your business registered? If yes, in China or elsewhere?
- What are your payment terms and methods?
This brings us to the end of this introduction on the benefits of working with Chinese sourcing agents, and everything else you need to know about this topic.
A China sourcing agent or company links international buyers with reliable suppliers in China. Whether your company is new to importing products from China or needs specialty products or high quantities – a Chinese sourcing agent or company will link you to the best suppliers in China.
Get your FREE Tenba Group consultation to get started! We connect you to the best sourcing agents and companies to fulfill your global sourcing needs.