In today’s business landscape sourcing has become a significant part of the manufacturing supply chain across industries. For example, Dell obtains some of its computer components from outside manufacturers rather than manufacturing them in-house. Practically every item in your home or office has a “Made in China” tag or part within it.
The concept of outsourcing is about three decades old. Companies, both large and small, contract a third party to manage work more efficiently. It is a cost-effective approach adopted by businesses seeking to minimize costs and maximize profits. They often use the services of a procurement specialist or sourcing agent to handle the task.
How to Import from China
In order to do business with China-based suppliers it’s important to authenticate whether or not it is profitable, by first giving due consideration to the legalities and procedures involved. A detailed evaluation of risks, product cost and minimum order quantity should be completed before starting the buying process.
This process also includes locating suppliers who offer the best deals, negotiating for the best price, reaching a pricing agreement, shipment terms and quality, and following up with your order once it’s been packaged and shipped.
However, many startups may find it easier to work with a sourcing specialist physically based in China who can handle the details. Yet finding a good sourcing manager can be tricky.
For starters, it’s best to look for someone who also has a physical presence in your country, with local representatives who can help you with everything from planning what products to buy and where to find them, all the way to actually tracking the shipment until it reaches you.
Sourcing Products In China
Outsourcing within your supply chain, the sequence of processes involved in the production and distribution of your product, involves a great deal of trust between the supplier and buyer. A breach of trust or even a small mistake can ruin the entire relationship and impact other partners and end customers.
A procurement specialist is an individual who invests time and effort in helping a business to reap the benefit of his/her subject matter expertise in the purchasing process (i.e., finding goods or services at an acceptable price that meets the business need).
China is ideal for product sourcing since it offers low cost labor and high-class products. When you’re business with Chinese vendors, it helps to hire a sourcing specialist who can help you right products at the right cost for your small business.
Benefits of Hiring a Sourcing Agent
Why should startups consider hiring a procurement agent? Here’s a look at five ways a sourcing agent in China can add real value:
Sourcing agents act as the local representatives of your company in the area where they’re working. They get the best deals for their clients, to maintain a cordial relationship based on trust. A sourcing agent always keeps the business agenda on the forefront and strives to serve your interests well.
Better Security and Safety
Since your company is not located in China, the chances of deception, scams and fraudulent behavior are sky high. For this very reason, the services of a sourcing agent prove valuable, since they know trustworthy and dependable local suppliers.
Reduced Logistics Expenses
A sourcing agent can help your company avoid unnecessary expenditure incurred on travel and accommodations by taking up sourcing tasks on your behalf. Even if you’re planning a sourcing trip, they can help you pick the best time to visit, when flight tickets and accommodation costs are low.
Language barriers can be a big hurdle when doing business outside your country. Sourcing agents placed in China are proficient in the native language, and can help eliminate any kind of disruption in business activity by communicating effectively with suppliers in their local language.
Sourcing products includes quoting and negotiating prices. Hiring a sourcing agent to take on these tasks can minimize the load of responsibilities. This not only saves time and effort but also ensures everything is properly managed, exactly as you desire.
Find a Good Sourcing Agent in China
Some of the challenges you may face while looking for a sourcing agent in China include:
Agents who are casual and lack due diligence when selecting suppliers and maintaining a meaningful interaction with them.
Some sourcing agents are disorganized and may neglect competency-based selection criteria to favor suppliers they know personally, compromising business interests to serve their own.
It is a common practice among sourcing managers to charge a commission from the local supplier. These hidden commissions can cause problems if a sourcing specialist chooses to advocate the supplier in case of discrepancies in price or quality.
Some sourcing agents do not focus on building loyalty through responsible transactions, leaving the company in a lurch by backing off after delivery of faulty products that are worth a huge sum of money.
Despite these challenges, overseas sourcing agents are a blessing for companies that require trust and confidence while outsourcing business. As long as you are careful with your choice, not only will sourcing specialists in China help you access trustworthy suppliers, but also simultaneously speed up business activity and reduce hidden costs.
This article has been edited and condensed.
As the Director at Excella Worldwide, Shruti Agrawal is a strategist with an Electronics Engineering background and always on the lookout for ways to challenge and disrupt business models to make them better. Connect with @Excella_WW on Twitter.
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