Sourcing Directly Vs Using an Agent

Sourcing Directly Vs Using an Agent

Thanks to globalization and the advent of modern technology, it is easier than ever to import goods from China and other Asian countries without hassle. Unlike the olden days, we now have direct access to vendors across the borders. Therefore, you might be interested in sourcing your product directly from manufacturers in China instead of engaging the services of an agent. There are pros and cons to both the methods of sourcing. Let’s have a look at them in detail.

Language and Cultural Barriers

You may not know the nuances of dealing with vendors in China. There are various factors that can be a barrier to a smooth transaction. You need to speak in the local language in order to get the best possible deal. Misunderstandings are also possible if you do not understand the language or cultural aspects of the other country. In addition to this, there could be problems on availability due to the difference in time zones. Hiring an agent will help you overcome all such difficulties.

Negotiation of Product Cost

It is true that cost of goods is lowest if you purchase directly from the manufacturer. However the vendor is unlikely to give you their best price unless you already have a good rapport with them. An agent with local ties comes in handy at such times. He can speak to your vendors on his own terms to get you the best possible deal.

Due Diligence

There is considerable amount of risk when dealing with vendors from another country. There is a possibility of fraud and unethical practices when dealing with vendors overseas. This necessitates independent background verification of your vendors in China. A sourcing agent can help with this as well as pre and post shipment inspection.

Quality Control

It is always better if the manufacturing takes place under your supervision. However, it may not always be possible for you to setup a quality control team aboard due to financial or legal issues. A good sourcing agent will help you perform vendor and process inspection even while you are away. The costs associated with using an agent is much lesser compared to setting up your own quality control team in China.

Confidentiality

It may be possible that you give away competitive intellectual property when dealing directly with manufacturers. To eliminate this risk, you can have your sourcing agent sign a non-disclosure agreement with you to protect your intellectual assets.

Regional Problems

Smaller manufacturers may find it difficult to deal with you. The bigger manufacturers may not be interested in dealing with buyers who order smaller quantities. There could be local issues like strikes by employees or worker unions. It is better to have a person on site to alert you about any such issues in advance so that you can take appropriate corrective action.

Local Logistics

Goods need to reach the port of loading from the manufacturer’s premises in a safe manner to avoid damage to your goods. The sourcing agent can be on site to ensure that products are shipped in a safe and efficient manner without adding too much on the cost.