An Introduction to China Sourcing Agent

Published by blucejum on

As a country with large-scale of manufacturing and more than 1.4 billion people, China has 3 million companies and produce 8 million types of products. And with the development of E-commerce, it is easy to source products though business to business sites and search engines, people can discover everything they are interesting by typing target keywords on Alibaba, made in China and google, however, there are still thousands of people are willing to hire China sourcing agent.

In this article, we introduce Chinese sourcing agent which relating to importing from China. Hoping it is helpful to the people who are planning to purchase from China.

1, The Definition of China Sourcing Agent

Sourcing agent is also called purchasing agent, broker, procurement Solutions Company, sourcing agency, and buying company. It is a procurement organization to help high-cost company source products and services from low-cost countries, such as China, Vietnam, India, Brazil, South Africa and Mexico.

In order to help people well understand the definition of sourcing agent, Discover Sourcing listed the main points of its definition as.

  • Focus on finding product from real manufacturing company.
  • It shall is a service company.
  • Charge customers for service fees.
  • Product’s price and service charge is separate.

2, Classify Sourcing Agent By Region And Function

Many years ago, one of my friends from USA ever asked me that how many sourcing agents in China? Unfortunately, I can’t answer him the question at that time. If someone asks me the same question now, I will tell him that the quantity of real sourcing agent is less than 50.

There are different kinds of agencies, of course, not all of them can be called China sourcing agent. Lots of Chinese companies claimed they were real sourcing agent, but they are not, they are Chinese trading companies in fact. A trading company always tells its potential customers they can do everything, but you never know where products were produced. What’s more, some of trading companies try every means to prevent customers to get information about real suppliers, because they don’t want to share any information about their suppliers with customers.

1) Classify China Sourcing Agent By Region

Trading company is everywhere, but sourcing agents are not like trading companies, they only base in those cities, Shanghai, Yiwu, Shenzhen and Guangzhou.

  • Yiwu Sourcing Agent: Yiwu is an city famous as Yiwu wholesale market which is also called Yiwu International Trade City that can offer more than 800,000 kinds of small commodities, such as toothbrush, gift products, auto parts. Products wholesaled from Yiwu market are low price, but those products are produced in personal workshop, no quality control, no production inspection, no normal engineers, and all of the processes are operated according to experiences learning from other companies.
  • Shenzhen Sourcing AgentIn China, 50% of electronic products are made in Shenzhen, Foshan, Zhongshan, and Dongguan. Sourcing electronics products from Shenzhen market can be convenience and efficient, because people can get to any potential factory in those cities in one day. So, sourcing agents in this city always focus on electronics products due to the advantageous supply chain to electronics.
  • Guangzhou Sourcing Agent: Guangzhou is an ancient city next to Shenzhen and Dongguan, so the sourcing agents here are specializes in sourcing electronic products too.
  • Shanghai Sourcing Agent: Shanghai is an international city which all of the top 500 companies have offices here and factories here are produced high quality products. Kunshan, Jiaxing, Wuxi, Hangzhou and Ningbo are the most important industrial cities in China, people in Shanghai can reach these cities within 2 hours by high-speed train. So, Shanghai sourcing agents are internationalized and have the ability to offer strategic sourcing services.

2) Classify China Sourcing Agent By Function

As is mentioned above, sourcing agent includes manufacturing sourcing agent and product sourcing agent. Manufacturing sourcing agents focus on manufacturing supplier development and customized product sourcing; And product sourcing agent specialize in sourcing off the shelf products or commodities. A product sourcing company didn’t have R&D department which can help clients develop new products. In other word, a product sourcing agent is more likely a trading company.

3, Different Between Sourcing Agent And Trading Company

Manufacturing company and trading company are the two important sources to import products from China. In order to get make more money, most of trading companies purchase products from small workshops that don’t have quality control system but can be supply products at the lowest price. So, pricing from trading companies are not factories’ price and at least 12% higher than purchase from real manufacturers directly.

Items Sourcing Agent Trading Company
Price Low High
Supplier Info Open Hide
R&D Capacity Yes No
MOQ Small High
Manufacturing Sourcing Yes No
Quality High Poor
Lead Time Short Long

Develop supplier cannot be as one wishes due to different cultures. Importing from China via China sourcing agent not only can reduce risk, but also can optimize supply chain, however, few people think it is important. Agents can help negotiate for competitive price and good payment terms, find freight forwarder, guarantee products are produced as plan and delivered on time, check quality before shipping, handle shipping issue, and so on.The role of sourcing agent?

For small business, especially the new business starter, hiring such a third-party sourcing services provider shall is the best way to import from China. Outsourcing makes you have energy and time on improving products’ design and marketing development.

4, What Sourcing Agents Can Do?

Unlike trading company, a real sourcing agent will never need to claim they were manufacturing company, because people know these organizations impossible to produce products.

  • Working according to requirement, such as Verify manufacturing company, audit suppliers, source products, find potential suppliers, and after-sale service support.
  • Optimize supplier chain to cost down, such as price negotiation, source new freight forwarder, provides sourcing solutions.
  • Guarantee products are produced and shipped according to requirements, such as Production Inspection, Technical support, Project management, order management, quality control, and shipping arrangement.
  • Discover and develop new products, such as sample sourcing and new product development.

5, Who Need China Sourcing Agent?

In the high-speed developing society, people can source and don’t need agent services when importing from China, but data shows that there are still lots of people want to hire agents, such as, new business starters, startup companies, and Amazon FBA sellers. There are more than 26,000 searches per month.

Sourcing agent 880 Buying office 1000
China sourcing agent 590 Purchasing company 320
Yiwu sourcing agent 40 Sourcing services 210
Shenzhen sourcing agent 20 Trading company 22200
Sourcing company 720 Sourcing agent in China 210

Those are some potential organizations that need China sourcing agent services, but there are still some factors to stop them to hire a sourcing partner even if they have a plan to source products from China, such as budget limited and Company rules and regulations.

  • Small business owner, such as wholesalers, retailers, and some trading companies.
  • Start-up Company, such as new importer and new business starter.
  • Companies that didn’t have time to find and verify China manufacturing companies.
  • Companies that are planning to transfer products to China.
  • Manufacturing companies that want to import semi-manufactured products or material from China for cost down.
  • Companies who focus on business and need to someone to help them source products.

6, Why to Hire China Sourcing Agent?

Be the first hypothesis, for example, an auto parts you purchase from China is USD10.00/piece, however, a Chinese sourcing agent help you discover a verify manufacturer who can offer the price at $9/piece with the same quality, but you need to pay extra $0.5/piece as sourcing service fees. It means that you can purchase the same parts at $9.5/piece and never need to spend time on Chinese supplier.

1) Verify Manufacturing Company

In electronic commerce ages, people can find supplier easy, but products are easier to list on internet. So, the question is coming, how to you know who is the right supplier? In most case, it is difficult to discover the right source, because it is too hard to verify a real manufacturer.

2) Find Lower Price

People should have quoted with lots of suppliers discovered on Alibaba or made in China before receiving satisfying prices. We understand customers are longing to obtain products with competitive price and good quality, but it is not easy to a company who does not familiar with Chinese market.

  • China Sourcing Agents have different Sources and may be able to offer lower price, they can find the sources which cannot be discover on B2B sites, search engines, and trade shows, etc.
  • Chinese sourcing agents are good at Price Negotiation, because they know the real Chinese cost and have rich experiences on cost analysis.
  • Agents can get the Domestic Price due to price offered to Chinese company is always lower than overseas company.

3) Save Time and High Efficiency

A US customer contacted us and hoped us to develop a Chinese precision machining supplier for him, because he have waited a lot of time on Alibaba and found it was hard to communicate with manufacturers. This is the common problem for the companies that don’t have subsidiary company or representative office in China.

4) For Quality Control

Pre-shipment inspection is the last step to control the quality of product made in China. If you cannot visit China in person, a third-party product inspection services company is the most economical way to solve it. They help to check the appearance, test the functions, and measure dimension before shipping. After inspecting products, customer will receive an inspection report from the agency. Here are some tips when hiring a Chinese third-party product inspection service company.

  • The inspection service company is neutral and have none interest with your supplier.
  • Describe your requirements as standard before choosing any organization to check products. Check the template of product inspection report and request the agent to modify it according to products.

7, Services Fees to Hire China Sourcing Agent

Order Amount Service Charge
less than $1,000 $99+5.5% of POs
$1,000~$2,000 $99+5.0% of POs
$2,000~$4,000 $99+4.9% of POs
$4,000~$7,000 $99+4.8% of POs
$7,000~$10,000 $99+4.7% of POs
$10,000~$20,000 $99+4.6% of POs
$20,000+ $99+4.5% of POs

1)  Price of product should be at EXW terms and service fee is charge separately.

2) There are two common business models.

  • Both products payment and service charge are pay to agent’s bank account is a traditional sourcing agent’s business model. Most of Chinese sourcing agents are running in this model and running as trading company.
  • If products payment is pay to China manufacturing companies, however service fees is pay to the agent’s bank account. In this models, the sourcing agent is mostly a sourcing counselor.

In general, customer can pay the services fees via bank transfer, PayPal, credit card, and western union.