The existence of traders and sourcing agents is due to the fact that there are numerous manufacturers who vary in the capability of export, understanding of the global market, domestic business performances and foreign language skills, etc. The global market requires a role to bridge the gap between international buyers and manufacturers. However, while there are countless buyers (consciously or unconsciously) dealing with trading companies, some buyers especially those with specific technical requirement prefer to hire a local sourcing agent. Why do they shift from traders to a sourcing agent or sometimes not even directly deal with a manufacturer?
1. Better control
With a good sourcing agent, the buyer’s interests are fully enacted in a very controlled manner. Firstly, with someone getting deep into the factories, the buyer has a better control of the production, delivery and after-sale service, and he can make sure all the followup information he receives is true and proved. Secondly and more importantly, the sourcing agent can jointly or independently find out suppliers information and negotiate with the suppliers without any motivation to win an order or sell one particular product. Therefore, the buyer is more likely to be able to find a more suitable product as he does not get confused by the exaggerated or even untrue descriptions from the trader or manufacturer.
2. Authentic assessment and audit
A sourcing agent can provide the buyer with full information on registration details, official documents, latest photos and written reports about the factory including offices, production lines, warehouses, quality control station, lab equipment, etc to access the factory’s qualifications, credibility, production capacity and technical expertise. But traders can send any data to the buyer or even claim they are manufacturers of any product, while the fact is they may not be technically sound or have enough production capacity.
3. Easier communication
A good sourcing agent is a person with sound English fluency and understanding, general technical knowledge, business assessment, logistics, product design and global perspective. He can work perfectly on behalf of the buyer to access suppliers, negotiate the price and terms, do trouble-shooting, order follow-up, coordinate in urgent times, and finally, enhance the business relationship with the supplier.
In the first place, sourcing agents or representatives usually work in a smaller team or simply work alone, while trading companies work in bigger offices with multiple departments. The result is the expenditures burdened by the latter are much heavier. However, a bigger reason is the conflict of interests between the trader and the buyer, the trader will never share the manufacturer’s information (contact, original price) with the buyers for fear that the buyer could skip the trader and deal directly with the original supplier, in all cases, the trader strikes a deal with the buyers at a hidden and highest margin, while the sourcing agent works for the buyer at a clear-set service fees. Coupled with the expense factor, the price the buyer could get from a trader is much higher than the fees he needs to pay a sourcing agent.
Source by Charlie Lin