China Sourcing: Upwork vs. Sourcing Agency

You often hear that “business is about people” and you know full well that having good people is the key to managing your China supply chain.  The question is how do you find good people? How do you manage them?

One tantalizing option that exists today but was not available only a few short years ago is the Upwork platform (and its competitors).  This is a well-designed website that lets you find, test and manage freelancers for different jobs.

We also wanted to share this blog because it studies the question and lists common risks of hiring a freelancer from Upwork to manage your China supply chain.  In a previous blog, we also addressed the issue of Hiring Teams vs. Individuals, but this blog will focus on the comparison between a freelancer versus a sourcing team.

To begin, let’s agree that it is best to have dedicated specialists working for you. And let’s say there are three ways to secure that.

1. Hiring a well-established and proven team of specialists
2. Finding and hiring a professional individual and hiring them full-time or part time through an HR process
3. By hiring a freelancer through Upwork

So how does hiring a freelancer differ from hiring an agent or agency?

• HR: According to the above article, hiring freelancers to manage your China supply chain is illegal in China because the Chinese government doesn’t recognize sub-contractors. Any individual working on your behalf is supposed to be your “employee” in China. This may not be the case if you’re hiring a company or agency already established as a legal business entity in China.

• Fees and Commissions: Sourcing freelancers often charge a commission based on your total order. When hiring a freelancer that introduces you to a supplier, they take this commission from the supplier who builds the cost into the price. This is in addition to the cost of hiring that freelancer on the Upwork platform. We consider this an obvious conflict of interest since the freelancer is supposed to protect your interests, not just his or her own or those of the supplier. Reputable sourcing service companies do not charge such under-the-table commissions.

• Accountability: This affects different aspects of your China supply chain. Usually, freelance sourcing agents perform many tasks — QC, logistics, etc.— and should do so with the buyer’s (i.e. Their client) interest in mind. But how do you hold them accountable when quality is not as expected or when a delivery is not timely? Also, as the article says, what is the risk of having a freelancer completely disappear if serious problems occur?

There are always risks when hiring anyone to manage your China supply chain, whether that be an agent, agency, or freelancer. You have to do your homework in all cases, but I think you will find that each option tends to suit different needs.

Overall, hiring a freelancer on Upwork is easier, simpler and cheaper than hiring your own full-time employee through an HR process. If you have a very simple and easily managed product and/orprogram, hiring a freelancer may be the most economical and simple route.  But the legality of this process is a concern.

Amore robust agency may be best suited for more complex and larger sourcing programs. But test your assumptions: “try before you buy” is always a good approach.

In all cases, start with why you need the talent and be very clear about your needs and the end-result you expect. You can then build your support solution around this clear vision.

What type of sourcing support do you employ? Have you ever hired a freelancer to manage your China supply chain? Share your thoughts with us below.

 

By Jocelyn Trigueros