China still is the cheapest country for manufacturers and retailers in the US to source for parts and goods. China has proven wrong the concept of low wage equates to low skill. China is a country that offers low wages to highly skilled workers. This is one of the reasons a lot of Western establishment, the US included, are sourcing most of their parts and goods from China.
China offers a combination of low cost, well-developed skills and policies that are investor-friendly. It is therefore not a surprise that organizations from all parts of the world want to establish businesses in China.
There are however a lot of companies who want to source parts and goods from China but are not so keen in setting up a full-blown and company-owned buying office in the country. This is where sourcing agents from China come in.
How to Source Products from China?
You can choose from a number of options if you want to source products from China.
- Search the Internet
This is the most cost-effective and easiest option. You can do your search through Google or Bing. You can also make use of B2B (business-to-business) platforms such as Alibaba, Made-in-China.com and Global Services. You can organize your search by filtering legitimate suppliers. You can also rely on good reviews. Most B2B sourcing platforms provide a list of endorsed suppliers and blacklisted suppliers.
- Social Media
Although not all suppliers are conscious of their social media presence, they can be a good source for reviews and feedbacks of probable suppliers. Additionally, there are groups in LinkedIn that focus on China suppliers such as China Sourcing and the China Sourcing Forum. You can also check for any complaints against a supplier at the Ripoff Report.
- Trade Shows
By attending trade shows you get to meet legitimate suppliers. You can meet them face to face and they can thoroughly explain their company profiles, products, production capabilities and other major business concerns. The Canton Fair is China’s largest trade fair that is held twice a year. The East China Fair on the other hand is China’s largest regional trade fair. Both trade fairs attract thousands of potential buyers. Chinese suppliers also attend most industry specific trade fairs in the US such as the Las Vegas International Consumer Electronics Show (CES).
- Hire a Sourcing Agent
A sourcing agent is someone who has the capability to help you with the sourcing and procurement process. When you hire a sourcing agent, he can help with the entire buying process from identifying a supplier all the way to shipment and logistics management.
Why You Need a Sourcing Agent?
Finding a reliable and high-quality supplier is one of the most important components in starting an import business. Your manufacturer/supplier is the lifeline of your business. They have full control of the goods you are going to sell which in turn controls how your customers will view your business.
When you buy from china, you will need a sourcing agent to help you quickly and efficiently find the high quality suppliers you need from their country.
The most important benefit you will get out of engaging the services of a sourcing agent or buyers agents is the fact that they are from the country of your prospective suppliers. They know better than you can possibly know how to deal and negotiate with these suppliers to get you a great deal. Other important benefits include:
- They can personally visit the factories and check the quality of the products.
- They can help you choose the right products and the best supplier based on your specifications.
- They negotiate prices with the supplier.
- They do quality control.
- They provide logistics and shipping support.
- They speak the same language the suppliers do and they know the culture by heart thus there are almost no communication barriers.
- They are familiar with the business landscape in their country so they know the suppliers to consider and those whom you need to stay away from.
- They are experts in what they do.
In short, with a sourcing agent you do not need to have a buying office in China to take care of all the dealings of your business. They will take care of the buying process so you can concentrate on the other aspects of your business.
Qualifications of a Good Sourcing Agent
While a sourcing agent makes the procurement process a lot easier for you, you need to be working with the right sourcing agent.
- Experts in Procurement
The sourcing agent in China needs to have at least five years of solid experience in procuring products from their country. The number of years he has been in business is proof of his track record. This means he has continuously provided his clients with good quality business. Other than being knowledgeable in choosing suppliers he should also be extremely capable in the areas of quality control, logistics and audit.
- Offers Competitive Prices
The best sourcing agent is able to offer the most competitive prices to his client alongside good quality products. A sourcing agent has the capability to negotiate with suppliers for the lowest prices possible. These agents are able to offer competitive prices because they have a huge pool of suppliers. Sourcing agents can have in their list a good number of suppliers for every product you may need thus they are able to get the best possible prices.
- Fluent in Cantonese and Mandarin
An effective sourcing agent must be able to speak the language of suppliers to be able to do sound business. There is no room for miscommunication in this business. A slight miscommunication can mean loss of money.
- Full Knowledge of Chinese Business Culture
A sourcing agent will only be able to effectively deal with Chinese suppliers if he understands how they conduct business. He should be aware of behaviors and beliefs and how suppliers conduct business transactions.
- Experience in Dealing with Chinese Suppliers
There is such a thing as knowing when to keep on going and when to stop. A good sourcing agent should have good negotiating skills. He will be representing you in all dealings with suppliers and he will only be able to get you good prices if he is able to negotiate correctly. Additionally, he should also have good business relationships with suppliers.
Finding a Good Sourcing Agent
If you are planning to import from china, you must have heard about sourcing agents. Sourcing agents make doing business with suppliers from China a lot easier. There are basically three types of sourcing agents.
Regardless of the type of sourcing agent you choose, they do the same things for you in so far as the procurement process is concerned. It is also assumed that all concerned are knowledgeable and skilled to handle the procurement process for you in China.
- Commissioned Agent
This is an individual who has extensive experience in the product you want to buy from China. You usually pay him a commission for the orders he worked on. The commission is based on the order’s FOB price and is between 5% and 10%.
- Trading Company
This is an ideal if you are buying in small volumes and you do not want to get involved with all the details of the procurement process. Traders work with small factories who can accommodate your small volume of orders. More often than not, these small factories do not have the capability to directly talk with export clients.
Traders earn by adding a mark-up to the supplier’s price. A professional purchasing agent would prefer to go direct to the factories thinking this will cost cheaper. Fact is a trader’s price will still come out cheaper, if you negotiate correctly, than that of the bigger factories. This is because in China, the bigger factories are more expensive than the small workshop-type suppliers.
If you purchase from a trader you should inspect the quality of the product. An exception is when the trader shows you a report from a third-party quality control company.
- Third Party Service Provider
If you are ordering large volumes, a third party service provider is the best type of sourcing agent to work with. Suppliers will always be very accommodating of inquires of third party service providers because of the large volume of the order. Their service fees are also most likely to be low in relation to the size of the order.
These companies however require an upfront investment. This is justifiable because they provide professional sourcing and screening of products and they also inform you of the supply chain. Most of these companies position their services as supply chain management. Some of these companies though sometimes possess the products and become a trader for your order.
For first time importers, choosing the best sourcing agent can often be daunting. Whichever type of sourcing agent you choose, trust and legitimacy are the most important factors to consider.
To make sure you are going to be dealing with a trustworthy and legitimate individual or organization, have them supply you with a list of 3 or 4 clients from your country they have rendered procurement services.
Let it be reiterated that China is the cheapest source of most quality parts and products. With a good sourcing agent working with you, you can benefit from this and make your business flourish in no time.