What is a China sourcing company?
China sourcing companies provide services tailored and customizable to importers to maximize the benefit of their China supply chain. These companies often provide an array of different services from benchmarking and sampling to contract negotiations and logistics. China sourcing companies help to manage and execute every aspect of the China supply chain. Ideally, a China sourcing company acts as an extension of an importer’s home office.
How does a China sourcing company differ from sourcing agents?
Agents and China sourcing companies both offer services tailored to importers’ requirements but it’s important to note their similarities and differences.
Similarities
Placing orders and logistics:
Both sourcing agents and sourcing companies help importers place and monitor orders and work with you on logistics. They do everything possible to ensure that importers have a good experience to encourage repeat orders.
Range of services:
Both Agents and China sourcing companies provide the services necessary to ensure a successful buying program for the importers they are working with. These china sourcing services are mostly related to the “3 essentials”:
– Pricing and placing orders: e. Finding the low cost supplier for a specific product.
– Quality Assurance: Ensuring that the product delivered to the client conforms to what was ordered.
– On time delivery: Ensuring that shipment of merchandise leaves on time, every time.
Differences
Finding factories:
China sourcing agent often have a network of specific manufacturers and suppliers that they have established relationships with and rarely stray from.
In contrast, a China sourcing company does not favor any specific factory. They will benchmark factories, provide quotes, coordinate or conduct inspections, make recommendations, etc., and leave the choice of supplier to the importer. Their main concern is to secure the optimal factory for the importer’s program.
Payment for services:
Agents usually work on a commission basis, whereas most sourcing companies work on a fee basis. The difference between these two payment approaches is as follows:
Commission:
Usually no payment is due until shipment occurs or payment is made to the factory. The benefits for the client are:
– No overhead.
– The cost of service is directly linked to cost of goods.
– If no orders are placed, no payment is due.
Fees:
The client pays for specific services, usually based on time spent. The benefits for the client are:
– Better control over their program.
– Ability to secure services that are not directly linked to orders (e.g. Research)
– Lower first cost for the goods.
– Typically, the more the importer buys, the more they save.
What are the benefits of using a China sourcing company?
A China sourcing company can provide the following beneficial China procurement services to importers:
– Hands-on control over their supply chain.
– Management of a broad range of products from order placement to delivery
– Assistance in product development
– Introduction to new ideas for packaging, cost reduction, etc.
– Benchmark factories, continuously look for low cost providers
– Monitor quality throughout the process
– Ensure on-time delivery
– Other services: e.g. Travel support, access to local technical expertise, etc.
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