If you are planning to import from China and considering getting help from a sourcing company, you must have many questions. Don’t worry. In today’s guide, we’ll take a closer look at purchasing agents. Includes definitions, costs, pros and cons, and how to find the best purchasing agent. Read on to learn more.

1. What is a sourcing agent?

A sourcing agent is a person or company who represents a buyer in locating suitable products or suppliers in the overseas country where the goods are manufactured. Purchasing (purchasing) agents date back to the nineteenth century when they were known as compradors, local contract suppliers, or local managers working for foreign companies in East Asia.

Purchasing agents were important in southern China, buying and selling tea, silk, cotton, and yarn for foreign companies.

Sourcing Agent

2. What does a purchasing agent usually do?

Judging from the names of purchasing agents, it seems that they are only responsible for purchasing, but in fact, today’s purchasing agents’ services include all aspects of the supply chain.

1) Supplier verification

Although Alibaba has made finding suppliers easier than ever, buyers still inevitably encounter supplier scams and illegal companies. One of the key services of a sourcing agent is supplier verification, as they often have local teams in the country of origin such as China, and know how to verify Chinese companies.

2) Product procurement

Purchasing agents can help you find the best prices in low-cost countries, as long as the buyer provides specifications and requirements, sometimes even a picture of the product is enough. Product sourcing is an important service provided by all purchasing agents, whether they are freelance or professional purchasing agents.

3) Supplier procurement

Finding suitable suppliers for buyers is one of the main services of a purchasing agent. In many cases, the buyer needs to develop a new product and requires a reliable factory with sufficient production capacity, rather than an off-the-shelf product.

4) Negotiate with suppliers

Negotiating with suppliers is never a one-size-fits-all approach, and dealing with overseas suppliers is even more difficult. That’s why a local buying agent can maximize the benefits for buyers – after all, they speak the local language and understand the culture.

5) Follow up on orders

What you define as acceptable and what the Chinese factory considers acceptable are sometimes two different standards, either because of cultural differences or the factory’s quality system. Therefore, a purchasing agent will often act as your local office, monitoring production standards and ensuring on-time delivery.

Sourcing Agent

6) Arrange payment

Not all Chinese suppliers accept payments in U.S. dollars; for those suppliers, buyers can pay the sourcing agent in U.S. dollars, and the sourcing agent pays the supplier in RMB.

7) Quality control

Some purchasing agents are also responsible for quality control, but their expertise varies widely. Before working with them, it is necessary to ask them exactly how they inspect the goods.

8) Arrange delivery

After the goods are produced and checked for quality, your agent will arrange the most suitable transportation based on the size and weight of the goods and your budget, which may be sea, air or land transportation.

9) Other services that the purchasing agent may provide

In addition to the regular services mentioned above, some purchasing agents also provide ocean consolidation, product testing and certification, customs clearance in your country, warehousing, and other services. But the more services an agent can provide, the better. Obviously not, there are some services that purchasing agents are simply not good at, such as product photography.

It’s best if you remember that the most important benefits of working with a sourcing agent are getting more competitive prices and reducing supply chain risks.

3. What are the disadvantages of using a purchasing agent?

A good sourcing agent can add value to your supply chain, but a bad sourcing agent will increase your costs and do you no favors. As a buyer, you should know how to identify these bad purchasing agents and prevent them from harming your business.

Bad purchasing agents receive kickbacks from suppliers.

The purchasing agent works for the buyer and all actions shall be in the best interest of the buyer.

However, some unscrupulous purchasing agents ask for kickbacks from suppliers, and they select suppliers not based on the quality and price of the products, but based on the amount of bribes they pay.

Some purchasing agents won’t let you know what’s going on at the factory.

Some purchasing agents operate as trading companies, hiding information about real manufacturers and using various excuses to prevent buyers from visiting factories.

Sourcing Agent

4. How to find a purchasing agent in China?

However, we must understand that “the best purchasing agent in China” is a very vague name for this industry, and almost anyone can “claim” that he is the best purchasing agent in China.

I often describe China’s purchasing agents as “90% are liars or incompetent, and most are both. But 10% are worth more than their weight in gold.”

So how do you find a purchasing agent that is “good value for money”? Unfortunately, the best way I know is word of mouth. I say “unfortunately” because it means you already need someone who knows enough about international manufacturing cooperation to give you a good recommendation.

The good news here is that good purchasing agents won’t purchase products they’re not familiar with. So if our client needs help sourcing an unusual product and we don’t know the sourcing experience with that product, we go to the good sourcing agents we know and ask them for advice.

Therefore, you need to make an informed decision while choosing this expert. Otherwise, your losses may far exceed the amount of his commission. Here are 7 steps to find a sourcing agent in China. You can use the following points to determine the best sourcing agent that is suitable and reliable in China:

1) Collect a list of potential Chinese purchasing agents

Finding a sourcing agent in China begins with compiling a list of potential candidates.  Then, through further communication, you can weed out candidates who are less capable of delivering the service. Here are some methods you can use to find a China sourcing agent:

  • Google
  • social media
  • recommender
  • trade fair

2) Ask them for professional product knowledge and market trends

Depending on the product, the import process from China can be completely different. Certain types of cargo are very complex, such as electronics and automobiles, as well as many other bulky items.

It is crucial that the purchasing agent has the necessary product knowledge, as this plays a decisive role in whether the delivery is profitable or not.

3) Have good communication skills

The best purchasing agents in China must have strong English writing and language skills and should be able to communicate with you easily via phone and email.

In addition, due to the time difference between China and other countries, they must respond to emails or WeChat efficiently and quickly.

4) Have a transparent and legal process

Finding a purchasing agent is easy. But to find the best-qualified sourcing agents in China, you need an effective and well-executed strategy.

The right purchasing agent behaves transparently and methodically, prioritizing customer requirements for products and the availability of necessary certificates, rather than building relationships with suppliers and the possibility of receiving rebates.

Sourcing Agent

5) Have professional import and export knowledge and experience

Any of the best sourcing agents in China must be fully aware of the legalities and paperwork associated with importing and exporting. This includes import and export procedures, certificate and documentation requirements, licenses, etc.

Questions for Purchasing Agents

In addition to having predefined procurement procedures, the best procurement agents in China should also be able to give clear answers to the following questions:

  • On what factors do they classify suppliers as competent/unskilled?
  • Should the purchasing agent pay for the product or directly to the supplier?
  • What are his strategies for preventing and fighting fraud? (e.g. payment fraud)
  • Will he have complete control of the procurement process himself or will it be partially outsourced? If so, which part?
  • Is the agent prepared to handle potential disputes regarding the quality of the goods during and after production?
  • How long has the agency been in business?
  • Does he plan to request products from “verified” suppliers or find new ones?
  • Does the agency have customer reviews from your country?
  • Are you willing to sign the NNN Agreement?

6) Have a legally registered company

A qualified purchasing agent must at least be a registered company with an office in at least one Chinese city (including Hong Kong). A more qualified purchasing agent may have offices not only in China but also in your country. Of course, this does not affect the success of your transaction, but it is certainly an indicator of how strong the agency’s position is and confirms its reliability.

7) Carry out supply chain management without any kickbacks

Many Chinese procurement companies resist kickbacks in order to protect their reputations, but their lower-level procurement employees do so “quietly”. This requires companies to conduct ongoing audits to prevent this from happening.

5. Conclusion

If you’ve read this far, you must be very committed to your importing business. This article is some of our opinions as purchasing agents on how buyers choose purchasing companies. It is our hope that you will find it useful.