Agents in China Sourcing: Past, Present & Future
May 2, 2024
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.
Fees
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
China Sourcing Agent FAQ
Key Differences | Sourcing Company | Sourcing Agent |
Ownership and structure | Registered legal entity in China and typically has a larger organizational structure, including multiple departments and employees | Usually an individual or a small company that operates as an independent contractor |
Scope of services | Offer a broader range of services beyond just sourcing, such as logistics management, quality control, and product design; can also handle larger orders and complex supply chain operations. Works across all industries. | Mainly focus on finding suppliers and products for their clients but are limited to specific industries. |
Cost | The client pays for specific services, usually based on time spent. The benefits for the client are: – Better control over their program. | Typically charge a commission for their service. The cost of service is directly linked to the cost of goods. Pro: Usually no payment is due until shipment occurs or payment is made to the factory. Con: There is often little cost transparency. |
Accountability | More accountable for their services since they are registered legal entities in China and subject to legal regulations. | May not be as accountable since they are often individuals or small companies without legal registration in China |
We’ve put together a list of the Top 10 China Sourcing Companies for your convenience.
A sourcing team in China can help buyers source a wide range of products from Chinese suppliers. China is known as the “factory of the world,” producing a vast array of products. Here are some examples:
- Electronics and electrical components: mobile phones, laptops, tablets, power banks, chargers, cables, electronic components, etc.
- Home and kitchen appliances: air conditioners, refrigerators, washing machines, microwave ovens, blenders, coffee makers, kitchenware, etc.
- Clothing and textiles: t-shirts, jackets, dresses, shoes, bags, hats, and textiles
- Furniture: sofas, chairs, tables, beds, cabinets, and other home and office furniture
- Toys and games: stuffed animals, board games, educational toys, remote-controlled toys, etc.
- Automotive and industrial products: automotive parts, machinery, hardware, and tools
- Health and beauty products: skincare products, makeup, personal care products, health supplements, etc.
Using a sourcing company can be beneficial if the buyer has a large and complex sourcing project that requires a team of experts with different skills and specializations. A sourcing company can provide a comprehensive range of services, including product sourcing, quality control, logistics, and assistance with customs clearance. Additionally, a sourcing company may have better resources and connections in China, which can result in better pricing and faster turnaround times. On the other hand, using a single sourcing agent can be beneficial for smaller and less complex sourcing projects.
See more on the differences between sourcing agents and sourcing companies.
Professional sourcing companies conduct quality control checks at different stages of the production process, including:
- Pre-production inspection
- During production inspection
- Pre-shipment inspection
The quality control process may include visual inspections, measurements, functional tests, and other types of technical tests to ensure that the products meet the required quality standards. The objective is to identify defects or issues during the quality control process, and rectify them before the products are shipped.
Yes, of course.
In fact, visiting the factory is an important step in the sourcing process, especially if you are working with a new supplier, because manufacturers and suppliers are key components of the supply chain.
Your sourcing team helps arrange the factory visit, including scheduling the visit, coordinating with suppliers, arranging transportation, and accompanying you to the factory. Your team also acts as an interpreter if necessary and helps facilitate communication between you and the supplier.