15 Aug Agents vs. Trading Companies
When sourcing products from China, businesses face the challenge of choosing the right intermediary. Understanding the key differences between agents and trading companies is crucial.
Agents charge a fee on top of the factory price, and the customer pays the factory directly. The agent’s responsibility usually stops there. They can initially appear appealing; however, a critical drawback associated with agents is the potential for conflicts of interest. Agents may prioritize their relationships with manufacturers over the best interests of the businesses they are supposed to represent, leading to compromised decision-making and potential negative impacts on the sourcing process. For instance, many agents receive kickbacks from factories, inflating prices and directing the agent’s choice of factory toward the one offering the highest kickback rather than the best fit for the client.
Trading companies, on the other hand, buy from the factory and resell the product to the client at a price and margin they determine. They provide a well-aligned alternative to agents for sourcing from China. Unlike agents, trading companies take responsibility for the quality of the products they sell to the client. Their structure is designed to ensure that their interests are firmly aligned with those of their clients rather than the manufacturers. This critical difference reorients the focus towards delivering the best outcomes for the businesses they serve, significantly reducing the risk of conflicts of interest and the associated compromises.
