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:

  1. The time of the manufacturer is also valuable and cannot be wasted at will;
  2. Manufacturers are human beings just like buyers, and they don’t want to be used as an AI tool to compare prices;
  3. Manufacturers need to be respected;
  4. Manufacturers also need to make money and earn a living.
Warning: Leading Chinese manufacturers spend most of their time and energy discussing the project management process, not pleasing and flattering buyers. If you find a manufacturer who just says “Yes, Sir/Madam,” you should be careful.

 

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

Tip: It is important to understand the buyer’s business model. We need to ensure that the buyer meets the supplier perception. When buyers and sellers share the same values, it reduces the chances of mistakes later on.
Note: There are many different types of suppliers in China, and we only choose to work with the most high-end manufacturers. Obviously, top manufacturers also have some specific requirements for buyers, which leads us to only serve buyers who meet certain requirements.

 

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.

Tip: Asking manufacturers for samples can help get them interested in you. Manufacturers see you as an in-market prospect and not a time-waster who just wants a low price.

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.

Note: Not all manufacturers can accurately estimate the weight and volume of packaged bulk products. If the buyer’s product is customized, there may be large errors in the estimated volume and weight. The freight rate and exchange rate fluctuations also cause the freight estimate to be inconsistent. Therefore, we sometimes quote in two stages: the first stage quote is the production cost of the product, and the second stage quote is based after receiving the product.

 

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.

Note: Only big customers may accompany purchasing agents on a visit to the factory. Every product sourcing company has a different definition of a big customer, but generally speaking, at least one container of goods needs to be purchased to be considered a big customer.
Warning: Purchasing agents take buyers on a factory tour to gain a level of understanding of the factory’s production capacity. Generally speaking, it is agreed the manufacturer does not share factory contact information. This is information between the China sourcing company and the manufacturer. If the buyer asks for the contact information of the factory, the factory will politely decline to share that information.

 

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.

Note: The proforma invoice is usually marked with a validity period. The expectation is the buyer pays within the validity period, otherwise the purchasing agent has the right to modify the content of the contract.

 

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.

Note: Chinese law stipulates that only companies with import and export rights can accept foreign currency. Not all Chinese manufacturers have import and export rights. In these cases, the purchasing agent will pay them RMB.

 

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.

Note: Not all orders require the purchasing agent to visit the product production line in person. The purchasing agent makes a determination to do an in-person visit to the manufacturer on a case-by-case basis.

 

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.

proscons
In-house team checking product quality in their own warehousecan reduce costsprofessional knowledge varies widely;
In-house team checking product quality in factoryproblems can be found and solved quicklyNeed to apply for the manufacturer to coordinate the accompanying time;
Third-party inspection company inspects goods at the factoryA 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 warehouseA 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.

Warning: If the purchasing agent can only provide a solution of letting a third-party inspection company go to the manufacturer to inspect the goods, then the purchasing agent is likely to be in a different industrial cluster from the manufacturer. They may be freelancers working from home, never have the opportunity to visit the factory or touch your product from the beginning to the end.

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.

Note: SourcingNova has a professional warehouse of 5,000 square meters in Shenzhen, and our own quality inspection team assists third-party inspection companies in conducting detailed and comprehensive product inspection. We provide detailed product inspection reports. We will keep qualified products and only return non-conforming products to the factory for repair or replacement. In this way we can minimize the product defect rate and prevent kickback.
Tip: Always look for China sourcing agents who have their own warehouse and are willing to coordinate with a third-party inspection company.

 

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.

Tip: If you often source products from different manufacturers, then you should consider hiring professional warehousing services in China.

 

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.

Warning: There are more than 10,000 freight forwarders in Shenzhen, and only a handful of them have dedicated warehouses at the port. Freight forwarders with warehouses in ports have better cooperation with shipping lines. While other freight forwarders are queuing, the best shipping agent in China has the priority to load the ship. During the peak season, container shipping companies reserve some space for important customers. If the buyer cannot fill the entire container, larger companies with their own containers, Maersk and OOCL for example, will cancel the order of the small forwarder. This means that the shipping company will unload containers belonging to smaller customers and stack those containers in the port. This behavior is called “throw down goods” in the industry.

Throw down goods has never happened to us.

Tip: During off-peak seasons, a mediocre freight forwarder and a great freight forwarder can look indistinguishable. During the peak freight period, a good freight forwarder helps buyers keep the supply chain stable.
Note: SourcingNova has its own forwarding subsidiary. We do not need to use third-party forwarders very often.

 

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.

Note: The buyer needs to provide VAT information to the purchasing agent, so that the purchasing agent can handle the cumbersome document business for the buyer. For the buyer, the only disadvantage of choosing the DDU clause is to pay an extra document processing fee (this fee is the fee paid by the purchasing agent to the customs on behalf of the buyer, not the profit of the purchasing agent, and the amount is about 50 US dollars). The advantage is that buyers can prove that they have paid customs duties in their own capacity.

 

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.

Warning: Some sourcing agents claim to provide buyers with professional packaging designs. Their own websites lack nice pictures, and some sourcing agents’ websites look like a mess. You should be wary of the design capabilities of such a sourcing agent.
Note: SourcingNova does not have its own dedicated personnel responsible for product photography and packaging design. We choose third-party services for these two elements.

 

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.