Appointing a sourcing company or a buying office in China is a must take step for your business which belongs to the China Market. Your sourcing agent can be an individual or a company; but that’s not the main thing to worry about. The main focus on selecting a sourcing agent in China is the expertise of the agent regarding risk control, control management, quality control, loading process, warehousing, shipping, contact support etc.
Online directories or trade shows are the best possible place to find a sourcing agent or a buying company for your organization. But the final selection should be verified via background check, hands on experience and job expertise. In China, three types of sourcing agents are available: 1. Commission Based Agent, 2. Trading Company & 3. Third Party Service Provider.
- Commission Based Agent: A trustworthy and deeply experienced sourcing agent is a good option of an organization. The payment option for this type of agents are fixed in proportion of the FOB price for the ordered products. But finding a trustworthy purchasing agent is difficult in China. Most of the agents obtain money from the factory without informing the buyers. That’s why it’s not recommended by the experienced marketers to hire an individual commission based agent.
- Trading Company: If an organization is dealing with low quantities then this type of trading companies are very useful to handle all the details of China production and other related issues. The trading companies can help the organizations to find the small or medium level factories which are interested in small orders. The trader adds its margin on top of the manufacturer’s price. In China a trading company is always a cheaper option for the business owners than collaborating with large factories.
- Third Party Service Provider: If you do not agree to deal with the middlemen, that will not be an issue but you should take care of the responsibilities of a sourcing agent. In that case a third party service provider would be a suitable option for your business. This type of third party service providers are the best suited option for large order and the service rate is also low in count. In China this type of third party companies use to market them as “project management”, “procurement” or “supply chain management” companies or service providers.
Every option has it’s best and worst attributes. It’s totally upon the organization’s business strategy regarding the hiring of a sourcing agent or a trader or a service provider.