Looking for a supplier through a screen became easier thanks to directories, that repertory an extensive list of suppliers and even traduce their website in different languages to help the importer contact the manufacturer and find a qualified supplier.
But as with every system, some limits still exist. In fact, some manufacturers don’t want to appear on directories, to save money or even for strategy. Suppliers only speak English and Mandarin, which could be an additional difficulty when contacting them.
Finally, risks exist in those platforms, even if websites are trying to avoid them. So, an importer may try to rely on a sourcing agent for his procurement process, which is the safest method to avoid scams and save time and money.
But how do you find the best sourcing agent in China? Let’s give you our advice to be sure you are working with the right sourcing agency.
What does a sourcing agent do?
A sourcing agent is a company you will rely on to avoid the risks of sourcing in a foreign country and to save your money while importing products from China. This agent will contact the supplier, control the products and sometimes help you with the shipment of your goods.
In fact, sourcing companies can provide different services in the supply-chain process,
These could be :
– Put their network and supplier database at your disposal
– Contact the supplier by speaking mandarin
– Negotiate price, quality, and conditions (such as MOQ, payment conditions, and type)
– Control the quality and norms of the products
– Laboratory tests
– Make a supplier audit
– Help you with the payment of your order
– Negotiate prototype and samples at a good price for free
– Help you with the shipment of your goods
Why would using a sourcing agent be beneﬁcial?
Difference in cultures
Chinese culture is different from other cultures, and sometimes, it could be difficult to negotiate when you are not aware of it. In fact, negotiation is a part of China culture, if you don’t try to well negotiate your product and conditions, you will lose credibility. Another point is trust. Chinese people have to learn to know you before having confidence, you’ll have to create a relationship with your supplier. A sourcing agent will speak mandarin and know how to negotiate with a Chinese supplier.
The first point is that you have to be careful with suppliers you’ll find on websites, while finding suppliers on the internet, use websites and directories that are famous and well-reputed. You’ll have to spend a lot of time on these directories to learn how it works and avoid falling into scams. You’ll sometimes come across very attractive offers with low prices, but they could be fake. Sellers (fake sellers, obviously) will cash your deposit and disappear as he has never existed. A sourcing agent will avoid this type of scam by controlling the existence of the supplier, sometimes by visiting him and talk with them. It’s an easy way to ensure the supplier is reliable and, by the way, negotiate with him directly.
Ensure norms are applied
Norms and certificates are not the same between countries, that’s why it’s recommended to check if the supplier has a quality control system (like ISO 9001 at best). Even if the supplier shows you this certification, the safer, the better, so you should ask a sourcing agent to do a supplier audit to ensure the certificate is not fake.
We recommend you control the production during the process, even if the supplier has certifications and a quality control system.
You also have to know that when you are contracting a supplier, you have to be flexible because new negotiations and alterations can happen during the working relationship with your new supplier.
Some issues can also happen during the process, most often related to the lack of comprehension between the supplier and your specifications and even with norms and quality that are not the same between Europe and China.
We talked about cultural and language differences previously, this is an example of issues you can face up during the procurement process. In fact, the translation is sometimes very hard, and some technical points could be misinterpreted by the supplier. You also have to be aware of the “Cha Bu Duo” culture in Asia that signify “almost”, suppliers can manufacture your products “almost” respecting the standards and quality. That’s why you need to control your suppliers because sometimes they can rely on other manufacturers which could be less fussy about the quality. Finally, even if you are satisfied with the first order, it could be safer to control the quality systematically because it can fall at any time.
How to be sure you chose the best sourcing agent ?
The sourcing agent has to be located in the same country as your supplier. It will be easier to visit the supplier, negotiate with him, audit him, and keep an eye on the production process. To ensure it, you’ll have to check if the sourcing company is registered in the country and if its presence is legal. You’ll have to ask for some administrative documents to check it.
The experience of the sourcing agent is additional proof of reliability, try to pick one with years of work experience in this field. To verify, you can check its references and even contact its customers and get their opinion on the company. If your sourcing agent is speaking mandarin and knows about Chinese culture and its inner workings, you can be confident, it’s that a reliable one.
Large supplier database
The main activity of a sourcing agent is to find you the best supplier according to your needs, this supplier could not appear easily on websites and that’s why you want to rely on this type of company, the exclusivity of its database. When a sourcing agent is looking for a supplier for you, he has to put different supplier’s choices at your disposal, so you can select and compare with your own research.
Another goal when looking for a good sourcing agent is that he is able to negotiate for you the best quality and price for your product. He will also negotiate the payment conditions and terms, so you’ll don’t have to pay the total amount of the order before the production process. The standard terms are 30 to 50% at the order and 50 to 70% before the shipment, if it’s not the case and the company asks you to pay the whole order, it could be a sign of a scam. Your sourcing agent is also here to negotiate the order conditions as the price, the after-sale service, the warranty, spare parts, samples, and even Incoterms.
If you thought you’ll find the lowest prices only in China, you were wrong. In fact, countries such as Tunisia, Turkey, or even Romania could be more attractive in a Total Cost of Ownership (TCO) point of view because freight, customs, and quality control costs could be reduced. So, if you decide to do your sourcing in China, it’s to access to Chinese market before everything.
Then, you’ll have to consider paying for the quality and don’t put pressure on the supplier. He will always want to realize a good margin, and if the price you offer him is too low, he’ll just take lower quality raw material because the most important for him is its profit.
Quality issues often came after too much pressure on the price. If you want the best quality for your product, you’ll have to pay the right price for it, and that’s what a sourcing agent will do for you, find the best price between your budget and the supplier standards.
A sourcing agent will ensure that the supplier is honest by conducting an investigation on the supplier. The first document he will check is obviously the supplier’s Business License. Then, because certifications on technologies and environmental norms are frequently fake, everything has to be checked by local authorities.
Sometimes it also happens that a fraudulent supplier makes you visit another manufacturer than his own, you’ll have to be vigilant and that’s why a sourcing agent can be useful.
A good sourcing agent will control the quality and ensure it by monitoring the supplier during the process. He will ask for prototypes and samples and will always ask for your agreement before launching the production, you’ll receive photos and documents as proof that the product is respecting your needs and standards.
Tips for a good sourcing strategy in China
Foremost, you have to understand how the Chinese market works before any purchase. It means that you’ll have to do market studies, look for any information you can find about the market and the culture, and finally send your sourcing agent to initiate the working relationship and verify the situation.
Then, you’ll face up legal aspects, it’s recommended to rely on a specialized organism for this and even one quality control specialist for technical aspects.
We already talked about the fact that procurement in China is not a synonym for “cheap”, because quality needs to be paid for. So, your company has to be ready to give the right price for a good quality product.
In Europe, it’s easy to be confident about the contract a buyer signed because its supplier will often honor its contract share. But in China, you have to follow and control your supplier to ensure he will respect its engagement. It’s why you need a sourcing agent in China to do this part of the strategy.
Another way to ensure the supplier will produce your product respecting your standards is to clearly write your specifications. In fact, these specifications (in English preferably) will play an important role because it defines the parameters of the product. If you forget a detail, the supplier can use it to reduce its costs and increase its margins, and, obviously, decrease the quality of your product. Be careful when writing your specifications, because any changes can conduct to delays and augmentation of your costs.
Sometimes, adding a link in the supply chain can not be seen in a good light, even if, finally, an international freight forwarder based is a key to success in every trade or logistic operation in China. Whether it is as a purchasing office proposing a full tracking of the process or as a punctual services company, their goal is to allow companies that are not mandarin-speakers to access the Chinese market while avoiding risks and money loss.