Sourcing company : definition and advantages

The fact that the term “sourcing” is often misused, or that a “sourcing company” is more than enough mistaken for a trading company is common knowledge within our industry. Clients may ask us what does a sourcing agent do, some others may ask us to explain the differences with a trading company, and so on….

Well, the time has come to provide our readers with a comprehensive answer about what a sourcing company in China does, differences with a trading company, and advantages of dealing with a sourcing agency when buying from China.

What does a sourcing company do?

In a nutshell, it implements a comprehensive set of procurement practices, aimed at finding, evaluating and engaging suppliers for purchasing goods. Naturally, a Chinese sourcing company will gather a team including profiles from each profession (namely, purchasing, management, quality, logistics …) proficient in local and foreign languages.

The involvement of a sourcing team is similar to a trading company since it is involved in each step of the order, as described below :

Product sourcing Order monitoring Quality Control Logistics After-delivery

What is the difference with a reseller or trading agent?

The core differences are as follow :

Chinese Trading Companies Chinese Sourcing Companies
Offer : Sells goods Sells services
Specialization : Industry specific Processes specific
Main interest : Factory’s Client’s
Focus : Sales Cost vs Risk vs Quality

Which advantages does a sourcing company in Shanghai bring?

Local presence : nothing compares to having a trusting party ready to act locally at any time.>
Time efficiency : communication and business habits are decoded and made easy. A knowledgeable and honed professional with real language skills equals hours saved.
Access to prices : a seasoned sourcing agent will give you access to his network of factories, potentially allowing better purchasing prices and terms.
Quality-wise: sourcing agencies in China usually have a better understanding of foreign quality standards and regulations.

Who really needs a sourcing company in Asia?

  • SMEs that are putting all efforts on sales and marketing but lack in terms of purchasing and quality.
  • Buyers involved in dealings spanning various industries, who need to deal with a certain number of factories and traders.
  • Groups and brands which operations are more complex, such as product pooling and repacking.
  • All companies involved in niche markets, adamant to ensure a tight control over production, quality management as well as brand and design protection.