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China sourcing

What a sourcing agent costs, and the three ways they get paid

Commission, retainer or margin — each one points the agent's interest somewhere different. Knowing which model you are in tells you what advice you are getting.

France → China

Asking an agent what they charge is the wrong first question. Ask how they are paid. The mechanism, far more than the amount, decides whether their interests point the same way as yours.

Commission on order value

The most common model, and the most misaligned. The agent takes a percentage of what you spend, which means their income rises when your price rises. They will still negotiate — a reputation is worth more than one order — but they have no structural reason to push the last few percent out of a quote, and every reason to encourage a larger order.

It works best when you already know your target price. It works worst when you are relying on the agent to tell you what the price should be.

Fixed fee, or a retainer

You pay for time and expertise, independent of what you end up buying. This aligns the interests properly: the agent gains nothing from a higher price and nothing from a bigger order, so their advice can include “do not do this”. It is the only model under which an agent can tell you your product should not be made in China at all.

It is also the model buyers resist, because the cost appears before the result. That resistance is understandable and usually expensive.

Margin — the one to be clear about

The agent buys from the factory and resells to you. You see one price. There is nothing improper in this and it can be entirely efficient; what matters is whether it is disclosed. If an intermediary presents themselves as an agent working on commission while also taking a margin, you are paying twice and you cannot see the factory price at all.

The question that settles it

Ask, in writing: do you receive anything at all from the supplier — commission, rebate, referral fee, year-end bonus? The answer is yes far more often than the market admits. A supplier-side rebate is not necessarily disqualifying, but you have to know it exists, because it explains why one factory keeps getting recommended.

A practical arrangement that works: a fixed fee for the search and qualification phase, where you need honest advice, and a smaller commission afterwards on repeat orders, where you need someone to stay engaged. It costs more than pure commission and less than either mistake.

Questions we get on this.

Is it normal for an agent to be paid by the factory?

It happens often. It is only a problem when it is not disclosed, because it silently changes which factories you get shown. Ask the question in writing and keep the answer.