Importing goods from China, you can operate by yourself or hire a China purchasing agent to serve you. A sourcing agent, purchasing partner, or buying company always can offer services which are including, but not limited to develop new supplier, audit factory, RFQ for competitive price, discover the best manufacturer which is impossible to be found on B2B sites or search engine, ask for sample and ship to you via low-cost international express (for example, it is less than 15 USD to ship 1 kg package from China to USA through a Chinese purchasing agent), purchase order management for lead time guarantee and project management, quality control and pre-shipment inspection, payment and after-sale services, etc. Those purchasing services and processes are absolutely necessary if you plan to over your competitors via importing from China. So, a reliable and outstanding purchasing agent services company is very import for overseas customers who plan to import goods from China.
But, how to find a reliable purchasing agent in China and where do you start? Regarding the operation flow of procurement solutions company, this article explains the operation mechanism of purchasing services company in detail from the organization form and the operation flow which you may actually learn something about importing products from Chinese manufacturers or suppliers via working with purchasing agents in China. And this is a complete guide to import products from China through purchasing agent services company.
- What are the differences between purchasing agent, trading company and wholesaler?
- The operation flow of a purchasing agent in China.
- Supplier development and purchasing agent.
- Why you need a Chinese purchasing agent.
- What are services that purchasing agent can offer to their overseas customers?
- Some answers for why a Chinese purchasing agent can get a lower price.
- What about quality control if you hire a purchasing agent in China?
- Who needs a Purchasing agent?
- How to find the right purchasing agent for you?
- China purchasing agent services fees.
- PayPal and China suppliers, purchasing agent.
- How to work with a purchasing agent for new project?
- Non-disclosure Agreement and Chinese purchasing agent.
- Import from Chinese manufacturers, does it really matter?
- Kickback issue in China.
- Get free sample via purchasing agent in China.
- Additional services and China purchasing agent.
- Door to door services and import goods from China.
- What is the time to need no more of China purchasing agent services?
Purchasing agent, trading company and wholesaler: What are the different?
a, Sourcing or purchasing Agent
Purchasing agent includes manufacturing purchasing agent and product purchasing agent. It is the meaning that a manufacturing purchasing agent will focus on custom-make product, such as plastic injection molding parts, stamping parts, aluminum die casting parts, forging parts and machining parts. In manufacturing purchasing agent services company, there is a technical engineer team which will be responsible for new product development. And most of the manufacturing purchasing agent are based on Shanghai, we call them Shanghai purchasing Agent. But, a product purchasing agent will not need such a team due to their job is “find”, “find”, “find”. They find the product for you from local wholesale market such as Yiwu wholesale market, Shanghai wholesale market, B2B sites like 1688 and alibaba website. Most of their products are off the shelf in stock or short lead time. Most of product purchasing agents are based on Yiwu and Shenzhen. Yiwu purchasing agents focus on small commodities such as hardware and tools, flashlight, non-woven bag and backpack, etc. Shenzhen purchasing agents focus on electronic products such as USB flash disk for phone, 4G wireless router and headphone.
A real China purchasing agent services provider should not sell products, they offer purchasing services only. They charge purchasing agent fees to overseas customer and is open to China suppliers without any charge. And customers will know all the information of manufacturers or suppliers after some paper work or guarantee.
- purchasing agent services fees paid into China purchasing agent’s account.
- Overseas customers pay goods payment to Chinese supplers’ account directly.
- Goods are delivered from suppliers’ warehouse to overseas companies directly.
- purchasing agent will handle all the business on overseas customers’ behalf.
b, Trading Company
We found that most of Chinese purchasing agents are not real purchasing agent. They sell products and hold the information of suppliers. These purchasing agents work like a trading company. As a matter of fact, those kind of purchasing agents are trading companies.
Buy products from China manufacturers at low prices and sell to you at higher prices which is a standard commercial operation for a trading company. The pricing gap is the profit of a trading company. And they try every means to block you to know any information of the real suppliers. Note that some of the trading companies lie to you that they are a factory. You can search our article on our website (DiscoverSourcing.com) to learn “How to confirm it is a real manufacturer?”.
- No any purchasing services fees.
- Overseas customers pay goods payment to trading companies’ account.
- Goods are delivered from suppliers’ warehouse to trading company’s warehouse, and then trading company ships those goods to overseas customers via their shipping solutions.
- Trading company will handle all the business on their behalf.
- You will never know who is your manufacturers. As far as we know, most of the products exported by trading companies are made in family workshops.
Why can trading companies offer a low price?
- As is mentioned above, the products made in a small family workshops which is without quality control system.
- Products are produced separately. For example, you are working at an US company and import aluminum die casting products from Chinese trading company. As fa as we know, most of the trading companies buy die casting tooling or mould at a small tooling workshop who can offer the lowest tooling-making cost in China, and transfer the die casting parts tooling to a small die casting manufacturing workshop which you can find those die casting factories everywhere in China.
- Have a good relationship with their die casting products sources.
- Tax reimbursement for export can make the cost down. China souring agent can find such a manufacturing supplier for you.
c, China wholesaler
Sometimes, wholesaler likes a purchasing agent but you can know who is the real supplier via the package of products. Most of the products offered by wholesalers are standard products in stock, and they don’t care that you will discover the real supplier via reading the package or production instructions.
- No any purchasing services fees.
- No technical team.
- Overseas customers pay goods payment to wholesalers’ account.
- Goods are delivered from wholesalers’ warehouse to overseas customers via their shipping solutions.
- Most of the products are in stock.
- The price is higher than import from China factories directly.
- Most of the purchase order from customers are for small business.
The operation flow of a purchasing agent in China.
Most of China purchasing Agents are not trading companies, they don’t sell goods but provide purchasing services to help overseas company to import goods from China. So, they have a different operational process.
- A data of supplier system and update process.
- Supplier development process.
- Supplier audit standard.
- Quality control system.
- Global supply chain.
- Payment and risk management for customers.
- Technical support and after-sale service.
Supplier development and purchasing agent.
When a purchasing agent receives an authorization to develop a China manufacturing supplier, he will work for it. This is a simple work-flow of a China purchasing agent to develop a right supplier for overseas customer.
- Review the document of customers;
- Find potential sources according to customer’s need;
- Choose 5~10 suppliers to contact and discuss one by one;
- Supplier information card and NDA;
- Release product document and drawing for quoting;
- Select 2~4 suppliers who can offer reasonable price and details to negotiate;
- Visit supplier and audit;
- A report with quotation and supplier information to overseas customer.
Why you need a China purchasing agent?
China purchasing agent is not only help you discover products or suppliers but also can give you some assurances to import goods from China. Importing from China is without risk, especially you are a starter.
- Save money is the main reason to hire a purchasing agent for most of Western companies. Procurement outsourcing can help them focus on products, R&D, and marketing.
- Time is money which is meaning that wasting time on a bad manufacturer or suppliers is not a good deal. Too much information to find which is reliable, everyone is claiming that their company is a manufacturing company and can offer you a competitive price and good quality. But, only 30% of those online suppliers are real manufacturers. Working with a purchasing agent will let you no longer worry about who lie to you.
- You can discover some low prices but it is no the competitive one. A purchasing agent can help you discover the best price from China. Your target price is USD10/Piece, a souring agent can find a USD9/Piece but you need to pay USD0.35/Piece to the agent which will help you purchase order management, quality control, pre-shipment inspection and after-sale service support, which is a win-win game.
- Discover the right manufacturer in China is not easy for some importers. The product is too special to find a supplier in China. In this case, a purchasing agent will glad to take time to source for you in China.
What are services that purchasing agent can provide to their overseas customers?
The mission of a responsible purchasing agent in China should be like this: Provide reliable and practical sourcing solutions and help you to get the parts or products made in China at reasonable & competitive price. Here is a list of procurement services provided by China purchasing agent.
- Ex-works prices surveys.
- supplier development.
- Manufacturer or factory audit.
- Price analysis and negotiation.
- Tooling or mould development support.
- Sample purchasing and development assistance.
- Product purchasing or new product development.
- purchasing advisory or survey.
- Business and import & export guide.
- Technical support.
- Project management.
- Purchase order management.
- Supplier management.
- Quality control such as manufacturing process and production inspection.
- Supplier chain solution such as provide low-cost shipping solution.
- Payment support.
- Import & export agent and custom service.
- After-sale service.
Some answers for why a purchasing agent can get a lower price.
purchasing agents including manufacturing purchasing services companies and product purchasing agents always can offer competitive prices. And everyone knows that this’ formula is designed for overseas company who imports goods from China.
Target price = Ex-works cost + Operating charges + Shipping cost
a, Supplier Development Sources.
An overseas company who is planning import goods from China should know that a good Chinese source is half done. You may can discover some cost on international B2B site such as alibaba and made in China, search engine such as google and yahoo, trade shows and introduction by your clients or current suppliers, but, those are small parts of the Chinese supplier sources. 60% of Chinese manufacturers don’t have any English introduction profile or on internet but have a great deal of experience in export quality-products to overseas companies. You can find those suppliers on domestic B2B site in Chinese, search engine in Chinese, yellow pages from telecommunication enterprise, domestic exhibition, introduction by friends, suppliers and customers, and so on.
b, Price Analysis and Negotiation.
Maybe you will say we also can do the price analysis and negotiation with Chinese suppliers and this is not an advantage for why a purchasing agent can get a good price for their overseas client. The answer is YES for a big business or large purchase. But, how about the small business or low volume import goods from China? A China purchasing agent can negotiate for low MOQ at a reason about low-cost due to a manufacturer believe that it just like a domestic business and run it at few cost.
c, Supply Chain Solutions.
Most of Chinese factories or manufacturers focus on manufacturing products and quality control, and have few energy to develop economical supply chain solutions such as low-cost forwarder and customs services provider. However, an experienced and professional purchasing agent can do it due to this is a part of the high-quality purchasing service.
What about quality control if you hire a China purchasing agent?
Bad quality product made in China makes some overseas companies don’t dare to outsourcing to China. Price is import, but good quality is an important prerequisite. No one want to receive a “surprise” when you pay a large sum of money to China. If your purchasing agent services package includes quality control or product inspection, your agent will help you check the quality during the manufacturing and pre-shipment processes which can cut the risk to import goods from China. General quality control services includes following points.
- Tooling audit and test.
- Sample test or inspection.
- Trial order inspection before shipping to you.
- Mass product inspection before shipping to you.
- Manufacturing audit.
- Dimension measurement and inspection.
- Appearance inspection.
- Function test.
Who needs a purchasing agent?
A purchasing agent can help you a lot, but it is not available to everyone who want to source product or parts from China. Some companies want to handle all the thing by themselves, some people don’t have a budget to hire a China purchasing agent and someone did not recognize that a China purchasing agent can save time and money to their project outsourcing to China. Following is a list of the people or companies who may need a purchasing agent when they plan to import products from Chinese suppliers.
- People or companies who are the first time to import goods from China.
- Companies who want to outsource procurement to the 3rd party.
- Small business owners who want to import low-volume from China.
- Companies or people who don’t want to waste time on B2B sites such as alibaba and made in China.
- Someone who wants to hire a Chinese purchasing services company to help them manage their purchasing business in China.
- Anyone who want to discover reliable manufacturers or sources in China.
- The people who have difficulty with purchasing in China.
- Companies who need a professional quality control team in China.
How to find a right purchasing agent for you?
You can find a large number of China purchasing agents via google and yahoo, but most of them are the right one for you. For example, if you are looking for a custom product, such as die casting parts, stamping parts and plastic injection molding parts you should not hire a product purchasing agent in Yiwu city, zhejiang province, China, due to most of those purchasing agents are products purchasing agent. Their core business is to find products from Yiwu wholesale market. The right purchasing agent for you is a manufacturing purchasing agent or manufacturing purchasing services company like DiscoverSourcing.com based on Shanghai which is famous as offering high-quality manufacturing purchasing services. And if you want to import electronic products such as USB flash disk for iPhone and Android phone, you should find a electronic product purchasing agent in Shenzhen, Guangdong province.
- 90% of Yiwu purchasing agent is a product purchasing agent who search product from Yiwu wholesale market which provides products at lowest prices in China. Note that if you want to import high-quality products from China, Yiwu wholesale market should not be your target source due to most of the products are made in family workshops without a standard quality control system.
- Shenzhen purchasing agents focus on electronic products due to Pearl River Delta region is the heart of electronic products made in China.
- Shanghai , the largest cosmopolitan city in china and most of the companies in this city focus on providing good services and high-quality products or solutions, such as develop reliable manufacturing suppliers, searching high-quality products at competitive price from China, especially manufacturers locate at Yangtze River Delta region.
China purchasing agent services fees.
Hire a purchasing agent to work for you, and you can save time and money, but the agent pays time and services. It is right, proper or reasonable to pay the purchasing agent services fees. And a China purchasing agent services company will charge the fees to you according to what is your volume, where is the manufacturer and what purchasing services do you need. Here is a quotation from China manufacturing purchasing services company and product purchasing agent Discover Sourcing Limited for a customer from the United States, and the factory is located at Kunshan, China.
China (Shanghai) purchasing agent services fees depends on the amount of each purchase order. This is a services package including purchase order management and pre-shipment inspection. I think this is the lowest purchasing agent services fees in China.
|Order Amount||Service Charge||Payment Term|
|less than $1,000||$99+5.5% of POs||100% Deposit|
|$1,000~$2,000||$99+5.0% of POs||Negotiable|
|$2,000~$4,000||$99+4.9% of POs||Negotiable|
|$4,000~$7,000||$99+4.8% of POs||Negotiable|
|$7,000~$10,000||$99+4.7% of POs||Negotiable|
|$10,000~$20,000||$99+4.6% of POs||Negotiable|
|$20,000+||$99+4.5% of POs||Negotiable|
China purchasing agent payment terms.
99% of China purchasing agents are small and lean companies and payment terms are flexible. Overseas customers can pay the services charge via Telegraphic Transfer, PayPal and Western Union.
- For purchase order less than $2,500 order, 100% payment when place order is acceptable.
- For purchase order more than $2,500 order, 30% deposit + 70% balance after inspection is acceptable for most of the companies.
PayPal and China supplier, purchasing agent.
PayPal is a worldwide payment method and lot of overseas customers hope they can pay the proforma invoice via PayPal, but, a lot of Chinese suppliers reject to accept this payment term when you place a large order. Do you know why? Here is some answer.
- Tax rebate is the main reason for a China supplier to reject PayPal. For example, a water pump for auto parts manufacturing company can received 15% of tax rebate from China Customs after they export the auto parts. But, if the receive those found via PayPal, the welfare will disappear and the VAT17% is demanded.
- Lots of friend told me that they don’t like PayPal because PayPal is not friendly to Chinese supplier. It likes to block the account when they received a complaint, no matter the complaint is reasonable.
- Too high of payment charge(4.4% + 0.3USD) and exchange fees(1.2%).
But most of China purchasing agents and small business owners can receive PayPal payment, especially for the products or goods shipped via international express. And if the value of your package is less than 500USD, the product goes straight through quicker and no customs fees in China.
How to work with a purchasing agent for new project?
At this step, I think you have selected a China purchasing agent as your partner in China. They are your another eyes in China. As mentioned above, a good purchasing agent can help you discover reliable supply chain in China, therefore, learning how to work with a China purchasing services agent is another important thing for the people who plan to import goods from China.
- supplier development – Pease give the details of your products to your China purchasing agent, such as drawing and other product SPEC, sample, volume of each order, target price, and the level of supplier you are interesting.
- New product development – Drawing, picture, or sample with requirement is necessary.
- Quality control – Critical dimension or point should be tell your agent. If you can provide a quality control instruction or guide which will be helpful.
- Lead time – Planning Time + Manufacturing Time + Document for Customs Time + Delivery Time = Total Lead time. You can push the leadtime according to those listed point.
- Shipment – International express or heavy air, train and boat shipment are the most popular modes of transport for import goods from China. But the fees depends you which one you will choice and what is your product and volume.
Import from Chinese manufacturers, does it really matter?
Most of overseas companies believes that they can get a good price via a real manufacturer or factory. YES, 80% is like that. But how about the remaining 20%? We found that some of the international buyer can get a good price via a trading company. How ever, we don’t suggest you to import some products via a trading company, especially the manufacturing products due to you didn’t know who is your real manufacturing supplier and how about the quality control in this factory. Import from factory direct, pricing is one of the considerations, more importantly than it is that you can know who is your manufacturing supplier.
Non-disclosure Agreement and China purchasing agent.
If the product is designed by your company, please sign an NDA (Non-disclosure Agreement) with your purchasing agent or the potential agents before releasing the drawing, document and sample. And this term any potential supplier should sign the NDA with you or oversea customer before getting drawing, document and sample should be included. As a responsible purchasing agent in China, he should work according to your demand. And you don’t want to see your products were sold on China B2B sites such alibaba and made in China.
Kickback issue in China.
The revenue model of a purchasing agent should be like this China purchasing agent charge their services to overseas customers and will not charge anything to the supplier in China. But, their exist serious kickback problem in China that it was a fatal damage the benefit of small business. So, an agent without hidden commission is the first Choice.
Free sample from China.
Do you found that most of Chinese suppliers ask you to pay the sample fees and shipping cost at unreasonable cost. Fox example, the unit price for a die casting water pump for auto parts is USD20/Piece and the weight is 0.9kg, your Chinese supplier ask you to pay 100USD, I think this is unreasonable. But, if you ask a purchasing agent for help, they maybe can get for you for free. As mentioned above, a purchasing agent also can ship to you at low shipping cost or without shipping cost.
Additional services and China purchasing agent.
Low volume for small business and ship together.
You have sources, competitive price, quality control and inspection, but how about the mixed stowage and packing together. Such as you purchase 10PCS water pump for auto, 20 pairs bicycle hubs and carbon rims from China. If you ship them together as one bill that can save a lot of shipping cost. So, some of the customer can provide free warehouse services for loading together as one bill which works best for small quantity or low volume imported from China.
New product development.
In China, you also can discover a purchasing agent with R&D skills. You can find this kind of agents in manufacturing purchasing services companies and not products purchasing agents. They not only can develop supplier for you but also can design product according to your description.
Door to door services and import goods from China.
For a new importer who is the first time to import product from China, we don’t suggest you to select a EXW or FOB term which you need to handle the customs process yourself. Choose a door to door services which you need to pay import duty and VAT before you receive the goods only. Note that import tax and VAT depend on your local government, a purchasing agent can not pay for you.
What is the time to need no more of China purchasing agent services?
As companies grow, maybe, you will not need a purchasing agent in China, you can handle yourself or your suppliers can provide your some insurance to import from China. When the following happens, it is the time to consider ending the business with a purchasing agent in China. But, we suggest you to discuss with your purchasing agent services provider before taking action.
- You don’t want to hire a purchasing agent due to the cost reason which you find that purchasing agent services fees is to gobble up your profits.
- You plan to end up your business in China.
- You want to handle all the import and export business though yourself and you have know how to develop good suppliers in China.
- The purchasing agent services can not match your needs, but, this kind of situation, we suggest you to change a purchasing agent and not stop using the services.