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Trading company vs Direct Sourcing in China

By Manoj Shivnani

China is the future for any manufacturer or service provider. That is no secret. So do you buy directly, do you buy thru a trader, a broker, an exporter??? Do you source yourself and then involve someone there?

The answer is that it all depends on your personal preferences. In my case I use both.

What I do is I source the item myself thru normal channels, websites, contacts, directories,etc. Since I have experience I will normally know in which region to locate the item I am looking for. Once I get the item I negotiate directly. Once the deal is closed, then I involve one of my Hong Kong Agents in the operation.

Why do I source myself: in order to save time.

Since I have been doing this for so long I more/less know a lot of the costings as well as where the items are cheaper or of better quality. Also it is good to be able to compare the correct price with different vendors. Ultimately though one saves time in response. My HK agent like most agents work with a few buyers but are all the time busy. If I send an enquiry to my agent, since he has about a million enquiries on his plate, he takes ages to reply. In this way I get a reply in about 24hr maximum directly from china.

Why do I involve an agent if it is going to cost me more: in order to make more money and to “cover my back”.

In order to make more money??? Confused!!! Don’t be. You got to remember that china is complicated, it is easy to find the supplier and fight the price. However the real headaches come once the deal is signed, ie quality problems, inspection problems, material delayes, organising the shipment, sampling,etc,etc,etc,. The 3-10% which your agent will charge ( depending on the value of the operation) will mean that he takes care of all the handling of headaches. If he takes care of all the headaches, that means I have time on my hands to concentrate on what brings revenues and cash to my business, ie sales, sales, and sales.

Any smart businessman in today´s age will tell you that today more than ever before, time is money. You need to have that time in your hands to be able to increase your sales efforts.

In order to cover my back?? Yes. There can be different payment terms involved in the operation. I know that if my hk agent is involved then I will do the payment to him and then he will do to the factory. If something goes wrong with the goods received in terms of short-shipment, wrong quality,etc then he is liable to pay me. It is mucha easier to claim your money back from a hk established business as the law really works, plus if he is your regular agent, he is not going to want to risk his buyers account for not solving your problem.

About the author:
The author is a China Business Expert, entrepreneur and self made businessman. He has been dealing with China for over 10 years now, both for his own import & wholesale business as well as for some of his customers where he acts as an intermediary and consultant in the supplyside purchasing cycle. You will find many more and free resources, articles, tips and suggestions other than why epand your business to china in his site, www.freechinaadvice.com.


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