China Sourcing Agent

What are China Sourcing Agents or Purchasing Agents?

The Sourcing Agents or Purchasing Agents are China company or a person employed by you to find the products you want to buy from qualified suppliers. Sourcing Agents or Purchasing Agents acts as your representative, work on the region. As if you want to buy goods from low cost Country or place, you should look for such company which could help you negotiate the agreement, monitor quality, ensure shipment and track orders. Usually they charges percentage of total deal or get paid base long term contract period.
Find a Sourcing Agent to work for you is a wise choice to lower costs to make a high profit.

What features do Sourcing Agents or Purchasing Agents need?

-1. Language
The Souring Agents or Purchasing Agents usually report to you via Emails and formed reports for all in-process work or after every shipment. So it is important that they know your language, or at least know English, to explain and describe what are happening in your business.
-2. Knowledge of Products
It is important that they are experts, or at least know much of your industry, so that they can understand the production and quality specifications to do some trouble-shooting work for the production, quality, packaging and shipment of your products. So some sourcing agents also play a role as an engineer.
-3. Integrity: Honest, Patient and Responsible
Just as the clerk working in your office, a person should be patient enough for all his work. Some China Sourcing Agents and Purchasing Agents company employs all its staff with strictly examine on personnel integrity.
The integrity is as important as work language and knowledge.

Something you need to consider when choosing your agent/ partner / assistant in China.

There are Sourcing Agent and Purchasing Agent Company and single agent person supply such work in China or some other low cost regions. A Sourcing company offering professional services and it is legal to be trusted. Some small buyers (or simply to start a business) always want to find a single person to help his business because afraid of the high commission that a Sourcing company may charge; then they always be cheated of the people they hired.

Something to consider when choosing agent:
a) Is he working for your or for kickbacks? It's pretty common for many Chinese agents take kickbacks from YOUR suppliers, in the same time they are charging you a flat fee or percentage based commission. This can add about 5%-15% hidden cost to your total.
b) Does he possess the product/industry knowledge of your intended purchase, for example, glassware? Working with someone who has the product knowledge saves you much headache later in the process. And, he can usually land your much better and hopefully less expensive suppliers.
But if you let a legal company help you for these works, you don't need afraid that at all. Some China Sourcing agent and Purchasing Agents company offers low commission for long term development, when you give a target purchasing price, they start to work base on that until you get the qualified products.

Sourcing Agent Options & Compensation

Sourcing Agents in China are compensated in a variety of methods.  The majority work on some form of commission. Commissions generally can range from 3-15% of purchase value which is not unreasonable when the savings generated can double that amount. The problem with working on a commission is that the Agent has no motivation to decrease the price, and may tend to try and make one-off big-ticket deals that may not be in your best interest.   
Another compensation option is a percent of savings scheme where payment to the Sourcing Agent is based on your savings. This is difficult to arrange, as it requires full disclosure from all parties. Furthermore, your agent will now be inclined to advocate for whichever factory has the cheapest price. Often this is not the best price/quality ratio for your given target price.
The best option is one that aligns the buyer's and sourcing agent's interests.   This results in some form of a Monthly Supplier Management Fee (perhaps in combination with one of the above mentioned options).  Under this method the Sourcing Agent's job is to get the best price/quality ratio possible based on buyer's exact needs. An arrangement of this type with a trusted agent who has a presence in the local market is of great value and provides peace of mind to the customer.  This option will lead to a long-term relationship built on mutual understanding rather than one-off commission-based deals or legal documents (like letters of exclusivity) that mean very little in the reality of China. The agent's job is to make sure you remain profitable and are a happy customer.  A good Sourcing Agent is not afraid to work in a very transparent environment where you have full disclosure of OEM and product information. Be wary of agents who want to keep you in the dark.

Monthly Supplier Management Fees

The main determinants in the price of the Sourcing Agents' fee are as follows: 
    Labor needed to staff the project 
      Special Technical Skills needed for QC work 
      Number of sub-suppliers that need to be coordinated 
      Location of suppliers 
      Difficulty of production (start from blue print or off-the-shelf) 
      Frequency of orders 
Depending on the above, monthly fees can range from only a few thousand USD into the tens of thousands.

The following chart outlines what monthly management fees you can generally expect in China: 

Complexity of Sourcing Program                           Monthly Retainer (USD) 
Simple (low order frequency / easy order maintenance)          2.5K 
Average                                                                                      7K 
Complex                                                                                  13K 
Very Complex
(many Sub-suppliers / technical product)                         22K and up 

Sourcing from China

Companies that are understaffed or on a tight budget can turn to China sourcing agents. Outside help on China sourcing ranges from matchmaking to consulting on logistics and quality control. procurement agents' fees in China sourcing range from 3 to 12 percent of the purchase price, depending on the level of service.