These days it has become very essential to import various products from China to make your business more competitive in the domestic market. China can offer almost all kinds of manufactured products at an unbelievable price. Therefore, more and more companies are trying to source different products from China.
However, importing from China may not be as easy as you may think. There are plenty of issues involved and hence while sourcing any products from China you will need certain proven sourcing solutions so that you can maintain your supply chain for your own production.
As there is a severe language problem involved while dealing with any Chinese companies, hence it becomes necessary to have a certain sourcing agent in China who can help you with your procurement from China.
However, quite often you may end up with a certain trading company rather than any genuine sourcing company. Any trading company may not be the same as any sourcing company. Therefore, when you are negotiating with any sourcing agent, particularly in China then you should be very clear with whom you are discussing.
The kind of support that you expect from a certain sourcing company in China may not be the same with any trading company. Quite often many trading companies also position them as sourcing companies and when you get into actual business then you realize that you are dealing with actually a trading company rather than a sourcing company.
Your support services can be effective when you have identified proven sourcing solutions from a certain right sourcing company so that you can have the stability to your own business and also you can manage the cost of your own product and minimize any risk of your business operations.
Your effective sourcing support can either make or break the success of your initiative. Therefore, you will always prefer to ensure that you have hired the right sourcing company so that it can benefit your business instead of hiring a trading company.
Therefore in this article, we will try to understand how to differentiate between these two services and consider the right one that can complement your business more. In some cases, you may even prefer a trading company too.
1What a Trading Company is?
A trading firm is one that will partner with a number of factories and establishes a tight working relationship with them. The business connection can deteriorate to the point where the traders appear to be acting on behalf of any producing company.
Traders can sometimes work as another extension of the factory’s overseas trading department. Cooperation with dependable factories is critical for traders because it is only then that placing orders with them is convenient.
With a very good business relationship, it can be easier to negotiate advantageous rates, quality, and lead time in order to give the essential support.
2What a Sourcing Company is?
A sourcing firm will work on your behalf to find new products and services. This could be in relation to imports from either China or any other nations where a reliable production process or sourcing requirements are required. A sourcing firm can assist your organisation in the following ways:
- Identifying and then selecting suppliers
- Analysing the technical capability of suppliers
- Performing supplier audits
- Doing negotiation and also making a necessary contract with your supplier
- Management of supplier relationship
- Carrying out various quality control and inspections
- Handling entire logistics and transportation
- Management of supply chain
What are the various benefits of any Chinese sourcing company?
As part of proven sourcing solutions, a Chinese sourcing company can find suitable suppliers in China as your Chinese sourcing company actually lives in China. They know the local language and hence can discuss and negotiate with any Chinese companies more effectively.
A good Chinese sourcing company can help your company to find any products that are needed by you and you can source them from China at much lower prices than you can get in your own country. As a result, you can reduce your own production costs. A Chinese sourcing agent can represent either a single company or may also serve multiple companies.
They can offer the following help and support:
- Supplier identification
- Price negotiation
- Quality control management
- Management of supply chain
A reputable Chinese agent company will serve as your eyes and ears. They would go to the plant, do background checks, and make sure you got what you paid for. Furthermore, even any best factory can experience delays or errors.
Then, to ensure that your objectives are realised, your China sourcing agent should maintain effective touch with vendors on a regular basis.
The following are a few benefits that you can get from certain Chinese sourcing agents and offer you proven sourcing solutions:
Sourcing any kind of new products and their suppliers.
- Supplier evaluation
- Factory audits
- Manage negotiations
- Signing of contract
- Making draft agreements.
- Perform factory inspection
- Quality control.
- Manage transportation
- Logistics management
- Cost reduction
- Customized packing
- Quality supplier recommendation
What benefits a trading company may offer?
A trading company can provide certain standardized services. Because of the negotiation skills any trading company can help you to do follow up on your orders to save your time and energy.
The role of any trading company will be as a middleman. You will place orders to your trading companies, the trading company then will order many other factories for production. Generally, there are 2 kinds of trading companies available:
- A trading company that claims to be a factory but is not. This type of trading organisation can provide superior services and add value to your company’s business experience
- A trading company may mislead buyers into believing it is a real manufacturer when it is not. These types of trading firms are only intermediaries who purchase and sell, benefitting greatly from information asymmetry. Often their services are can be dubious.
The following are a few benefits from any trading company:
- Orders will be maintained up to date
- Can offer amazing terms of payment. Often to reduce your risk they may handle your order by using their own cash too.
- Certain specific products are sourced in lower minimum order quantity from manufacturers
When it comes to importing from China, there is no one-size-fits-all manufacturer as your proven sourcing solutions. Determine what matters most to you and your clients, and then choose the suppliers who can best meet your needs.