The number on your invoice probably isn't the factory's number.

How the money works

There are only three ways an intermediary gets paid. Two of them are fine.

• Commission on order value. You agree a percentage. Simple, and it works — as long as the percentage you agreed is the only money changing hands. The failure mode is that it usually isn't.
• Fixed fee. You pay a defined amount per project or per month, and it doesn't move with the invoice. Structurally the cleanest, because the intermediary cannot profit from the gap between what you're shown and what the factory charges.
• Declared margin — a trading company. The intermediary buys from the factory and sells to you under its own name, with a margin it discloses. There is no pretence of neutrality, so there is no neutrality to betray. This is our model, and we say so on the invoice.
• And the fourth thing, which isn't a model. Undisclosed money from the supplier side, on top of whatever you agreed. That is not a pricing structure. It is a conflict of interest being paid for.

Where it hides

From their client files, not hypotheticals.

The international manufacturing lawyers at Harris Sliwoski publish what they find in their own client work. Four of their published matters are below — two of concealed markup, and two showing what else an opaque intermediary can cost you. The firm states it has altered the details enough to make the parties unidentifiable, so read these as a practitioner's account of what recurs, not as court records you can pull.

The double-dip

A European electronics company had a 5% commission agreement. Its agent was inflating factory prices by 35% and separately collecting 10–15% directly from the factories. It came to light only because an internal invoice was forwarded to the client by mistake.

The silent downgrade

A US home goods company overpaid roughly $2.4 million across three years, paying close to 40% above direct factory price to an agent presenting as a factory. It surfaced after a major quality failure — at which point it emerged the agent had quietly moved production to a lower-tier manufacturer to protect its own margin. The buyer's quality problem and the buyer's pricing problem had the same cause.

No one to sue

A European buyer rejected defective shoes and withheld payment. The party that sued them wasn't the factory — it was the agent, whose contract guaranteed payment regardless of product quality. With no contractual relationship to the manufacturer, the buyer settled at around 80% of invoice for shoes they could not sell.

Paying twice

An agent owed money to the factory actually making a retailer's Christmas lights. The factory withheld the shipment. The retailer paid the manufacturer directly to release it — and discovered factory prices were nearly 50% below what the agent had been charging. The stock arrived in November instead of May.

The firm states it uncovers at least five to ten of these agent-posing-as-a-factory cases every year. Separately, it reports that its own investigations consistently show agent markups of around 40%, and that deceptive markups often run from 30% to 40%.

Source. Dan Harris, “Sourcing Agent Deceptions: How to Spot, Stop and Prevent International Manufacturing Scams”, Harris Sliwoski LLP, China Law Blog, published 23 June 2025. Every case and every figure in this section comes from that single article, which carries no later modified date. The firm's own note on the examples: “The facts have been changed just enough to make it impossible to identify the parties involved.”

Why this got worse in 2026

An inflated invoice now costs you twice.

Duty is assessed on the invoice value you present at the border — not on what the factory was paid. That single fact turns a hidden markup from a margin problem into a customs problem.

The mechanics, illustrated at a round number. What follows is an illustration of the mechanism, not a claim about what a typical arrangement looks like. Take a $1,000,000 order routed through an intermediary taking 40% of the invoice value — the top of the 30–40% range Harris Sliwoski reports, and the figure used in their own worked example. The factory receives $600,000. The remaining $400,000 of that invoice bought you no goods, no tooling, no inspection and no freight. That is the old problem, and on its own it is bad enough.

The new problem sits on top of it. You declare $1,000,000, because that is the invoice you hold. Duty is calculated against the full declared value, so you also pay duty on the $400,000 — a second charge on money that never reached a manufacturer. Whatever rate your HS code carries, you are paying it on a number that was inflated for someone else's benefit, and you pay it again on every reorder.

We are deliberately not printing a total duty percentage here. The US stack moved repeatedly through 2026 — the IEEPA layer was held unlawful in Learning Resources v. United States on 20 February 2026, the Section 122 surcharge lapsed on 24 July 2026, Section 301 continues on a separate authority — so any single headline rate would be wrong for most readers and stale for the rest. The arithmetic above holds at any rate. Only the size of the second bill changes.

Source. The $1,000,000 / 40% / $600,000 example and the point that duty is assessed on the inflated invoice are Harris Sliwoski's, from the section “The Hidden Costs of Sourcing Agent Fraud” in Dan Harris, “Sourcing Agent Deceptions: How to Spot, Stop and Prevent International Manufacturing Scams”, Harris Sliwoski LLP, China Law Blog, published 23 June 2025. Two deliberate departures from it: we state the 40% as a share of invoice value, which is the only reading on which their $600,000 figure is arithmetically correct, and we do not carry over their “average China duties around 55%” or the $220,000 they derive from it, because that rate is stale for 2026 for the reasons set out above.

Audit your own arrangement

Six questions. The answers matter less than the willingness to answer.

1. What is the factory's price for this item? Not your price. Theirs.
2. Do you receive any payment, rebate, discount or benefit from the supplier side? Ask for it in writing.
3. What exchange rate do you apply, and what's the spread? Conversion is a common quiet skim.
4. Which legal entity manufactures my goods, and can I contract with them directly? If you have a name, you can check it on gsxt.gov.cn in about five minutes.
5. If I leave, what happens to my molds, tooling, specifications and supplier relationships?
6. Are you contractually entitled to payment even if the goods fail inspection?

Applying it to us

We're a trading company. Here's exactly what that means for your invoice.

We buy from the factory and sell to you under our own name. There is a margin, it is ours, and it is disclosed before you order. We do not take commission from suppliers, and we do not present ourselves as your neutral representative while being paid by the other side — that specific combination is what every case above has in common.

Worth being precise about the distinction. Harris Sliwoski's own framing is that their warning is aimed at fraudulent agents and those who misrepresent their compensation, and is explicitly not about legitimate, transparent sourcing agents providing real services at honest pricing. The line they draw is concealment versus disclosure — not agent versus trading company. We agree with them, which is inconvenient for anyone who would rather this were a turf war.

What you can ask us for

• Our margin, stated in writing before you commit. It is a percentage of order value on a sliding scale — the larger the order, the lower the percentage. You see the rate that applies to your order before you agree to anything, on its own line rather than folded into a supplier quote. The mechanism — what the rate pays for, and what moves it within the scale — is set out in full further down this page.
• Written exit terms. Molds, tooling and specifications leave with you.
• Our business licence details. So you can verify us on gsxt.gov.cn the same way we verify factories — our Unified Social Credit Code is published on this site, not held back until you ask nicely.

Engagement model

How this is priced.

• Single-quote audit One quote checked against the market. Free, no obligation, and we confirm the turnaround when you send it.
• Sourcing project Quoted per project, with our margin disclosed before you commit.
• Ongoing procurement Monthly retainer based on order volume and supplier count.

We publish no rate card because a rate card set against an unknown category and volume is a guess dressed as a number. You get a figure before you commit, in writing, and it does not move afterwards without your agreement.

What the sliding scale actually is

On goods we buy and resell, our margin is a percentage of the order value, and that percentage falls as the order value rises. That is the shape of it: the bigger the order, the smaller the slice we take of it. The reason is not generosity. Most of the work behind an order — finding and vetting the factory, arguing the specification into a form the factory will actually hold, setting up the inspection — costs roughly the same whether the run is small or large, so charging a flat percentage on a large order would be charging you for effort we did not spend.

What the rate is paying for

It is not a finder's fee for making an introduction. It covers the sourcing work — identifying candidate factories, verifying them, negotiating and then holding the price you were quoted; the supervision during production, and the coordination of inspection and of whatever corrective action the inspection produces; and the export paperwork that has to be right before anything moves.

It also covers a position we take that an agent does not. We are the seller of record, which means we have already bought the goods from the factory before we sell them to you. If a run comes out wrong, the deposit already placed, the rework, the delay and the argument with the manufacturer are ours to absorb and ours to fight — you have one counterparty, and it is a company you can pursue. That exposure is real, it is priced, and it is a large part of why the number is not simply a commission with a different name.

What moves it within the scale

Order value moves it most. After that: how many suppliers and how many SKUs sit behind a single order; how much of the specification is bespoke rather than something the factory already runs; how much inspection, testing and compliance work the category carries; whether this is a one-off or a repeating programme we can plan around; and the payment terms we are asked to carry. A repeating order of one well-understood item sits at the gentler end of the scale. A first production run of a bespoke product split across several factories sits at the other.

The applicable rate is put to you in writing before you commit, together with the scope it covers, and it does not change afterwards without your agreement. If the order changes enough to change the rate, we say so and you decide before anything proceeds — the rate is not something we reserve the right to revisit quietly once your deposit is in.

Service-only work is different

Where we are not buying and reselling — an inspection, a supplier search, a factory audit, procurement management across suppliers you already hold — there is a quoted fee for the work and no margin on goods, because there are no goods of ours involved. There is also no commission from the supplier side, on those engagements or on any other. We do not take money from both ends of the same transaction. That specific arrangement is what this entire page is about.

Where these facts come from

Every sourced claim on this page, and how to check it.

We would rather you verified this than trusted us. Each item below is checkable at source.

• The four cases and the 40% figure. Dan Harris, “Sourcing Agent Deceptions: How to Spot, Stop and Prevent International Manufacturing Scams”, Harris Sliwoski LLP, China Law Blog, 23 June 2025. Every case and figure we cite is in that single article — including the firm's statement that it uncovers at least five to ten such cases a year, and that its investigations consistently show markups of around 40% against a typical 30–40% range. The firm also states it has changed case details enough to prevent identification of the parties, so these are practitioners' accounts rather than public records.
• Their carve-out for honest agents. Also theirs, in the same article, and stated explicitly — the warning is aimed at fraudulent or misrepresenting intermediaries, not at transparent ones. We quote it because it is the fairest version of the argument, not the most flattering to us.
• The 2026 tariff position. IEEPA tariffs held unlawful in Learning Resources v. United States, decided 20 February 2026. The Section 122 surcharge lapsed at the end of its 150-day statutory limit on 24 July 2026. Section 301 continues under a separate authority with no expiry. See our tariffs page for the detail and the caveats.
• Our own arrangement. The only claim here you cannot check from a public source — so test it instead. Ask for the applicable margin rate in writing, or send us a competing factory-direct quote. Both are tests we can fail.