Sourcing Agents in China: Understanding the Legal and Commercial Risk

Working through a sourcing agent can be commercially efficient. It can also create fragmented accountability, unclear authority, and unexpected exposure if the relationship is not properly structured.

The core risk in a sourcing agent arrangement is that the agent operates in a space between the buyer and the supplier, with authority that is often informal, undocumented, and poorly understood by all parties.

Common problems include: the agent commits the buyer to terms that were not authorised; the agent receives payments that are not properly accounted for; the agent's relationship with the supplier creates conflicts of interest; and the agent's authority to bind the buyer is disputed when something goes wrong.

These risks are not inherent to the sourcing agent model. They arise from the absence of a clear, written framework that defines the agent's authority, obligations, and accountability.

A structured review of the sourcing arrangement — before problems arise — can identify the main gaps and define a more disciplined operational structure.