China probably sells more manufactured goods than any other country in the world. Manufacturing is often referred to as the “world’s factory” and drives national economic development. Due to its low cost, China is one of the most important manufacturers of industrial products. Sourcing from China can be a cost-effective way to grow your business. However, language barriers and mixed business practices can be a barrier for many foreign buyers, not to mention the wide variety of products to choose from. This is when a purchasing agent can be of great benefit to you.
We can explain the concept of a purchasing agent to you if you are unfamiliar with the concept. The simplest definition of a sourcing agent is a third party that helps you find suitable suppliers in a specific country. Generally speaking, the purchasing agent is familiar with the country’s business practices and customs and may also speak the local language.
A simple internet search will list numerous purchasing agents. What are the advantages and disadvantages of each?
1. Things to consider when choosing a Chinese sourcing agent
When choosing a sourcing agent in China, you need to keep the following points in mind to make the right choice.
1) Purchasing agent location
When you browse Google’s list of purchasing agents in China, look for the purchasing agent’s location. Are they Chinese, or foreign companies with offices in China? It is much easier to do business with foreign companies than with local Chinese companies. China has strict internet policies, which makes it difficult to check the qualifications of Chinese sourcing agents.
Make sure the foreign sourcing agent you choose has an office in China that is fully staffed. Be sure to check how long the office has been operating in China. Make sure your purchasing agent has a proven track record.
2) Experience of Chinese purchasing agents
There are huge differences in the way Chinese companies and Western companies operate. The differences can largely be attributed to differences in culture, customs, and ways of thinking. It is a wise choice to choose a purchasing agent with many years of experience in China. A purchasing agent with extensive experience working in China will have a large network of reliable contacts that are critical to your business.
3) Check references
Choose a purchasing agent who can provide you with authentic references from other businesses. Consult these references and check out their websites before making a decision. Find out how long they have worked with the purchasing agent and the quality they deliver. Ask them if they would recommend a purchasing agent.
4) Get the required documents
Your purchasing agent should be able to provide you with documentation of the purchasing and shipping process. The language on the document can give you a clear idea of the agent’s familiarity with the entire process. Documents usually provided by purchasing agents are certificate of origin, bill of lading, fumigation certificate, and detailed packing list.
5) Check how they handle quality issues
When sourcing products from abroad, the quality of the product is crucial. Check with the purchasing agent to see what measures they have in place to handle quality issues. Make it clear from the beginning that you will not accept substandard quality products.
6) Have the necessary licenses
Trade licenses are required for all Chinese businesses. The laws in China are very strict and you can only conduct certain types of business under certain licenses. Before you start working with a purchasing agent, don’t forget to check their license.
7) Check language ability
The ideal purchasing agent should be fluent in English and Mandarin. Make sure your primary contact has good written and spoken English skills. It would be better if the China office staff are also proficient in English, as there may be times when you need to speak to them directly.
8) Expert knowledge of the product you want to purchase
Different purchasing agents have different areas of expertise. You must check whether your purchasing agent has previous experience purchasing the product you are interested in. You can ask your agent for records of previous orders, or you can ask buyers for references. You may not find a purchasing agent that only handles one product. So ask for references from buyers who are in the same industry as yours.
9) Choose a purchasing agent with good ethics
We have heard of several purchasing agents taking kickbacks from suppliers. These agents may help you find suppliers faster, but the quality of the products may be questionable. Make sure you only accept suppliers that meet your quality and certification specifications.
2. How to find the right Chinese purchasing agent for you?
Now that you’ve narrowed down your list, we’ve put together a helpful checklist to help you find the right one for your business.
1) Record exactly what you need
Create a document outlining your requirements for purchasing agents and suppliers. Take the time to make sure you list all the requirements. Keep in mind that business practices vary from country to country. Don’t assume something is understandable just because it’s the standard in your country.
For your purchasing agent, you must include the scope of services, experience level, location, language proficiency, and payment structure. Make sure you also define your supplier’s requirements – working conditions, material types, quality, and delivery times.
2) Set a budget
Your budget is an important factor in choosing the right purchasing agent for your business. Remember to be flexible with your budget, as unexpected expenses can crop up at any time. Make sure you determine the number of units you want to produce. Additionally, determine the price you want to pay for the product and the amount you are willing to pay to the purchasing agent. Be realistic.
3) Determine the type of purchasing company you want to do business with
Purchasing agents can be divided into three broad categories:
1. Single Purchasing Agent: These agents work independently. The advantage is that they won’t be working with too many clients at once and therefore may be able to develop a personal relationship with your business. The disadvantage is that one’s network may also be limited. Verifying the credentials of individual individuals will be difficult, amplifying the risk.
2. Procurement Agencies: These procurement companies employ multiple procurement agents, each with their own area of expertise. These companies have more resources and therefore a larger network of suppliers. The downside is that these companies tend to be more expensive than individual purchasing agents.
3. Procurement and Logistics Companies: These are typically larger companies where procurement is one of many departments. These companies often also provide logistics and quality inspection services. One company can handle all your tasks – from finding suppliers to shipping products to warehouses. The downside is that they can be very expensive. Additionally, relying on one company to take care of all your needs, especially logistics, comes with its own set of risks.
Since each type of purchasing agency has its own advantages and disadvantages, you’ll need to decide which one is best for your business.
4) Research your purchasing agent
When researching your purchasing agents, don’t limit yourself to Google. Most of us tend to go with the first result that pops up on Google. Instead, use other platforms to delve deeper. It is a good idea to read reviews from other buyers and sellers. You should be able to narrow down your choices based on reviews and recommendations.
You should also talk to their references to learn more about their services and product quality.
5) Request a written quote
In order to get the best deal, it is wise to screen several purchasing agents. Request a quote from each of them, including the price of each service, how it is calculated, and the different payment structures they offer.
Don’t forget to ask for a copy of their business license. Now you can choose the quote that best meets your needs and budget.
6) Try to negotiate the price
Once you have an offer listed, try to negotiate the price. Larger companies usually have fixed prices. However, they sometimes have discounts that can sweeten the deal. Negotiations can go better with independent purchasing agents because their payments are more flexible
You may also want to know if the price will go down if you place a repeat order.
7) Record everything you agree to
To avoid future disagreements, be sure to document everything you agree to. Document important factors, such as what happens if the product received is of poor quality or shipment is delayed.
Confirm the payment structure, including the amount and type of payments for both parties. Documentation always helps if things don’t work out the way you expect.
3. What are the benefits of using a Chinese purchasing agent?
Many businesses are hesitant to use a purchasing agent due to concerns about unprofessional and unethical behavior. However, when you use the right purchasing agent, the benefits far outweigh the risks.
Here are some benefits of using a purchasing agent:
1) Save time
With a reliable sourcing agent, you can save a lot of time as you don’t have to dig through supplier pages to find the right supplier. You also save a lot of time that you would otherwise spend vetting suppliers and engaging in lengthy negotiations. Your purchasing agent will handle all of this, saving you valuable time.
2) Communication link between you and your supplier
When selecting a supplier, you need to provide a brief description of the product you require. Given the language barrier between you and the supplier, your purchasing agent can help you write down the exact details.
3) Help with negotiations
When sourcing from China, the idea is to get lower prices than you would normally get domestically. However, when the price is too low, product quality may be questioned. An experienced purchasing agent can strike the right balance in this situation. They can give you a good deal, but not so low that it affects the quality of the product.
Negotiations become easier when you have a purchasing agent because they speak the local language. They understand Chinese culture and customs. As a result, negotiations with purchasing agents are faster and more effective.
4) Verify your manufacturer’s qualifications
Before you start doing business with a manufacturer, it’s a good idea to check the manufacturer’s credentials. Be forewarned, when you ask them, all their certificates and licenses must be in Mandarin. If you need to verify them, you first need to hire a professional translator to translate these documents. This in itself is quite expensive. There’s also a risk that the manufacturer might hand over a bunch of fake documents.
When you hire a purchasing agent, they know exactly what the original certificate will look like. They understand the inspection bodies and the requirements that manufacturers must meet. By using a purchasing agent, you can greatly reduce your chances of being ripped off by your suppliers.
5) Huge connection network
In addition to their services, you pay a purchasing agent for their experience and vast network of contacts. Since they have worked with multiple vendors, they know exactly which one is best for you.
Finding the right China sourcing agent is crucial if you’re considering sourcing products from China. Getting quality products on time at the right price can help your business grow by leaps and bounds. Take the time to choose the right sourcing agent. The future of your business depends on it. Toopus, a team of professional Chinese sourcing agents, is your China office with dedicated staff to find the best factories, the most competitive prices, and the highest product quality.