A reader recently asked me how to find good sourcing agents in China. Many dark stories involving rogue sourcing agents have shaped my opinion on this topic. My response will probably sound radical to first-time importers.
The way I see it, you have two options if you need someone on the ground to source and follow new suppliers…
How to find good sourcing agents in China?
- You hire a Chinese girl with sourcing experience, who works in your office and that you trust 110%. But that only works if you have a local office with a reliable manager. Note: you should regularly check what she is doing, except maybe if she’s your wife.
- You hire a foreign sourcing agency (who may or may not be based locally), with an established procedure and reference clients that you can call. That agent might or might not take possession of the goods and be your supplier. The most important is that they work transparently and give a quote for their service.
My point is that there is nothing in between.
Of course, there are a few trustworthy Chinese or Hong Kong agents who can help you a lot for a low cost. But your odds of finding them is about one in a hundred.
The other 99% are attracted by the massive sums involved in foreign trade, and are looking for a fast buck.
Doing a good job as a sourcing agent requires smarts AND experience
Let’s take a few examples:
- If your expected volumes are very small by China’s standards, you might have to buy from a wholesaler (either in China or in your home country).
- If your expected volumes are very large, you will get better terms and save money in the long run by working with a contract manufacturer.
- If the firmware of your electronic product is highly proprietary, pick a factory that does the reflow & SMT processes, as well as assembly, in-house.
- If you already know the factory will need to be approved by Disney, the best is to find one that is already approved.
- If you need to develop a new product that will go into people’s mouths (strict hygiene is a must), pick a supplier that makes products with similar needs.
- If you need to import items for which fewer than 10 Chinese factories are licensed (e.g. riffles), find out which of those are allowed to export.
Typical bad habits of sourcing agents to look out for
They have lots of bad habits:
- They will be too disorganized—and sometimes too lazy—to follow an objective process where potential suppliers are identified, then short-listed, and then visited in person and carefully checked.
- If they have personal contacts who may know someone who knows a manufacturer of the product you are looking for, that’s the route they will take in priority. If their uncle can supply it, he will automatically be the lucky one. Forget about competency-based selection.
- They will look very hard-working and honest, but in most cases, they will get 5% or 10% from the factory, without disclosing it to you. That hidden commission is on top of what you will give them. Now, which option is really the cheapest?
- As a consequence of the above point, they will be inclined to defend the manufacturer more than your company when things go wrong—and things WILL go wrong at one point or another.
- They will seldom take the pain to draw samples at random and check product quality. And, even if they do it and they find some issues, they will probably not tell you. Remember, a Chinese agent that you are not supervising closely will have more than one boss.
- After you stop working with them, what might happen? Look at this example that I found on a forum for UK importers:
Am I being too harsh? What do you think?
- Top 10 mistakes to avoid when outsourcing your sourcing
- The 3 types of sourcing companies in China
- The dirty little secrets of Chinese trading companies
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