China probably sells more manufactured goods than any other country in the world. Manufacturing is often referred to as the “factory of the world” and drives a country’s economy.
Due to its low cost, China is one of the most important manufacturers of industrial products. Sourcing from China can be a good decision if you want your business to be cost-effective. However, language barriers and mixed business practices can be a hindrance for many foreign buyers, not to mention the wide variety of products to choose from. This is when a purchasing agent can greatly benefit you.
If the concept of a purchasing agent is new to you, let us help you. The simplest definition of a purchasing agent is a third party that helps you find suitable suppliers in a specific country. Generally, purchasing agents are familiar with business practices and customs in the country and may also speak the local language.
A simple internet search can throw up a huge list of purchasing agents. How do you know which one is right for you?
Things to Consider When Choosing a China Sourcing Agent
When choosing a sourcing agent in China, there are a few things you need to keep in mind to make the right choice.
The location of the sourcing agent
Find the location of a sourcing agent when you browse Google’s list of sourcing agents in China. Are they Chinese, or are they foreign companies with offices in China? Doing business with foreign companies is much easier than doing business in China. China has strict internet policies which can make it difficult to check the credentials of your Chinese sourcing agent.
When you choose a foreign sourcing agent, make sure they have a fully staffed office in China. Be sure to check how long the office has been operating in China. Choose a purchasing agent with a proven track record.
The experience of sourcing agents in China
There are huge differences in the way Chinese companies and Western companies operate. These differences are mainly attributable to differences in culture, customs, and ways of thinking. It is wise to choose a purchasing agent with many years of experience in China. Sourcing agents with extensive experience working in China will have a large network of reliable contacts that are vital to your business.
Choose a purchasing agent who can give you real references from other businesses. Make sure you take the time to talk to these references and check out their websites. Please find out how long they have worked with purchasing agents and the quality of their offerings. Ask if they would recommend a purchasing agent.
Get the required documents
Your purchasing agent should be able to provide you with relevant documentation for the purchasing and shipping process. The language on the document will give you a fair idea of how proficient the agent is with the entire process. The documents usually provided by purchasing agents are the certificate of origin, bill of lading, fumigation certificate, and detailed packing list.
Check how they handle quality issues
When sourcing products from abroad, the quality of the product is paramount. Check with the purchasing agent what measures they have in place to deal with quality issues. Make it clear from the outset that you will not accept a product of substandard quality.
Have the necessary licenses
All businesses in China are required to obtain a trade license. Chinese laws are very strict and you can only conduct certain types of business on certain licenses. Don’t forget to check their licenses before you start working with a purchasing agent.
Check language ability
The ideal purchasing agent should be proficient in both English and Mandarin. Make sure your primary contact has good written and spoken English. Ideally, the Chinese office staff is also proficient in English as you may sometimes need to talk directly to them.
Expertise in the product you want to buy
Different purchasing agents have different areas of expertise. You must check that your purchasing agent has prior experience sourcing the product you are interested in. You can ask your agent for previous order records, or you can ask for buyer references. You may not find a purchasing agent that handles only one product. So ask for buyer references that are in the same industry as yours.
Choose a sourcing agent with good ethics
We’ve heard of several purchasing agents taking rebates from suppliers. Such an agency may help you find suppliers faster, but the quality of the product may be questionable. Make sure you only say yes to suppliers that meet your quality and certification specifications.
How to find the right China sourcing agent for you?
Now that you’ve narrowed down your list, we’ve put together a helpful list to find the right one for your business.
Record exactly what you need
Create a document listing your purchasing agent and supplier requirements. Take the time to make sure you have listed all the requirements. Remember that business practices vary from country to country. Don’t assume something is understood just because it’s your country’s standard.
For your purchasing agent, you must include the scope of service, experience level, location, language ability, and payment structure. Make sure you also define your requirements for supplier working conditions, material type, quality, and lead time.
Set a budget
Your budget is an important factor in choosing the right sourcing agent for your business. Remember to be flexible with your budget, as unexpected expenses can arise at any time. Make sure you determine the number of units you want to produce. Also, determine the price you want to pay for your product and how much you are willing to pay the purchasing agent. Be realistic.
Determine the type of sourcing company you want to do business with
Purchasing agents can be divided into three categories:
- Single Purchasing Agents: These agents work independently. The advantage is that they won’t be working with too many clients at a time, so maybe able to develop a personal relationship with your business. The downside is that a person’s network may also be limited. It is difficult to verify one’s credentials, which magnifies the risk.
- Purchasing agents: These purchasing companies employ several purchasing agents, each with their own area of expertise. These companies have more resources and therefore a larger network of suppliers. On the downside, these companies tend to be more expensive than individual purchasing agents.
- Purchasing and logistics companies: These are usually larger companies and purchasing is one of many departments. These companies usually also provide logistics and quality inspection services. The biggest benefit is that all your tasks—from finding suppliers to shipping products to warehouses—can be done by one company. The downside is that they can be very expensive. Also, relying on one company for all your needs, especially logistics, comes with its own risks.
Since each type of purchasing agent has its own pros and cons, you need to decide which one is best for your business.
Research your purchasing agent
When researching your buying agency, don’t limit yourself to Google. Most of us tend to use the first result that pops up on Google. Instead, use other platforms for in-depth research. You should read reviews from other sellers and buyers. You should be able to narrow down your choices based on reviews and testimonials.
You should also talk to their referees to learn more about their service and product quality.
Request a written quote
In order to get the best price, it is wise to choose several purchasing agents. Ask each of them for a quote, including the price of each service, how the price is calculated, and the different payment structures they offer.
Don’t forget to ask for a copy of their business license. Choose now the quote that best suits your requirements and budget.
Try to negotiate a price
Once you’ve shortlisted an offer, try to negotiate a price. Larger companies usually have fixed prices. However, they sometimes have some wiggle room for discounts, which can sweeten the deal. Negotiations with independent purchasing agents can be better as their payments are more flexible
You may also want to know if the price will drop if you reorder.
Record everything you agree to
To avoid disagreements in the future, make sure to record everything you agree to. Document important factors such as what happens when a product is received of poor quality or a shipment are delayed.
Confirm the payment structure, including the amount and type of payment for both parties. Documentation is always helpful if things don’t go the way you expect.
What are the benefits of being a sourcing agent in China?
Many businesses are reluctant to use purchasing agents due to fears of unprofessional and unethical behavior. However, when you use the right sourcing agent, the benefits far outweigh the risks.
Here are some of the benefits of using a sourcing agent:
With a reliable purchasing agent, you can save a lot of time because you don’t have to rummage through supplier pages to find the right supplier. You also save a lot of time that you would otherwise spend vetting suppliers and negotiating for a long time. Your purchasing agent will handle all of this to save you valuable time.
The communication link between you and your supplier
When choosing a supplier, you need to provide a brief description of the product you want. Considering the language barrier between you and the supplier, your purchasing agent can help you fill in the exact details.
When sourcing from China, the idea is to get a lower price than what is usually available domestically. However, when the price is too low, the quality of the product can be questioned. This is where a good purchasing agent can strike a balance. They can get you a good deal, but not so low that it compromises product quality.
Negotiations are easier when you have purchasing agents because they speak the local language. They understand Chinese culture and customs. As a result, negotiations with purchasing agents are faster and more efficient.
Verify the manufacturer’s credentials
It’s a good idea to check the manufacturer’s credentials before starting a business with the manufacturer. Note that all their certificates and licenses must be in Mandarin when you ask them. If you need to verify them, you will first need to pay for a professional translator to translate these documents. This in itself is quite expensive. It’s also possible that the manufacturer just handed over a bunch of fake documents.
When you hire a purchasing agent, they know exactly what the original certificate will look like. They understand the requirements that inspection agencies and manufacturers must meet. With a purchasing agent, you can greatly reduce your chances of being cheated by your suppliers.
Huge connection network
In addition to their services, you also pay a sourcing agent for their experience and vast network of contacts. Since they work with multiple suppliers, they know exactly which one is right for you.
If you are considering sourcing products from China, finding the right China sourcing agent is a crucial step. Getting quality products at the right price and time can help your business leapfrog. Take the time to choose the right purchasing agent. The future of your business depends on it.