Finding buying agents in China: 6 things you should know

Finding buying agents in China: 6 things you should know

When your import from china business grows, you need to find a Chinese buying agent, here is where the problem come from. you don’t know how and where to find a purchasing agent; Should you sign a contract with them, if yes, what clauses to put on the contract? How can you tell if they are trustworthy? Should you use a buying agent or a buying office, which one is better?

Trust is everything

I think you would agree with me that to work with an agent or broker, trust is everything. I would rather to use a reliable and trustworthy but mediocre buy agent rather than someone who is capable but you can’t believe in(Ideally, it would be perfect if you can find a competent and reliable one).

How can you tell if your agent or representative in China is trustworthy? In many cases, first impression can misguide you. You can did some online research to see if there is any comments and observation about him/her. Set some trial tasks with them, see how they act, if he did great for one project, two project, three projects…., then he is great. If he screws things up, find the reason and give him a second chance, you can normally tell a person by working with them for some times.

Contract VS verbal commitment

Some buyers think contract is not important(actually quite some), so they work with suppliers and purchasing agents on verbal commitment, binding by morality and virtue.

We have a client in US, buying casket from China. We are buying office for them. This client don’t like contract, he don’t sign contract properly, when I point that out, he responded that the contract will be useless if the supplier breach the contracts. Unfortunately things went on not very well with the casket supplier, they deliver poor quality products, first inspection failed, second failed, third failed, they refused fourth inspection. We have nothing to do but turn to ask for the help from lawyer, all lawyers asked if they could see the contract and what quality standard we agreed in the contract, which we didn’t have, the lawsuit is still going on, without a properly written contract, an easy lawsuit become complicated.

Believe me, these things happen. So my suggestion is trying to sign a contract properly with the buying agent no matter how good your personal relationship is with the agent. Ask the help of lawyer to draft and review the website. You might be also interested to check our 3 series article on how to negotiate contract with Chinese company.

Buying offices VS buying agents

Buying offices normally have experience in more industries while buying agents often specialize in certain area such as apparel, electronics. So if your sourcing projects covers many industries, then it might be better to use sourcing offices. If you deal with one product, you could work with individual agents. Also if your project is relatively big, it might be better to use sourcing office as you will need many sourcing experts to work on your project at the same time.

Buying offices are normally legally incorporated companies, so if they breach the contract, you will have somewhere and someone to chase after. Sourcing agent is often one man show, if bad things happen, they might disappear. So relatively, buying offices are more reliable than agents.

Agents might offer low rate, compared with buying office. So for small buyers, if you are able to find a reliable agent, then agent might be a better choice.

Hidden commission

It is a public secret that many sourcing agents demand commission from the suppliers. Getting commission from supplier means your buying agents and the suppliers become alliances, they will not push for the best price otherwise the suppliers won’t happily to give them the commission; they might turn a black eye on quality issue; they don’t recommend the best suppliers to you, instead, they recommend a supplier give them the best benefit.

You pay them decent service fee, they present you a make-up sourcing report(price is not real, factory presentation is biased, best supplier might be disregarded), all the problems are caused by hidden commission.

Hidden commission is so common, so suppliers often offer to give commission to the buying agents even the agents don’t ask for it.

So how can you make sure your sourcing agents won’t betray you – adding hidden commission?

First of all, you should sign a contract with your sourcing agents, state clearly in the contract that hidden commission, actively or passively, is not allowed.

Secondly, you could contact some suppliers by random, using a different company name, see what price you get.

Hire an experts, not hire a secretary

There are thousands of products world buyers trying to buy from China, products are different to each other, it will take months or even years of learning to understand the production mechanism of a new product. A competent sourcing agent should be a product expert, if you don’t know the product, you don’t know how to plan the quality control, you don’t know the cost and can’t negotiate the price properly, you don’t even know where to buy the products.

That is why Li & Fung only hire sourcing experts with 10+ years working experience in certain industry. The experience give them the knowledge of quality control, price negotiation, product research and development. They can deliver a solution.

Communication often is a problem

First is the language. You should make sure your sourcing agent speak your language well, good enough to understand your email, to draft and review English contract, they should also be familiar with products in your language(parameters, specification, parts and component etc). You need a sourcing agent who is well prepared and hit the ground running. If you are looking to build a long term relationship with your agent, ideally the agent should be proficient in speaking, as in many cases, email is slow, you will need to call them to speed up process.

But as a matter of fact, generally Chinese don’t speak good English, so for important matters, better to send an email or fax to make sure your agent understand and won’t miss your key points after the phone call.

The efficiency of communication is an issue to look at, especially when we have a time zone difference. See how long it takes your agent to reply your email, if they set up third party email management software like outlook, foxmail, they should be able to reply your email instantly. Instant messenger can be used to speed up the communication, text message can also be used for urgent contact.