Sourcing agent, trading company or importer: who takes which margin

A sourcing agent is paid a fee by you, published by agencies at between 3 and 12 percent of order value, and the factory invoices the goods to you. A trading company and a European importer each buy the goods themselves and resell them, so their margin sits inside the unit price and you never see the figure.

The difference also decides who carries the legal duties of importing into the European Union (EU). The table shows the four parties side by side.

Importer of record means the company named as importer when the goods enter the EU. It answers to customs for duty and import VAT, the value added tax charged on goods entering the EU, and, under EU product safety law, carries the importer’s legal duties.

The factory

The factory makes the product and sets the base price. Many quote FOB, short for free on board: the seller clears the goods for export and loads them onto the ship, and cost and risk pass to you at that point.

Some factories handle export paperwork themselves. Others use a trading company for it, and it is not unusual to see the trader’s name on the export documents in place of the factory’s. Since 30 December 2022 China no longer requires a separate foreign trade operator filing, though companies still need a customs registration code to declare exports. An “export licence” is therefore no longer a useful test of who you are dealing with.

The trading company

A Chinese trading company buys from one or more factories and sells to you under its own name. It is a legitimate business with real advantages. Jingsourcing lists easier communication, a wider product choice and a smaller MOQ, the minimum order quantity a supplier accepts. A trading company can combine items from several factories into one order.

The cost is a margin you cannot see, added between the factory price and yours. You are still the importer of record, because the goods are shipped to you and enter the EU in your name. The real problem arises only when a trading company presents itself as the factory.

The sourcing agent

An agent works for the buyer. It finds and vets factories, negotiates, inspects and organises shipping, and you pay it a fee. Published commissions include Sorva at 6 to 12 percent, Wesley Sourcing at 3 to 8 percent, TonySourcing at 5 percent, and Aslan at 4 to 8 percent. Some agents bill by project or by day. The full comparison is in what a China sourcing agent costs.

With an agent, the factory invoices you, so you see the factory price and the fee as two separate numbers. The risk is an agent that also takes money from the factory, which the same guide explains how to check.

The European importer or wholesaler

An importer buys in Asia, brings the goods into the EU in its own name, holds stock and sells to you in smaller quantities. Its margin pays for that stock, for the capital tied up in it and for the legal duties it carries as importer.

Those duties are real work. The Access2Markets guide from the European Commission says import duty is often paid by the importer, import VAT is usually paid by the importer, and the importer needs an EORI number, the EU-wide identification number used in customs declarations. Ireland’s product safety regulator, the Competition and Consumer Protection Commission (CCPC), lists what an importer must ensure before selling: its name and postal address on the product, packaging or an accompanying document; a manufacturer that has carried out a risk analysis and prepared technical documentation; and safety records kept for 10 years.

When you stop buying from an importer and buy from a factory, through an agent or a trading company, those duties move to you.

How to tell a factory from a trading company

Read the business licence. Ask for a copy of the duplicate business licence stamped with the company seal, called the chop. The EU SME Centre, which the EU funds to advise small and medium-sized businesses, recommends this because the original often hangs on an office wall where anyone can photograph it. Then read the business scope, the list of activities the company is registered to carry out. China Checkup says the scope tells you explicitly what kind of company you are dealing with. A manufacturer’s scope names production of the goods, usually with the words 生产 or 制造. A scope limited to sales (销售) and import and export (进出口) points to a trader.

Check the official register. Every licence carries an 18-character unified social credit code. Search it on the National Enterprise Credit Information Publicity System at gsxt.gov.cn, run by the State Administration for Market Regulation. It shows registered capital, business scope, annual reports and any record of abnormal operations, in Chinese only. The EU SME Centre adds that a low registered capital can signal a shell company, and that a company with only an English name is not incorporated in China.

Look at export records. Ask for a recent export declaration or bill of lading, the carrier’s shipping document, for the product you want. If the shipper named on it is another company, the factory exports through a trader, and you can ask to deal with the factory directly.

Visit the factory. The EU SME Centre advises visiting factories, offices and warehouses several times, announced and unannounced, to confirm the company matches the business scope on its licence. Ask what each machine does, how old it is and where it came from, and where the quality checkpoints sit on the line.

Which option fits which buyer

The importer is often the right answer for a smaller brand. Its margin buys you small quantities, fast delivery from European stock and someone else carrying the importer’s duties. Aslan’s own threshold is about EUR 200,000 a year in Asian goods; below that, a European wholesaler is usually the better deal.

Above that level, compare like with like. Take the importer’s price for one product and set it against the factory price, plus sea freight, duty, the agent’s fee and your own cost of holding the stock. The gap is the importer’s margin, and you can decide whether its service is worth it to you.

Aslan sources white-label goods and ODM goods only. ODM, short for original design manufacturer, means the factory’s own design sold under your brand. The current marine cleaning range is on the marine cleaning page, and the fee is on the pricing page.