Sourcing from Asia & Avoiding Middlemen

Editor’s note: Today’s post is written by David Fisher of Asia Quality Focus, an inspection and auditing firm focusing on Asia. 

Factory - Sourcing in Asia & Avoiding Middlemen

How can you source effectively in Asia?

Sourcing from Asia, whether it be China, India, Bangladesh or Southeast Asia, has become a necessary step for most companies to offer competitive prices. While many companies with serious resources can put money into finding the best factory, most smaller or medium sized enterprises do not always have this option. Luckily, because of networks like Globial and trade shows such as Global Sources, finding suppliers is easier than ever. Finding a legitimate factory, however, has never been more difficult.

Many (perhaps most) of the “manufacturers” that you will run into trade shows, or even on Globial. are actually Middlemen. “Middlemen” are considered intermediary parties who do not provide any real value to the procurement process. These agents essentially portray themselves as factories, often claiming they can produce almost any product under the sun. Next, they will outsource your project to the cheapest factory, sometimes one that they have a relationship with and which will give them a cut of the profit. These agents often lure you in with their impressive language skills and frequently offer unreasonably low prices along with impossible promises.

Working with a middleman is dangerous and should be avoided at all costs because:

  1. You have no idea what caliber of factory you are really working with. Additionally, there is no way to know whether the factory complies with necessary regulations or even is legally able to export products.
  2. There is no incentive to offer optimal product quality as your agent will steer you towards the most beneficial factory for him.
  3. Communication is much more difficult. Because your agent is likely not a specialist in your particular product, there is much more room for error and misunderstandings than if you were working directly with the factory.
  4. You are paying the middleman a surcharge (often unknowingly) and thus not getting the best pricing possible.

But how can you spot a middleman and ensure you are working directly with a legitimate factory? If you are planning to visit the factory, many of these signs may arise:

  1. Your supplier is dodgy about supplying contact details.
  2. He makes outlandish excuses as to why you cannot visit.
  3. He has different business cards than the factory representatives.
  4. The factory does not obviously know who the representative is. You may see the agent giving his card to factory representatives, and if so, this is a huge red flag.

If you are unable to visit the factory, make sure to ask for proper documentation from the factory, and if they are unable to provide this information, it is likely a middleman. Also, make sure that you inform your supplier that you may audit the facility and check production quality in process.

In choosing Asian suppliers, caution is of paramount importance! Making sure to put in adequate time vetting out your suppliers will save serious time and money in the long run.

David B. Fisher works with Asia Quality Focus, a Western owned inspection and auditing firm servicing China, India, Bangladesh, Pakistan, Taiwan, Vietnam, Thailand, Cambodia, Indonesia and the Philippines. For more info, email him at Dave (at) AsiaQualityFocus (dot) com. AQF is a sponsor of the China Sourcing Information Center, a non-profit that educates and assists buyers sourcing from China.

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  1. […] out AQF’s guest blog post, Sourcing from Asia & Avoiding Middlemen, on Globial’s blog today. For those of you who have never heard of Globial, it is a brand new […]

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