In today’s globalized marketplace, sourcing products from international suppliers is a key strategy for many companies in the U.S. and Europe. While remote buying relationships or working through agents has been the norm, setting up a dedicated buying office team in India, particularly via a fixed-fee model, presents numerous advantages.
India is emerging as a manufacturing powerhouse with a skilled workforce, favourable costs, and a rich supplier base. The governments ‘Made in India’ program has created a more positive environment for companies to do business and trade.
Key interventions in the Made in India Program:
- Ease of doing business reforms
- Infrastructure development
- Tax incentives
- Skill development and training
- Investment promotion
- Intellectual Property Protection
Establishing a Buying Office in Asia can be a strategic move to enhance Strategic Sourcing Capability
For businesses operating from Western markets, transitioning from a remote or agent-based setup to a buying office can unlock substantial benefits while mitigating key risks. Establishing a team in market can deliver significant advantages over working through an agent or trying to manage relationships directly from Head Office. Building full transparency into supply chain costs and creating a closer working partnership with key suppliers.
Whilst the Advantages can be huge the challenges of office space, recruitment, HR and Legal in a new country or jurisdiction can seem insurmountable and full of complexity.
ET2C International Unique Buying Office Model
ET2C International have over 23 years’ experience as Global Sourcing Experts. Our 200 colleagues are based in 7 offices across developed and emerging Asian sourcing markets to be your feet on the round. Creating your bridge to your Asian supply partners.
Many of our clients have developed their Asian buying offices with us. Taking advantage of our unique model that mitigates all the risk of establishing a new entity whilst releasing all the benefits of a team on the ground and direct supply relationships. Removing the challenges of office space, recruitment, staff isolation, HR, Payroll and Legal in a simple solution. Our teams can rapidly establish Buying Office teams in China, India, Vietnam and Turkey to rapidly take your Global Sourcing to the next level. Buying Office Model
To find our more about our Unique Fixed Fee Asian Buying office model drop us a line at contact@et2cint.com
Benefits of establishing a buying team in India
1. Cost Efficiency
One of the primary drivers for setting up a buying office in India is cost efficiency. India offers a vast pool of talent with lower labour costs compared to the U.S. or Europe. The fixed-fee model allows companies to streamline their operational expenses without unexpected surges in costs. Unlike commission-based agents, whose fees grow as your procurement volume increases, a fixed-fee model ensures predictability and transparency. This cost structure helps companies plan their budgets better, allocate resources more effectively, and increase profit margins.
By establishing a team on the ground in India, companies can access cheaper suppliers directly and benefit from competitive pricing, which remote or agent-based procurement teams may struggle to negotiate. Additionally, the fixed fee covers services like supplier identification, quality control, and logistical coordination, further lowering the need for third-party intermediaries and minimizing overheads.
2. Improved Control and Quality Assurance
One of the significant downsides of remote buying through agents is the lack of control over the procurement process. Agents typically act as intermediaries between the company and suppliers, which can create a layer of separation that may compromise the quality of the final product. With a dedicated buying team in India, companies gain greater oversight and control.
India has a vast and diverse supply chain network, and managing relationships directly is crucial for ensuring product quality and consistency. A local team is in a better position to:
- Conduct on-site inspections and audits.
- Ensure that suppliers comply with ethical standards and sustainability requirements.
- Facilitate real-time troubleshooting of production issues.
- Build long-term relationships with trusted suppliers.
Quality assurance becomes far more robust when you have a team that understands the local language, culture, and business environment.
3. Faster Response Times and Flexibility
Remote buying or dealing through agents often results in delayed communications, slowing down the decision-making process. Time zone differences, cultural misunderstandings, or language barriers can lead to operational inefficiencies, such as production delays or shipment errors. Having a local buying office mitigates these challenges by enabling quicker responses to supplier inquiries, order adjustments, and unforeseen issues.
An on-the-ground team can provide real-time updates and navigate logistical challenges, leading to faster turnaround times. Companies can also quickly scale their operations or switch suppliers when necessary. The local team’s presence offers agility that remote or agent-based procurement cannot match.
4. Enhanced Supplier Relationships
Building and nurturing strong relationships with suppliers is key to successful procurement. While agents can establish supplier networks on your behalf, their relationships are often transactional, and loyalty to your company might be minimal. A dedicated buying office team in India can focus on long-term relationship building, helping to create trust and collaboration with local suppliers.
Indian culture places high value on personal relationships and having an in-country presence enables your team to negotiate better deals, ensure timely delivery, and maintain long-term commitments from suppliers. Furthermore, the team can better understand the nuances of working with specific suppliers and industries, ensuring a more tailored procurement strategy.
5. Access to a Wide Supplier Network
India is a growing hub for manufacturing across various industries, from textiles and garments to automotive parts and electronics. Having a buying office in India grants U.S. and European companies direct access to a vast network of suppliers that may not be easily accessible through agents or remote operations.
The local team can continually scout for new suppliers, evaluate their capacities, and negotiate terms directly. This ability to diversify suppliers mitigates risks such as over-reliance on a single vendor or supply chain disruptions. Additionally, the team can monitor market trends, raw material availability, and labour issues to adjust sourcing strategies in real time.
6. Sustainability and Compliance Benefits
As global scrutiny around sustainability and ethical sourcing intensifies, having a local team in India provides a significant advantage. The buying office can ensure that suppliers meet the required environmental, social, and governance (ESG) standards, which may be more challenging to enforce when relying on third-party agents.
The team can conduct regular audits, verify certifications, and even engage in community-building initiatives with suppliers to create more sustainable partnerships. This on-the-ground presence allows companies to meet international compliance standards and ensure their sourcing practices align with corporate social responsibility (CSR) goals.
7. Fixed-Fee Model: A Transparent and Predictable Solution
One of the standout features of a Fixed Fee Buying Office Model is its transparency. In traditional agent-based models, fees are often tied to purchase volumes, leading to a lack of cost predictability and potential conflicts of interest. Agents might be incentivized to push for higher volumes or more expensive suppliers to increase their commissions.
The fixed-fee model eliminates this issue by offering a clear, upfront cost structure. Companies know exactly what they are paying for—whether it’s sourcing, quality control, logistics, or other services. This clarity allows for better financial planning, reduces the risk of hidden fees, and aligns the interests of the buying office with the company’s goals.
Mitigating Risk When Setting Up a Buying Office in a New Country
While the benefits of setting up a buying office in India are significant, companies must also be aware of the risks involved and develop strategies to mitigate them. Below is a ranked list of the key risks and corresponding mitigation strategies:
Risks to be Mitigated in establishing a Buying Office in Asia:
- Investment: Establishing a buying office requires an initial investment in setting up the office space, hiring staff, and legal compliance. Simply finding office space of the right standard can require significant time and market knowledge.
- Skill Sets: Many organisations do not have the current capability to navigate employment law, practises and legality in a new jurisdiction.
- Cultural Differences & Language Barriers: Cultural differences and language barriers can lead to communication difficulties, misunderstandings, and potential delays in operations.
- Labor Regulations & Ethical Sourcing: Navigating complex labor laws and ensuring ethical sourcing practices can be challenging for companies unfamiliar with the Asian landscape.
- Distance & Time Zone Differences: Managing a team across a significant time zone difference can pose communication and operational challenges. This can build a feeling of isolation and remoteness in working reducing effectiveness.
ET2C International Unique Buying Office Model-What are the Benefits
Setting up a buying office requires navigating complex legal, cultural, and business environments. Companies often lack the in-depth knowledge and experience to navigate these challenges effectively. Our 23 years’ experience and teams on the ground in India, China and other Asian Sourcing markets enable us to rapidly deliver:
- Office space: Our modern office facilities ensure great working environment and the ability for your teams to network with other Buying teams within the same building. Sharing knowledge and building Insights
- Recruiting & HR: We manage all your recruitment with you to find qualified local staff, managing payroll, and adhering to labour regulations.
- Supplier Identification & Negotiation: Identifying reliable suppliers, negotiating competitive pricing, and managing vendor relationships.
- Quality Control & Inspection: Providing quality control support and overseeing production processes.
- Faster Start-Up Time: Companies can leverage our existing infrastructure and resources, leading to the quicker establishment of their buying office and streamlined operations.
Establishing an Indian Buying Office to rapidly build your Global Sourcing Capability
Moving your Global Sourcing Strategy to one with Buying Office established moves your delivery to the next level. Improving operating margins, developing faster innovation, improving quality and supplier relationships. When establishing your new office risk mitigation is crucial to ensure rapid margin and trading improvements.
ET2C’s unique Buying Office Model has been delivering benefits to our clients for over 10 years. Mitigating all the risk of setting up a team in Asian to allow them to focus completely on delivering the benefits to operating margins. To find out more about how this could elevate your Global Sourcing drop us a line contact@et2cint.com
