Agents in China for Sourcing: Past, Present & Future
June 22, 2018
Buying from China is exciting, but it is also complicated. This is why most importers have trusted agents in China for sourcing. The role and benefit of sourcing agents is a topic that often comes up and we have covered it in a previous blog, (See Are You Leaving Money On the Table? Part 3 – China Sourcing Agents.) but in the end, sourcing agents are mostly there to help manage the supply chain.
Of course, if management is the focus, then having your own sourcing office is the way to go, but not everyone thinks they can afford such a support structure (See The Importance of Having a China Sourcing Team). So let’s focus on the agent.
The role of a sourcing agent has changed drastically over the 40 years we have been in business. In this blog we will discuss the role of sourcing agents in the past. How have they changed? And how does it compare to the average China sourcing agent today?
China Sourcing Agent Services
In the past, sourcing agent services consisted mostly of the most important factor – the human touch. This is difficult to measure and duplicate, but no matter who you had, you needed an agent: it was difficult to source anything consistently without one.
Generally, communicating with vendors in China was very difficult and expensive in the past, in the days of the telex machine. Poor communications increased the importance of the “agent on the spot” to ensure reliable liaison with factories. These communications were improved by the development of the fax, and later, perfected further by the development of email.
In those days, management was not the main focus of the China sourcing agent. They were mostly expected to liaise with factories, ensure quality control and arrange logistics. They were not expected to do this in a structured, well-managed way.
Furthermore, in the past, sourcing was very local. Factories introduced to importers by their agents were generally in the area that the agent lived in.
As a rule, agents in China for sourcing charged a commission on the FOB value of the orders they handled. The percentage variedfrom agent to agent and was also affected by the product. Most agents were not inclined to get their clients the best price for their goods as they would make less money if they did so. This practice is becoming less and less common in the present, and agents are becoming more and more aware of the conflict of interest when using this fee structure.
Agents were essential in helping westerners build a supply chain in China. It was inconceivable to source products without them. Good agents were precious and rare, and often kept as a secret. Today, some people think agents are not absolutely necessary to control one’s China supply chain. But in reality, the role of the agent has changed over time and the need for control over the supply chain, if anything, has increased. Next week, in Part Two, we’ll discuss how agents are viewed in the present time and how they have changed from the past.
By Jocelyn Trigueros