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Many businesses are in need of a helping hand when importing from China. This is when the procurement/purchasing expert becomes relevant. The company, that acts as a purchasing/procurement expert shall be your right hand and an incorruptible ally on the front line in China.

However, it’s not a protected professional title and anyone can call him or herself a purchasing expert. If you don’t make an informed decision when selecting a purchasing agent you might end up losing a lot more than the commission or service fee.

Whois a procurement/purchasing expert and why do I need one?

A procurement/purchasing expert is an individual or a professional company helping companies overseas to import from China. While a purchasing expert is not a requirement in order to import from China, a good procurement expert can be an extremely valuable asset in your overall product procurement strategy. Below I list a few examples of what a procurement/purchasing expert can help out with:

1.) Finding new products and suppliers.

2.) Audit existing suppliers.

3.) Manage negotiations and draft agreements.

4.) Perform factory inspections and quality control.

5.) Manage shipping & logistics

Dealing with Chinese suppliers is very time consuming. Finding the right one even more so and requires a well laid out strategy that actively weeds out the bad suppliers (that’s about 80 – 90% of them) identifies those who are qualified to manufacture a certain product. Finding the right supplier also requires a certain amount of product knowledge, an asset not possessed by many inexperienced importers.

Whether or not you should choose to work with a purchasing agent is up to you. If you have previous experience and ”in house” expertise to manage the often risky and time consuming procedures, don’t hesitate save a few dollars and do it on your own. For everybody else I present the four most important factors when selecting a procurement and purchasing agent in China.

Based in the United States, Europe or Australia? Read this !

Imported items are subject to product safety regulations. Importing non-compliant items is illegal and may result in a forced recall or even a lawsuit – in case anyone is injured by your product. Most suppliers in China are not able to comply with foreign standards. In fact, many suppliers are not even aware they exist, and why compliance is so important to overseas buyers.

But that’s not all. Many sourcing agents are also lacking expertise about product safety regulations in the mentioned markets. Working with a procurement expert lacking such knowledge is a serious liability. Keep in mind that in the end, you are going to be held financially responsible if your products turn out to be non-compliant with the relevant standards.

Area of product expertise

Importing from China can be a completely different story depending on the product. Certain products are very complicated (i.e. Electronics)

while others a fairly easy to get right (i.e. Wristwatches). Hiring the purchasing and procurement expert with the right product knowledge is critical and can make the difference between a successful business transaction and complete disaster.

Ask your purchasing expert for buyer references in the same industry and case studies from previous orders. While it might be impossible to find purchasing experts specialized in certain niche products, it’s still possible to ask for references for buyers a related industry in order to determine whether the purchasing and procurement expert is qualified or not.

Organization and sourcing procedures

Finding suppliers is easy. Finding qualified suppliers requires an efficient and well executed sourcing strategy. A good procurement agent has a transparent and ”technical” approach to product sourcing that puts the clients product specifications and certification requirements in the first place – in front of any existing supplier relationships and related kickbacks.

While purchasing experts in China work in very different ways, I’d say that the standard procurement process should look something like this as what we follow :

EXCELLA WORLDWIDE PROCUREMENT PROCESS

Apart from having a predetermined purchasing and procurement process in place, your agent shall be able to give straight answers the following questions:

1.) On what factors do they deem a supplier to be qualified / not qualified?
2.) Will you pay the purchasing agent for the products or pay directly to the supplier?
3.) What’s their strategy on preventing and countering frauds? (I.e. Payment frauds)
4.) How is the agent prepared to deal with potential quality issues during and after production?
5.) How long have they been established?
6.) Will they send the inquiry to an already “tested” supplier or source a new supplier?
7.) Do they have any buyer references from your country? (Never work with a purchasing agent who refuses to provide you with buyer references)

Location

At a minimum, a qualified purchasing agent shall have a registered company entity and an office in at least one Chinese city, which also includes Hong Kong. An even more qualified purchasing agent would have an office not only in China, but also in your country. While this is not critical to the success of your business, it’s certainly an indication that the purchasing agent is well established and more reliable.

Chinese suppliers tend to be concentrated in industrial clusters on the Chinese coastline. Your expert’s proximity to a certain industrial cluster can certainly help out when things go wrong during production. It may also cut traveling and transportation costs.

Management

The Chinese managed companies tend to be a lot more relationship focused than companies with a Western management. This has huge implications for your business. Do you want your purchasing agent to select the supplier who’s qualified to deliver a product in compliance with your quality and certification requirements, or the supplier whose willing to pay the largest kickback? Unless you can’t wait to find yourself bankrupted, I’d suggest you go for the former.

Hope you get your money worth and sourcing strategy correct with a Perfect Procurement Expert !!

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