Three different models sit between a wholesale buyer and a Chinese factory, and confusing one for another is where a lot of first-time importers get burned — not because any model is inherently bad, but because each shifts risk and cost differently.
Trading company: convenience, opaque margin
A trading company buys inventory from factories and resells it, meaning the buyer never sees the actual factory or the real unit cost — the markup is baked into the price with no visibility into how much of it is margin versus legitimate service. It's the lowest-effort option and often the least transparent one on price.
Sourcing agent: representation, disclosed fee
A sourcing agent works on the buyer's behalf for a disclosed commission, typically negotiating directly with named factories, arranging inspection and managing logistics — the buyer sees the real factory and the real FOB price, with the agent's fee itemized separately. This model trades a visible fee for real transparency and leverage over quality.
Going direct: full control, full responsibility
Buying directly from a factory removes intermediary fees entirely, but it also removes the vetting, negotiation experience and inspection infrastructure an agent brings — a buyer going direct needs the in-house expertise to do factory verification, quality inspection and logistics coordination themselves, or they're absorbing all of an agent's risk without any of the protection.
There's no universally right model — there's a right model for a given buyer's volume, in-house expertise and risk tolerance. What matters is picking one deliberately, not defaulting into whichever supplier reached out first.