China is widely regarded as the ‘world’s factory’, standing strong as the global manufacturing powerhouse of the world. With a thriving economy driven by an impressive GDP, China is the go-to worldwide supplier for products like clothing, textiles, furniture, footwear, cosmetics, toys, electronics, and more.
But how exactly did China manage to reach such an influential global status? Well, three main driving factors separate China’s production abilities:
Low Labor Costs
Excellent Infrastructure
A Technically Superior Workforce
China’s export market continues to grow, even in the face of adversity. China is one of the only economies to grow during the pandemic, a testament to the resolve and determination of this resilient demographic.
All of these advantages point to China being a great nation to source manufactured goods from, despite many western businesses being wary of collaborations. Therefore, the question that’s often posed is how to find a China manufacturer?
There are many cultural, business, and language barriers that can put people off, but these are easily overcome by working with a China sourcing agent. This makes the experience convenient and profitable, as your reputable agent can manage business relationships on your behalf by leveraging years of experience to generate optimal outcomes.
Sourcing agents like Easy Imex can tackle production, quality control, price negotiation, document preparation, and so much more. Selecting the right sourcing agent can be challenging, so it’s important to look for one that possesses the following characteristics:
A local presence in China
An office close to you
Elite communication skills
Advanced experience
Sourcing expertise
Choosing the right sourcing agent can be the difference between success and failure, but something that will drive your decision is the cost of working with an agent. This’ll mean contemplating how much your sourcing agent charges for their services and whether they’re worth their asking price?
If you’re intrigued to learn more about pricing structures, here are some China sourcing company fee breakdowns to give you a better idea what to expect when discovering the right sourcing agent for you:
Common Fee Structures
When looking for a China Sourcing agent UK, or anywhere else in the world for that matter, it’s important to consider the vast range of professional experts in existence. When finding the right one for you, price is likely to be a critical factor that drives your decision.
There are many different types of China sourcing agent fees, which largely depend on the scope of services being offered. Here are some examples of the type of fees you’re likely to encounter:
One-Time Fee
For a one-time fee, a sourcing agent can commit to:
Finding an appropriate supplier
Verifying their credentials
Verifying they supply the product claimed
Verifying whether they’re a manufacturer or trading company
Communicating your requirements to the supplier
Once a supplier has been approved, the sourcing agent will hand all responsibilities to you, which means the risks will be in your hands. Your sourcing agent will receive a one-time fee for their efforts.
Continuous Production Management Fee
This is a preferred option for those who need to entrust a sourcing agent with continued management and support services. It’s a great option for those who desire more than simply finding the right manufacturer, especially when there are many subsequent considerations to take into account.
For an additional fee, a sourcing agent can arrange things like sampling, toolin=g, document preparation, and negotiation to get the best deal possible. They can also tackle things like quality control inspections, problem-solving, and shipping, which can help the production process run seamlessly.
There are two common charging models for continued services of this nature:
Flat Fee
Many sourcing agents charge a flat fee which is calculated based on either the time spent working on a project or a per-product basis.
Commission
Commission based services are usually charged as a percentage of the total value of each purchase order. Sourcing agents usually charge somewhere in the region of 5-10% on each order, though commissions often vary based on the type of product and size of the order in question.
What is the Best Fee Model For Me?
Since there isn’t one specific model that stands out above the rest, your decision will largely be based on your unique circumstances. What works well for one person will not necessarily be the best option for others, so it’s important to select an option that fits your requirements.
However, there are a few do’s and don’t’s to bear in mind during the decision-making process:
Do’s
Select a package that facilitates cultivating a long-term business relationship with both your supplier and sourcing agent. Lasting partnerships will benefit everyone involved, especially when you’re willing to commit to a long-term arrangement.
Pick a supplier with various verification methods to minimize your overall risk. You should consider things like whether your agent will be able to visit the factory, or whether their licenses are valid and up-to-date. This is a great way to safeguard you from harm.
As a beginner, entrust an experienced sourcing agent with a local presence, one that offers a continuous production management package. This is a great way to alleviate pressure by capitalizing on the wealth of knowledge your agent has to offer.
Ensure value-added services are included in your package, whether that’s troubleshooting during the production process or taking photos for your eCommerce platform. Value-added services can come with additional charges, so it’s important to be vigilant and check the requirements in question.
Don’t’s
Avoid selecting the cheapest rates to ensure you’re not negated by a lack of quality.
Don’t be swayed by agents offering ‘free services’. There’s nothing free in this world, so you’ll end up paying for what’s offered somewhere down the line.
Avoid focusing solely on price, look at what your agent has to offer and how credible their background is. Find a sourcing agent whose committed to meeting your exact requirements, and who’s transparent and upfront about the entire procurement process.
Nurturing Effective Relationships
In China, trust, loyalty, and respect is everything. If you can build a great personal connection with your supplier/sourcing agent, they’ll be incentivized to do everything within their power to secure an optimal outcome for your business.
Trust between partners is essential, so you’ll need to build effective relationships if you’re to succeed. Establishing a mutually beneficial partnership is the ultimate goal, especially since your sourcing agent will provide an essential link between you and your manufacturer/supplier.
Your sourcing agent can leverage their relationships and knowledge to secure good connections with business representatives that can elevate your business to new heights. With a mixture of local presence, business insights, communication skills, and more, the right sourcing agent will be integral to your success.
It’s all about striking up the right relationship at a good value, something you can accomplish by working with a sourcing agent like Easy Imex.
Easy Imex is committed to scaling your business with elite sourcing services. The company can offer continued support and services after finding the right manufacturer for you, guaranteeing improved pricing, lead times, product quality, and more.
With the ability to tackle everything that surrounds the sourcing journey, Easy Imex values meeting the unique requirements of its clientele, securing the best possible solution in each individual case.
China is often called the manufacturing hub of the world. According to data published by the United Nations Statistics Division, China accounted for 28% of global manufacturing output in 2018, with its manufacturing sector amounting to almost $4 trillion.
In other words, if you want to outsource product manufacturing, one of the leading Chinese suppliers would be your best option. However, you need to find a reliable and experienced supplier that can provide you with high-quality products conferring to your specifications.
That’s where a sourcing agent comes in.
A sourcing agent is a qualified and experienced individual, agency, or company that connects suppliers and buyers. They can also help handle daily communication with your supplier, assist with product inspections, and even supervise your payments and shipping, among other things. As most agents also have a strong ground presence, you don’t have to set up a full-blown sourcing office in China.
Here are a few tips that will help you find the right sourcing agent in China.
Experience is the most critical factor you have to look for when searching for a product sourcing agent in China. Usually, the more experience they have the better. So, try to look for an agent or company with more than a decade of sourcing experience.
However, if you are unable to find such company, be sure to work with someone having at least four to five years of experience in sourcing from China. Make sure to take a look at the prospect’s revenue growth and client list.
If the agent shows a list of a growing number of clients and revenue, it is an indicator of genuine sourcing experience and excellent work ethics. You can also talk to their customers to find out about their experience and work style. Avoid working with an agent that is not willing to share this information.
If you are looking for a supplier to make general consumer goods, you needn’t look for a China sourcing agent specializing in a particular niche. However, if you are looking for an industry-specific manufacturer, it is better to work with an agent with knowledge specialization in the desired niche.
A niche-specific sourcing agent will have the latest information about the top manufacturers in the industry, the current demand and supply scenario, specialized shipping and packaging needs, specific product quality standards, and both wholesale and retail manufacturing costs. As a result, you will be able to find the right supplier quickly and efficiently.
As you may already know, there are thousands of Original Equipment Manufacturers (OEM) and suppliers in China. That’s why it is difficult to find any industry standards for China sourcing agent fees.
While many agencies will try to attract customers with free service for trial orders or cheapest rates, low cost offers often translate into low-quality products. To make sure you are paying the right price, you need to understand how pricing work.
So, How much do sourcing agents charge and how they charge?
Most sourcing agents will charge you based on one of the following three pricing policies.
Fixed Fee
It is one of the most commonly used pricing methods in China. Most agents or agencies will charge you a fixed monthly or weekly fee for a specific product or project. In this type of arrangement, the agent will connect you with a supplier and you can directly build the business relationship.
Naturally, this is the cheapest way to hire a sourcing agent in China. However, it is also the riskiest as low-cost agents are often not qualified and have little or no genuine work experience. So, you will most likely end up with a poor-quality supplier.
Another way is to hire a full-time sourcing agent or company for the duration of your project for a fixed monthly fee. Although this method can cost you a little more, you are more likely to find qualified and experienced individuals or agencies. Plus, they can also help you to oversee your project and supplier communication.
Percentage Service Fee or Commission
Many agencies also charge buyers as a percentage service fee or commission on the total order cost. As there is no standard, you may have to pay anywhere between 5%-10% of the order cost as sourcing fees.
However, the percentage will depend on the size of the order and also the type of product. If your order is bigger, some sourcing agencies may work on as low as 3% commission. Make sure to double-check the costs and the agent profile though, as lower costs often translate into poor product quality.
Gain from Price Difference at No Extra Charge
This is a little tricky pricing method. In China, many sourcing companies use this pricing model that involves providing you with suppliers offering the most competitive rates. They usually charge the fees based on the price difference due to the highly competitive rates of the supplier they have found.
On the other hand, if you are able to find a supplier with more competitive rates than the ones found by the sourcing company, you don’t have to consider the offer. Once again, however, you must remember that hiring the cheapest supplier is rarely a good idea.
Choose Agents Located in Desired Industry Clusters
Location also plays a crucial role in choosing the right sourcing agent in China. Like most countries, China also has industry clusters. For example, the Guangzhou reason is known for cosmetics manufacturing while Shenzhen is considered the hub for digital and electronics goods making.
As it happens, sourcing companies located in Shenzhen will have better procurement experience in electronics manufacturing. So, if you want to find a supplier for making headphones, screening agencies from Shenzhen is the best way to begin your search.
Furthermore, if the agency is located closer to your supplier, it is more convenient to visit the supplier for quality inspections, supervision, and any other on-site activity. The sourcing agencies are also likely to know the best suppliers in their area closely, helping you to establish a business relationship readily.
As you can see, finding the right sourcing agent in China is very critical for successfully outsourcing your manufacturing needs. Hopefully, these four tips will help you find the right sourcing agency as quickly as possible.
Jonble is one of the leading sourcing companies in China known for its trustworthy and transparent work culture and years of experience. You can talk about your outsourcing needs to our team of experts or send your query to see how we can help you. Contact us today!