How do I Choose an Importing Agent?
In this video, you’ll learn about import agents/brokers/assisting companies.
Like any unknown area that you move into in your life, when you are first dealing with China, it can appear quite daunting. Just as you use an accountant to do your tax, a bookkeeper to do your books, and a lawyer to do law-related business, you can also use an import adviser to deal with your importing matters.
Getting professional advice from an import adviser will assist you through the whole importing process, allowing you to have a better insight and understanding of your rights, the rights of the supplier, trade laws, and so on.
One of the questions I’ve been asked by clients is about agents they’ve found on the internet that will source products from China for a 5% commission, or less.
Be aware these agents also receive a commission from the manufacturer or supplier who supplies your products and to cover this cost the manufacturer or trading company will build in their commission into the offer price for the goods.
The result is that the commission paid by you to the agent can be anywhere from at least 12% to 100% and not 5% – you can never be 100% sure.
As most agents are profit driven, they may refer your business to the supplier with the cheapest price, resulting in substandard product, or to the supplier which offers them the highest commission (which isn’t necessarily the one with the most suitable product for you!).
Before you select an import adviser, or sign anything, make sure you read our special report on how to choose an import agent, which has questions to ask when you interview them. Email firstname.lastname@example.org for your free report.
How to Choose An Import Agent/Broker
Start by asking friends/associates if they can recommend an agent. If not, compare companies online, then shortlist at two or three. Choosing the right import broker will mean the difference between success and failure of your import project, so before committing to anything, ask these questions…
1. What services can you provide?
The requirements for sourcing from China are often underestimated. Finding an agent who can manage all stages of your project ‘end-to-end’ will save you time coordinating agents, inspection companies, freight forwarders, Customs, etc.
2. What can you source?
Some agents have a system that allows them to source anything. Others only have contacts in specific areas and specialize in these industries. Be confident they’re a good match for your product.
3. Will you research the total market, and tender out my job?
Open market tendering will enable the average price, or ‘fair market value’ to be established, giving you peace of mind you’re not being ripped off.
4. Will you reveal the full details of the suppliers you source for me?
Most brokers prevent you from knowing who their source is in China – even though you pay them thousands upfront to screen and source a suitable supplier. They withhold that entity’s contact details so you are always reliant on them. Ensure they disclose full details of suppliers, so if your relationship with the agent ceases, or their relationship with the factory ceases, you’re not left without product.
5. Will you advise upfront on how you’ll manage my project, what I get, and what my investment will be?
Good agents won’t have a problem with this. It helps prevent nasty surprises down the track.
6. Are you tied to any factories?
You want quotes from many suppliers, not just a couple of friends/relatives of the agent, or someone who pays him the most commission. A truly independent agent provides peace of mind you’ve been recommended a supplier most suited to your needs, not the one most suited to your agent.
7. Do you receive a commission from the factory?
On the internet, you can find agents who will source your products for a commission of around 5%. However, these agents also receive a commission from the manufacturer or trading company that supplies your products, and to cover this cost the manufacturer or trading company builds in their commission into the offer price for the goods. The result is the commission paid by you to the agent can be anywhere from at least 12% to 100% and not 5%… you can never be 100% sure. As most agents are profit-driven, they may refer your business to the supplier with the cheapest price, resulting in a substandard product, or to the supplier which offers them the highest commission (which isn’t necessarily the one with the most suitable product for you!).
8. Are the owners of the agency/brokerage Chinese?
Many brokers are non-Chinese who have done a few business trips, made some contacts and are trying to deal with the cultural complexities – but really start from behind the eight balls. The owner must be Chinese to truly understand the cultural factors imperative for success.
9. Is the person I’m dealing with Chinese?
Your project officer should be Chinese to avoid miscommunications and cultural issues arising.
10. Do you have employees in China?
Most agents purport to have contacts in China but these turn out to be 3 layers deep – that is, they are using Hong Kong brokers. So by the time you get a quote, two even three other people in the chain have put their mark-up on which makes the deal unworkable. Ensure your agent employs their own team working just for them on the ground – no contractors or middlemen.
Also, having personnel in China will mean issues can be sorted quicker, and they can act as your ‘Johnny on the spot’ for any issues.
11. Do you have an office in my country?
Having an office in the country you reside in means the agent should have the knowledge to the many idiosyncrasies to importing successfully into your country. This can assist greatly in avoiding costs and getting product quickly and smoothly into the country.
12. Will I have a single point of contact? Who are they?
A single point of contact will save your time being passed around from one person to another.
13. What is their level of written English?
Most business is conducted via email, so the good written ability is critical to avoid miscommunications, a common cause of grief!
14. What is their level of oral English?
Sometimes its best to sort an issue over the phone, so fluency in English is critical.
15. Have they lived at least 5 years in a Western country?
Agents of Chinese origin should have lived long term in a Western country to truly understand cultural differences and spot issues BEFORE they arise. Being bilingual isn’t enough; they must be bi-cultural.
16. Can you show me the system you will follow to ensure my job is managed diligently?
International trade is complex, so overlooking one small step or detail can have a big impact on the project. If the agent has a written system to follow, it reduces the chance for oversights and errors.
17. What strategies can you recommend to reduce the risk of Intellectual Property Rights infringement? (If applicable)
If you have a patent, patent-pending, or any other IP, you need to be sure the agent has tactics to help protect your proprietary ideas.
18. What systems do you have in place to ensure quality?
Quality control occurs right throughout the sourcing process, not just the final onsite inspection (if one is required). You must be comfortable the agent works closely with (read: micro-manages) the factory to have your expectations met.
19. Do you undertake onsite quality inspections? What is involved in this?
The agent should be able to arrange onsite factory inspections to International Standards.
20. If I have less than a container load, can you put it on with a client of yours?
If you have less than a container load, it’s better to share the container with someone the agent knows, to reduce the chance of the whole container being held up at Customs because of problems with the other person’s goods.
21. How long have you worked in international trade?
Experience counts for a lot in importing.
22. What testimonials from current/past clients can you provide?
Testimonials from former clients will help provide proof of their service claims.
23. What’s my investment in your services?
Different agents have different fee models. There can be upfront payment, a fee for service, commission on the value of goods, supplier management fee, retainer, or a combination.
Chinese agents usually have a commission that is not revealed (or admitted) to the buyer. This is a standard business practice in China.
24. Do you receive a commission from the factory?
Be clear right from the beginning of the possible charges involved.
Note: If your agent is Chinese, keep in mind that they prefer not to say ‘No’ to you as it could mean you lose face. ‘Yes’ may mean ‘Yes I heard you’, not ‘Yes I agree with you’.
Contact Chinadirect Sourcing (Form Below) if you need any assistance.
Good Luck with your importing from china! Enjoy the program!
Until then, Zai Jian (Good bye!)