Product Sourcing

China Sourcing Agent Fees: How Much Do They Charge?

china sourcing agent fees

China is often called the manufacturing hub of the world. According to data published by the United Nations Statistics Division, China accounted for 28% of global manufacturing output in 2018, with its manufacturing sector amounting to almost $4 trillion.

In other words, if you want to outsource product manufacturing, one of the leading Chinese suppliers would be your best option. However, you need to find a reliable and experienced supplier that can provide you with high-quality products conferring to your specifications.

That’s where a sourcing agent comes in.

What is a Sourcing Agent?

A sourcing agent is a qualified and experienced individual, agency, or company that connects suppliers and buyers. They can also help handle daily communication with your supplier, assist with product inspections, and even supervise your payments and shipping, among other things. As most agents also have a strong ground presence, you don’t have to set up a full-blown sourcing office in China.

Here are a few tips that will help you find the right sourcing agent in China.

1. Experience Is the Key

Experience is the most critical factor you have to look for when searching for a product sourcing agent in China. Usually, the more experience they have the better. So, try to look for an agent or company with more than a decade of sourcing experience.

However, if you are unable to find such company, be sure to work with someone having at least four to five years of experience in sourcing from China. Make sure to take a look at the prospect’s revenue growth and client list.

If the agent shows a list of a growing number of clients and revenue, it is an indicator of genuine sourcing experience and excellent work ethics. You can also talk to their customers to find out about their experience and work style. Avoid working with an agent that is not willing to share this information.

2. Consider Their Knowledge Specialization

If you are looking for a supplier to make general consumer goods, you needn’t look for a China sourcing agent specializing in a particular niche. However, if you are looking for an industry-specific manufacturer, it is better to work with an agent with knowledge specialization in the desired niche.

A niche-specific sourcing agent will have the latest information about the top manufacturers in the industry, the current demand and supply scenario, specialized shipping and packaging needs, specific product quality standards, and both wholesale and retail manufacturing costs. As a result, you will be able to find the right supplier quickly and efficiently.

3. China Sourcing Agent Fees

As you may already know, there are thousands of Original Equipment Manufacturers (OEM) and suppliers in China. That’s why it is difficult to find any industry standards for China sourcing agent fees.

While many agencies will try to attract customers with free service for trial orders or cheapest rates, low cost offers often translate into low-quality products. To make sure you are paying the right price, you need to understand how pricing work.

So, How much do sourcing agents charge and how they charge?

Most sourcing agents will charge you based on one of the following three pricing policies.

Fixed Fee

It is one of the most commonly used pricing methods in China. Most agents or agencies will charge you a fixed monthly or weekly fee for a specific product or project. In this type of arrangement, the agent will connect you with a supplier and you can directly build the business relationship.

Naturally, this is the cheapest way to hire a sourcing agent in China. However, it is also the riskiest as low-cost agents are often not qualified and have little or no genuine work experience. So, you will most likely end up with a poor-quality supplier.

Another way is to hire a full-time sourcing agent or company for the duration of your project for a fixed monthly fee. Although this method can cost you a little more, you are more likely to find qualified and experienced individuals or agencies. Plus, they can also help you to oversee your project and supplier communication.

Percentage Service Fee or Commission

Many agencies also charge buyers as a percentage service fee or commission on the total order cost. As there is no standard, you may have to pay anywhere between 5%-10% of the order cost as sourcing fees.

However, the percentage will depend on the size of the order and also the type of product. If your order is bigger, some sourcing agencies may work on as low as 3% commission. Make sure to double-check the costs and the agent profile though, as lower costs often translate into poor product quality.

Gain from Price Difference at No Extra Charge

This is a little tricky pricing method. In China, many sourcing companies use this pricing model that involves providing you with suppliers offering the most competitive rates. They usually charge the fees based on the price difference due to the highly competitive rates of the supplier they have found.

On the other hand, if you are able to find a supplier with more competitive rates than the ones found by the sourcing company, you don’t have to consider the offer. Once again, however, you must remember that hiring the cheapest supplier is rarely a good idea.

Choose Agents Located in Desired Industry Clusters

Location also plays a crucial role in choosing the right sourcing agent in China. Like most countries, China also has industry clusters. For example, the Guangzhou reason is known for cosmetics manufacturing while Shenzhen is considered the hub for digital and electronics goods making.

As it happens, sourcing companies located in Shenzhen will have better procurement experience in electronics manufacturing. So, if you want to find a supplier for making headphones, screening agencies from Shenzhen is the best way to begin your search.

Furthermore, if the agency is located closer to your supplier, it is more convenient to visit the supplier for quality inspections, supervision, and any other on-site activity. The sourcing agencies are also likely to know the best suppliers in their area closely, helping you to establish a business relationship readily.

Parting Words

As you can see, finding the right sourcing agent in China is very critical for successfully outsourcing your manufacturing needs. Hopefully, these four tips will help you find the right sourcing agency as quickly as possible.

Jonble is one of the leading sourcing companies in China known for its trustworthy and transparent work culture and years of experience. You can talk about your outsourcing needs to our team of experts or send your query to see how we can help you. Contact us today!