When Should an Importer Hire a Sourcing Manager in China?

A U.S. machining company I work with recently made an offer to a sourcing manager in China. Before the offer went out, the candidate had already helped the company save US$100,000 on a single project.

In the first week of the search, my team introduced eight candidates. The client interviewed four. One of them agreed to join the buyer on a factory visit and help with a supplier negotiation.

The buyer knew the supplier and had already tried to reach an agreement. After several conversations, the supplier was still holding firm. During the visit, the candidate helped secure better pricing and terms than the buyer had expected. The US$100,000 in savings came from that one project.

For a business that imports from China, especially a trading company whose margin depends on what it pays for the goods it resells, that raises a practical question. When a familiar supplier sends you a quote, how do you know whether it’s a good one?

How did you choose the supplier that gets most of your orders?

Ask an importer how a long-standing supplier relationship began, and the answer is sometimes quite simple. Someone made an introduction. The first order went well, so the buyer placed a second. A few years later, order volumes have grown, and that first supplier still gets most of the business.

When I talk with buyers in that position, I ask three questions:

1. Is the company that quotes you and sends the invoice the same company that makes the product?
2. When did you last get a quote from another qualified factory using the same drawing, material, quantity and delivery date?
3. If your supplier raised prices or ran out of capacity tomorrow, which factory could take your next order?

A trading partner may earn its margin by coordinating several factories, managing quality or keeping deliveries on schedule. As a buyer, you want to know which of those services you rely on, what they’re worth to you, and what alternatives you have when it’s time to negotiate.

What can a sourcing manager do on your behalf?

When I interview sourcing managers, I want to know what they can tell a buyer about an actual quote. Which costs can they explain? Which terms would they reopen? If the supplier holds firm, where would they take the order, and why do they trust that factory to deliver?

Answering those questions takes knowledge of the product and how it’s made. It also takes time on factory floors and relationships with other suppliers that make comparable parts. A buyer needs someone who can recognize a fair price and spot a cheaper quote that depends on a factory meeting a deadline it can’t keep.

That’s the value of having someone in China who works for you. Your team at headquarters makes the purchasing decision. Your sourcing manager can visit the factory, challenge a quote in person and bring you credible options before you commit.

For my U.S. client, the next step is to review the wider supplier base. Which relationships deserve more business? Which parts need a second qualified source? Which terms have carried over from one purchase order to the next without a fresh negotiation? Those are opportunities for future savings. The US$100,000 came from the negotiation already completed.

Does the hire make sense for your business?

Suppose you budget US$5,000 a month in base salary. That comes to US$60,000 a year, plus employment costs and travel. To decide whether that investment makes sense, start with last year’s purchases. Look at the three categories where you spent the most. What would better terms on one of them do for your gross margin? What would a second qualified factory be worth if your main supplier missed a delivery?

If you’re considering hiring a sourcing manager in China, start with one order you’d like to renegotiate. What do you buy, and where are you getting stuck? I’d be happy to help you decide whether it makes sense to hire locally and what experience to look for.

Joy Jin
Founder, JIN Talent

Recruitment services for international employers hiring in China · clients@jintalent.com