Many importers search for an agent that charges nothing, or that is paid only by the factory. It is worth knowing what that means. In most cases the factory builds the agent's payment into the price you pay, so someone is paying, and the agent has a reason to favour the factory that pays most.
This article does not repeat the definitions in why use an agent paid by you instead of by the factory. It shows what changes in practice and how to tell which setup you are in.
Three set-ups you will meet
- You pay the agent. The factory invoices you directly and pays the agent nothing.
- The factory pays the agent, usually as a share of the order or a flat sum per shipment. The agent charges you little or nothing.
- Both pay. The agent charges you a fee and also takes a payment from the factory, often undisclosed.
Why a free or factory-paid agent is not free
A factory that pays the agent has to recover the cost somewhere. It can build it into the price, trim the specification or move the order to a cheaper batch. You may never see the line item. What you can see is the incentive: the agent earns when the order is placed and has less reason to hold goods back after a failed inspection.
That does not make every factory-paid agent dishonest. It means you cannot rely on their advice the way you can on someone paid by you.
What changes in a real order
Picture two suppliers for the same product. One is slightly better on quality and the other pays the agent. A factory-paid agent has a reason to describe the second as the better fit. When the goods are tested and come out marginal, the same agent has a reason to call it acceptable. You would be relying on advice from a party whose income depends on the order going through.
An agent paid only by you has no reason to prefer either. It can say that the first supplier is better and that the second one failed.
How to tell who pays
- Ask directly, in writing: does the agent or any related party receive money, gifts or other benefits from any supplier?
- Check where your payment goes. If you are asked to pay the agent for the goods, the agent is a trader. If you pay the factory directly, the money trail is cleaner.
- Ask whether any supplier invoice contains a line that is not for goods.
- Read the agent's contract for any clause permitting payment from suppliers. See what a sourcing agent contract should include.
Our guide how do I know my agent is not taking hidden payments gives a fuller checklist, including what to do if you find out afterwards.
If you still want a factory-paid arrangement
Some buyers accept it for low-value or routine goods. If you do, make it explicit in writing, ask what the factory pays, hold your own inspection separate from the agent, and keep the right to name the inspector. Never let one party act as both your advisor and the factory's salesperson without knowing.
Why the question gets asked this way
Buyers often assume a factory-paid agent is a bargain, since they pay nothing up front. The searches we see are usually from importers trying to avoid a fee. That is understandable, especially for a first order. But a fee is a visible cost, and a hidden one is still a cost. The better question is not whether you pay, but whether you know what you are paying for and who the agent answers to.
If you want to keep your own costs low, ask for a narrow scope with a fixed fee, such as supplier vetting only, and add services later. That keeps the agent paid by you, with no hidden incentive.
How we work
We are paid by you, and only by you. We take nothing from factories, you pay the factory directly, and the fee is one written figure agreed in advance. That lets us tell you when a supplier is not good enough. Book a free sourcing review and ask us to put this in writing.