Three ways to buy from China, and what each one costs you.
Most buyers compare the unit price and stop there. The unit price is the part of the cost you can see. What separates the three models is who holds the export licence, who checks the goods before they ship, and who absorbs it when something is wrong.
The choice is really about who does the checking.
Buying factory direct gives the lowest unit cost and the least protection: high minimum order quantities, and every quality check is yours to organise and pay for. A trading company consolidates your order and makes it easy, but the margin is inside the price rather than beside it. A sourcing agent charges a stated commission and does the checking on the ground.
None of these is dishonest by nature. The mistake is choosing one while assuming you are getting another's protections.
| Factory direct | Trading company | Sourcing agent | |
|---|---|---|---|
| Unit cost | Lowest | Marked up | Factory price plus stated fee |
| Fee visibility | None to pay | Embedded in the price, commonly 15 to 30 percent | Stated, commonly 3 to 10 percent of FOB |
| Minimum order | High | Low, orders combined | Low, orders combined |
| Quality control | Yours to arrange | Varies, often paper only | On the ground, before shipment |
| Consolidation | You arrange it | Included | Included |
| Who answers for a defect | You and the factory | The trader, if they choose to | The agent, by agreement |
A commission under roughly three percent of order value rarely means a cheaper service. It usually means the difference is being recovered from the factory instead, which quietly makes your agent the factory's customer rather than yours. A stated fee you can see is safer than a low one you cannot.
FOB keeps the shipping decision yours.
Under FOB the seller delivers to the vessel and you appoint the ocean carrier, so destination charges are visible and negotiable. Under CIF the seller arranges the freight, which sounds simpler and often is, until the nominated agent at the destination bills charges you had no part in agreeing.
For a first order with an unfamiliar supplier, the visibility is usually worth more than the convenience.
- FOB: you control the carrier, the routing and the destination costs.
- CIF: the seller controls the freight, and the destination charges arrive after the fact.
- EXW: you take on export clearance at origin, which is rarely worth it from a distance.
- DAP and DDP: simplest to receive, but every cost is inside a number you cannot break down.
- Whichever you pick, agree the named place precisely. Half of Incoterm disputes are about the place, not the term.
The common frauds are old, and they are avoidable.
Deposit and disappear is exactly what it sounds like, and it rose with factory insolvencies: a struggling factory takes a deposit to pay down old debt with no intention of running your order. Quality bait and switch substitutes a cheaper specification after an approved sample, which is why sample approval must be tied to the batch actually produced.
Both are defeated by the same unglamorous thing: independent eyes at the factory before the money is fully committed and before the container closes.
- Verify the exporter holds its own export licence and tax registration. Borrowed licences and third-party declarations are no longer tolerated at customs.
- Stage payments against inspection milestones, not against calendar dates.
- Check the goods before production, during production, and again at container loading.
- Match what is loaded to the approved sample and the exact model, not to the category.
- Keep the shipping documents in your own name where the Incoterm allows it.
We are the third model. We charge a stated fee on the order rather than taking a margin inside the price, and we do the checking at origin ourselves. That is a commercial position, not a virtue: it means our value has to show up in what we catch before shipment. This guide is written so you can hold us to the same questions you would ask anyone else.