
Many people will seek the help of China sourcing agents when sourcing products from China, and these people have realized that sourcing companies can help them save worry, effort and money. It is important to note the vast majority of buyers who have just started contacting sourcing agents only pay attention to the price of the product. Few people will take the initiative to ask sourcing services companies about what does a sourcing agent do, what responsibilities the sourcing agent will assume and the specific sourcing processes.
Some beginners assume that the main difference between different product sourcing companies is price. In fact, there are thousands of purchasing agents in China. Each sourcing company has its own strengths and weaknesses, and while the core tasks are similar, the specific details of each sourcing company vary greatly. In today’s article, we provide a significant number of the tasks and responsibilities of the purchasing agent as well as the workflow Our goal is to leave you without any assumptions. You will know exactly what a sourcing agent can and cannot do for you.
We will cover the following:
- Buyer needs analysis;
- Supplier selection process;
- Design product prototypes and collect samples;
- Assist in negotiations;
- Make a quotation;
- Enter into contracts and agreements;
- Follow up the production progress;
- Product packaging and labeling;
- Assist in quality control;
- Warehousing Services;
- Arrange the transportation of goods;
- Assist in customs clearance in the destination country;
- Solve problems when they arise;
Let’s begin!
Assess buyer needs
Many novice buyers are direct and aggressive when first contacting a sourcing agency. We often receive this type of email:
Hi, I need 500 pcs of [specific product], please give me a quotation.
When we get these inquiries, our first step is to slow the customer down a bit. We ask the customer some questions to learn his business model and needs. When we finish the questionnaire, we better understand preferences, expectations and taboos. We compile a detailed Product Requirements Document, make a user portrait of the buyer and archive it. This way no matter which colleague comes to serve this customer in the future, the colleague knows the buyer likes and dislikes. We keep the buyer’s experience consistent in this way.
The second purpose of assessing the buyer’s needs is to verify his purchasing ideas. Many times, what buyers consider acceptable and what Chinese manufacturers consider acceptable are two different standards. These deviations are from cultural differences and different quality systems between the East and the West. We require fact based analysis not guess based.
The third purpose of assessing buyers’ needs (which most sourcing agents won’t tell you) is to weed out unqualified buyers. This may sound offensive to you as a buyer. You may have heard that buyers have the right to choose suppliers, but you probably don’t know that suppliers also have the right to choose buyers.
In fact, the relationship between the product sourcing agent and the manufacturer is an important asset. Experienced purchasing companies are committed to establishing long-term, stable and valuable contracts along with relationships with excellent suppliers. The quality of buyers greatly affects the relationship between purchasing companies and manufacturers.
We need to abide by some basic guidelines. This is important to what does a sourcing agent do for you, specifically:
- The time of the manufacturer is also valuable and cannot be wasted at will;
- Manufacturers are human beings just like buyers, and they don’t want to be used as an AI tool to compare prices;
- Manufacturers need to be respected;
- Manufacturers also need to make money and earn a living.
Find suppliers who meet customer requirements and exceed customer expectations
Finding manufacturers who are able and willing to produce products for you is an essential task for every sourcing agent. Ensuring that the factory is suitable for the client is essential to any sourcing agent. It is necessary for us to select suppliers for you, the buyer.
Every sourcing agent has his or her own method of helping buyers find suppliers. Suppliers are not limited to those you can find on B2B websites. There are many manufacturers who never registered on any online platform. The best China sourcing agent compiles a list of tried and tested manufacturers who are so trustworthy that the chances of error or commercial disputes are very low. Some manufacturers are well-known in manufacturing, but unknown to those outside the supply chain, we call them “hidden champions“.
If the product the customer wants to source is not on the list, the purchasing agent’s goal is to find a suitable manufacturer. Top China sourcing agents have a systematic way of researching and verifying manufacturers.
Related post: how to find a manufacturer in China
Collect Manufacturer Samples
After selecting the potential manufacturers, the Chinese sourcing agent requires the potential manufacturers to provide samples that meet the customer’s requirements. At this point, we apply our own internal labels to identify the individual manufacturer before placing all samples into a single package. We ship this package to the buyer. The buyer pays the sample fee and the courier fee for international shipping, and this is considerably cheaper than if he asks for samples from different manufacturers separately.
If necessary, we also assist buyers in developing product prototypes. We try to ensure that buyers and manufacturers have a consistent understanding of engineering documents to ensure that the customer gets what he wants.
Product price negotiation and procurement cost analysis
When the procurement agent finds the candidate’s qualified manufacturers, the next step is price negotiation. The procurement agent will negotiate pricing on behalf of the buyer and the potential supplier. The goal is the best price and to confirm the production details to meet the needs of buyers.
Each manufacturer has its own quotation form. This is an important part of what does a sourcing agent do on your behalf. They “translate” individual quotation forms into a unified format. In other words, we want all quotes using the same format. The specifications, quantity, valid period, lead time, quality standards and payment conditions of the product must be the same. In this way, the quotation form we get becomes meaningful – we compare with apples and apples instead of comparing apples to pears.
Related articles: Request for Quote (RFQ): How To Approach A Top Chinese Manufacturer?
When we have examined and compared costs between manufacturers, we prepare quotations and a summary of the findings for buyers. We estimate all costs based on the weight and volume of the product, so that buyers can analyze their total purchase cost more accurately.
Arrange a factory visit
During the pandemic, we stopped visiting factories. But in 2023, China changed its anti-epidemic policy, and purchasing agents may take overseas buyers to visit factories together.
Sign the procurement service contract
In global procurement practice, a proforma invoice has the same effect as a contract. In addition to the production cost of the product, the China purchasing agent will add the purchasing service fee to the proforma invoice. China sourcing agent fees vary based on the scope of work ordered from the agency. Therefore, it is necessary to clarify the scope of services and charging standards before starting final negotiations. This limits potential disputes.
Place purchase orders to factories on behalf of buyers
The China product sourcing agent places the order with the manufacturer on behalf of the buyer and make payments to the manufacturer. The purchasing agent will specify all the terms in the purchase order. The manufacturer is responsible for resolving issues with quality problems of the product order or production delays.
Follow up the production progress
An important responsibility of the purchasing agent is to monitor the production cycle so the products ship on time. Purchasing agents ask manufacturers for production plans. Purchasing agents learn when factories will start producing orders and when the orders are expected to be completed. During this period, agents visit the production line and manufacturer. Agents monitor the entire production process and ensure that the factory completes the production with the highest quality.
Sourcing agent in China keep a close eye on delivery times and consistent product quality. The agents provide regular and consistent updates to buyers.
Assist in controlling product quality
Every purchasing agent claims that they will control the product quality, but the specific practices are different. The two practices fall into one of two aspects:
A: Who is responsible for checking product quality? The purchasing agent or third-party inspection company?
B: Where to check the product quality? China buying agent’s warehouse or factory?
Each combination has its advantages and disadvantages. The following table lists both.
pros | cons | |
In-house team checking product quality in their own warehouse | can reduce costs | professional knowledge varies widely; |
In-house team checking product quality in factory | problems can be found and solved quickly | Need to apply for the manufacturer to coordinate the accompanying time; |
Third-party inspection company inspects goods at the factory | A detailed quality inspection report can be issued; | The factory bribes the inspector, and the qualified products are piled up with the unqualified products; |
The third-party inspection company inspects the goods at the purchasing agency warehouse | A detailed quality inspection report can be issued, and only unqualified products need to be returned to the factory; | If quality problems are found after the product leaves the factory, the manufacturer may only be willing to bear part of the responsibility. |
The cheapest option is for the purchasing agent to inspect the product at the manufacturer’s warehouse. The purchasing agent may not have the professional product inspection knowledge and equipment, and the buyer will tell the agent exactly how to check product quality.
The most effective way is a third-party inspection company. They check product quality in the warehouse of the purchasing agent.
It is important to note only a few purchasing agents have enough warehouse space.
Be wary of third-party inspection services without warehousing solutions. It is common for the manufacturer offers kickbacks to the inspectors in exchange for poor or non-existent inspection services. There is nothing a purchasing agent can do if this happens.
Assist third-party service companies
In addition to the third-party inspection companies mentioned above, buyers may also need other third-party services. These include agencies that conduct compliance testing and certification of products or shipping agents. Sourcing agents need to coordinate their work.
Warehousing Services and Amazon FBA Prep Services
With the development of e-commerce, more and more buyers need Amazon FBA Prep service. Only a few purchasing agents have the resources, including warehousing and staff, for Amazon FBA prep services. Most purchasing agents choose to outsource this service. This is mainly due to the reluctance of small and medium-sized purchasing agents to invest in infrastructure.
Having a dedicated warehouse represents many conveniences, such as:
We can pack and label products according to amazon sourcing requirements
Although some factories can provide this service, we are happy to check products for errors before shipping.
We can combine goods from different suppliers into one container for delivery
If buyers purchase products from different manufacturers, we ask different manufacturers to deliver the goods to our warehouse. Our warehouse staff consolidates and loads the goods into one container. In this way, we save the cost of customs declaration and transportation for buyers and leave no room for mistakes.
Warning: If you have multiple suppliers and each supplier does not have enough product for one container, you have three options:
A. You ask the factory to ship separately to your destination. You will pay the LCL rate and not the FCL rate. You also have to declare to customs separately for each manufacturer’s shipment. Your documentation fees and shipping costs are extremely high.
B. You hire a shipping agent in China to pick up the goods from different factories. You will face higher domestic transportation costs. Multiple loading locations often result in delay fees for trailers.
C. Your goods are concentrated at one supplier and then loaded into containers. You will have a risk of loss of goods.
Contact Freight Forwarder
Some sourcing agents do not provide shipping options, and they ask buyers to find a best shipping agent in China themselves. It is not surprising that most purchasing agents choose to cooperate with shipping agents for international cargo transportation. Cargo transportation is not as simple as it seems on paper. Cargo transportation requires a high level of expertise and industry understanding, such as:
- Which shipping provider to choose based on volume or weight;
- Which shipping suppliers have underperformed and which are more stable during peak seasons;
- Which documents and product certificates are required by customs;
Having a reliable partner to handle shipping is half the battle, especially during peak seasons when shipping delays are common. Reliable partners are able to arrange the best shipping costs and options depending on the size and weight of the shipment and your budget. Your options are sea, land and air.
Throw down goods has never happened to us.
Customs clearance in your country
The overseas partner of the freight forwarder is responsible for the customs clearance in your country and region. You don’t need an agent locally to handle such things.
Many purchasing agents offer duty paid delivery to their customers. It’s an end-to-end service, and you don’t have to worry about unexpected charges or customs delays. Your goods will be delivered safely and timely to the destination warehouse.
We recommend a DDP, Duty Paid Delivery, clause be used only in occasional circumstances. These clauses should not become the norm. Some articles on the Internet believe that DDP is actually a kind of smuggling. DDP trade terms mean the shipping company will cover the necessary import duties, including inland transportation. Buyers may be approached for paperwork proving these duties were paid. DDP does not provide evidence of this. Buyer can risk serious sanctions for failing to produce documentation of paid duties.
The best sourcing agents in China will not risk smuggling under any circumstances. It brings the agents huge business risks. We always legally declare import duties to customs, but the difference is that the buyer is not the subject of the declaration. Our overseas partners will pay taxes as the consignee. This means your goods have met customs duties, and you are not the one who pays the tax. Failing to produce documentation of paid taxes means the buyer has no legal ownership over the batch of goods.
We recommend buyers to use DDU terms. Under the terms of DDU, the purchasing agent is responsible for the safe delivery of the goods to the designated destination and pays for all transportation, export and entry customs clearance costs. The purchasing agent bears the risks and costs associated with supplying the goods to the delivery point and the buyer is responsible for payment of duties and taxes.
Help solve problems when they arise
Everyone wants the procurement process to run smoothly and without trouble. Sometimes, accidents happen. The agent’s job is to fix problems quickly and properly, minimizing the adverse effects of accidents. It is a significant part of what does a sourcing agent do for the customer.
Although not stipulated in the contract, it is the responsibilities of a sourcing agent to be on call to solve your doubts and deal with troublesome matters. He is like your personal butler, providing this one-on-one exclusive service throughout the process.
Act as agents for importing goods from china
Sometimes buyers need to source goods from some manufacturers who do not have an export license. For example, some buyers will visit the 1688 website to find suitable products. Manufacturers listed on 1688 only accept payment in RMB and do not have import and export rights. Purchasing companies will act as China export agent to help manufacturers handle all import-export-related business.
Other non-core business
Sometimes, buyers also want purchasing agents to help with some non-core business. It is a good business practice for a sourcing agency to offer additional services outside of regular procurement?
Obviously not, there are some services that buying agents are not good at at all. Product photography or designing outer packaging for products are two such services.
In fact, most purchasing agents are not good at design. It is not wise for buyers to ask purchasing agents to do something outside of their skills. Sourcing agents should always focus on their core strengths and outsource what they are not good at.
It would be best if you remember that the most important benefits of working with a sourcing agent are reducing the overall cost of sourcing and maintaining a stable supply chain.
Final words
Every purchasing agent has its own advantages and disadvantages. Buyers need to patiently explain their needs and pain points to the purchasing agent, treating them as your partners, not a restaurant waiter. As a buyer, you should have a detailed understanding of the specific tasks and responsibilities of a sourcing agent in the process of managing the supply chain for you in advance, rather than guessing what they will do for you.
It is a hope this article explained part of what does a sourcing agent do for you and for your sourcing needs.
SourcingNova is a Shenzhen sourcing agent. We are committed to serving buyers with super high requirements on quality. We have very high expectations of manufacturers. The manufacturers we work with are OEMs for world-class brands, have a sound corporate system and extensive experience. We have no tolerance for dishonesty, corruption and fraud. If you have the same values as us, and your products are manufactured in Guangdong, we encourage you to try our product sourcing services.