Sourcing agent vs. Trade company

May 16, 2022

Sourcing agent vs. Trade company

Choosing the option best for you.

What is a sourcing agent?

Manufacturing in China has several pros and cons. Cost of goods is a top pro, and the language barrier is a top con. There are ways to turn negatives into positives if you collaborate with the right partner. This leads to the question of choosing the best China-based partner for your business. There are two popular solutions to this problem. The solution is working with a sourcing agent versus a trade company. Many people believe that the two terms are interchangeable. That is certainly not the case. There are significant differences between a sourcing agent and a trade company.

What is a Sourcing Agent?

A sourcing agent is a third-party agent who acts on the behalf of your business. Sourcing agents are local to the manufacturer. The job of a sourcing agent is to find the best manufacturer to meet your product needs. Sourcing agents, such as China sourcing agents, are local. China-based sourcing agents are aware of local customs and holidays that may interfere with the supply chain.  Sourcing agents can conduct quality control tests. They also have good relationships with manufacturers. One difference in sourcing agents is that they manage multiple types of products. They have working relationships with diverse types of suppliers and factories and can meet a variety of needs. If there are product or cost disputes, sourcing agents will work on your behalf to resolve them. Sourcing agents become an active extension of your business in China. Sourcing agents work with a variety of manufacturers on a variety of projects. There may be a need to help them understand your specific products so they can perform solid quality control.

What is a Trade Company?

Trade companies typically buy products from one country and then sell them to another country. Trade companies usually specialize in a small handful of products and have relationships with a limited number of manufacturers. They will sell one product type to multiple buyers, leaving room for duplication in a marketplace. Trade companies usually have close relationships with the factories they work with and can sometimes be an extension of the factory. This could be troublesome if there is a dispute between you and the manufacturing factory. In many cases, the trade company will lean in favor of the manufacturer. Trade companies are the link between you and the manufacturer so if trouble arises, there could be communication challenges.

Which Option is Best For Your Business?

If you have a large order and a good handle on Chinese supply chain, including logistics and global import regulations, a trade company could be a good option. If you have a large order but need a local partner to help manage your product and ensure the quality of your order, a sourcing agent could meet your needs. The bottom line is that the more knowledge you have about manufacturing in China, sourcing agents, and trade companies, the better equip you will be in the future.

To get more information on how we can be your sourcing agent partner, contact us at  Info@GlobalManufacturingSales.com or (732) 970-7800.


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