How to buy from wholesale market is always a challenge for many of buyers.
Here is one example: Ms Lee from Singapore,representing a large company, plans to source some products from China. Before coming, she thought that China wholesale markets (Yiwu market, Guanghzou market)are something like fairs or trade exhibitions. She can easily import directly by speaking to the sellers there.
She was greatly disappointed to found out that 95% of the people in the market were not ready to export directly: no export licenses, knew nothing about FOB price, and even were not capableof speaking English!
How China markets work?
Factories (or sheer agents) have their shops/showrooms set up inside the market. They sell the products they produce/ represent.
Usually two people are inside the shops. One is “boss”, the other is “assistant”. In most cases, the “boss” is the factory owner’s wife, daughter, or close relatives, someone the factory owner can completely trust. The “assistant” is usually a girl they employed, who can speak some English and know how to use a computer.
“Boss” usually doesn’t speak any English and knows little about international trade. Their job is to keep everything under control. To keep the overall cost down, the”shop assistant” is usually high school graduates or college graduates. They don’t have much knowledge about foreign trade either.
So the shops here just put whatever available inside, and sell. That’s it. They are happy with this. To export directly to overseas buyers is not something they’re happy to do, or able to do. So here comes the question:
How to buy from wholesale markets?
In most cases, you have to use an agent to assist you with all the sourcing activities. They can arrange your visit, accompany you to the market to browse, then collect orders, do inspection, and finally shipyour products.
Of course, agents will usually charge a commission from 3% – 10% of your total purchase value, according what you buy and how much you buy. You may also find some agents claim that they only charge a 1% commission and provide dozens of FREE service. Sounds like miracles.
As an”insider”in this industry, I know fairly enough that for all agents, 1% commission is even not enough to survive. If you find someone did “kept their promises” and offered you a 1% commission. They must have some “clever” ways to make money.
*The good things about an agent(such as Yiwu agent, Guangzhou agent):
Obviously , an agent can make things much easier for you. Sourcing from without an agent is nearly a “Mission Impossible”. You have no warehouse to collect your orders, no title to ship out your containers, and no one to do inspection.
And agents can also help you get cheaper prices sometimes because they have connections with suppliers. They buy a lot from suppliers and suppliers are also willing to offer a discount because agents help them sell.
*The bad things about using an agent:
This only comes when you stay with a “bad” agent. You may find that almost every agent’s site promises MIRACLES. In fact, the reality is quite different. Most agents are inexperienced, incapable, have no connections, have no warehouses, tell lies, make mistakes, create additional costs, waste time, and choose slow cheap container lines….