China Sourcing Agent vs Trading Company

Compare the full cost of a sourcing arrangement, including service fees, merchandise price, customs treatment and tooling ownership. In the conditional examples below, a 20% duty assumption and a 17% combined price spread produce a 7.2%–12.0% cost difference. Use your quoted prices and applicable tariff treatment to make the same comparison for an actual order. Start with the agency or sales agreement, original factory quote, itemized fees and independent inspection scope.

Counterparty Legal & Financial Matrix: Independent Sourcing Agent vs Trading Company vs Kickback Middleman

In China export procurement, the label printed on a supplier’s website or business card (“sourcing agency,” “supply chain partner,” or “group manufacturer”) carries zero legal weight. Counterparty rights, factory price transparency, and anti-kickback remedies are governed by which specific contract chapter of Book Three (Contracts) of the Civil Code of the People’s Republic of China (adopted May 28, 2020; effective January 1, 2021 under Article 1260, archived via the State Council official portal) governs the written agreement.

Why Statutory Contract Classification Determines Your Real Cost

Before ranking commission percentages on our China sourcing agent fees worksheet, verify which statutory role the counterparty occupies under Chinese contract law:

1. The Trading Company Seller (PRC Civil Code Article 595):
   • Under Article 595, a sales contract transfers ownership of goods from seller to buyer in exchange for a price. When a foreign importer accepts a single pro forma invoice and commercial invoice from a Shenzhen, Ningbo, or Yiwu trading company (外贸公司 or 进出口有限公司), no agency relationship exists.
   • Because the trading company is legally the seller, adding 12% to 25% onto the factory’s gate price is lawful commercial margin—not a breach of duty. The buyer has no right under Article 595 to demand the factory’s name, audit the raw RMB purchase order, or claim China’s 9%–13% export VAT refund (出口退税).
2. The Bona Fide Buying Agent (PRC Civil Code Articles 919–936):
   • Under Article 919, an entrustment contract binds the agent to handle procurement matters on behalf of the principal (buyer). Article 922 requires the agent to follow the buyer’s explicit instructions, Article 923 requires personal performance (barring unauthorized sub-entrustment to a secondary broker), and Article 924 mandates full reporting on supplier quotes and order execution upon request.
   • Crucially, Article 927 establishes a strict fiduciary property-turnover rule: “An agent shall hand over to the principal any property acquired in handling the entrusted matter.” Under a written Entrustment Contract, any cash rebate, volume discount, free production overage, golden sample, or paid mold acquired from the factory belongs by statute to the buyer.
   • Furthermore, Article 929 differentiates between paid (non-gratuitous) and unpaid (gratuitous) entrustment: when the buyer pays an explicit commission under Article 928, the agent is legally liable for losses caused by ordinary fault (such as failing to verify a supplier’s manufacturing license or falsifying an in-line check). When an agent claims to work “for free” (0% fee to the buyer), Article 929 lowers the agent’s statutory liability to intentional misconduct or gross negligence.
3. The Broker (Articles 951–960) and the Intermediary (Articles 961–966):
   • Under a Brokerage Contract (Article 951), a broker trades in its own name for a client and bears operating expenses by default (Article 952). Under Article 955, if a broker buys goods at a price lower than the target price set by the client, that price savings belongs to the client unless the contract explicitly grants the difference to the broker.
   • Under an Intermediary Contract (Article 961), a middleman introduces contracting parties or facilitates contract signing. Under Article 962, if the middleman intentionally conceals material facts (such as a secret price-padding arrangement with the factory) or supplies false supplier data that harms the buyer, the middleman forfeits all right to remuneration and is liable for resulting damages.

Selection takeaway: Never hire a China sourcing representative without naming PRC Civil Code Chapter XXIII (Entrustment Contract, Articles 919–936) in the written agreement; if the counterparty insists on issuing a single commercial invoice in its own name without disclosing the factory’s raw RMB contract, you are buying from an Article 595 trading reseller, not a fiduciary agent.

Worked Landed-Cost & Customs Valuation Audit Across $10,000, $50,000, and $150,000 Order Profiles

The financial gap between an independent buying agent and a trading company extends beyond the headline fee percentage. Under U.S. customs valuation law—codified in 19 U.S.C. § 1401a (Section 402 of the Tariff Act of 1930) and implemented through 19 CFR § 141.86, 19 CFR § 152.102, and 19 CFR § 152.103—how a middleman’s compensation and production tooling are structured directly alters the dutiable transaction value declared to U.S. Customs and Border Protection (CBP).

Statutory U.S. Customs Valuation Rules Governing Commissions and Tooling

1. Dutiable Selling Commissions vs Non-Dutiable Bona Fide Buying Commissions (19 CFR § 152.102(b) & § 152.103(b)(1)(ii)):
   • Under 19 CFR § 152.103(a)(1), the transaction value of imported merchandise is the “price actually paid or payable for the merchandise when sold for exportation to the United States”, plus mandatory statutory additions listed in 19 CFR § 152.103(b)(1) and 19 U.S.C. § 1401a(b)(1).
   • Under 19 CFR § 152.103(b)(1)(ii), the importer must add to transaction value “any selling commission incurred by the buyer with respect to the imported merchandise.” 19 CFR § 152.102(b) defines a selling commission as “any commission paid to the seller’s agent, who is related to or controlled by, or works for or on behalf of, the manufacturer or the seller.”
   • When an importer buys from a trading company, the trader’s gross price spread is embedded directly inside the commercial invoice unit price (price actually paid or payable). The importer therefore pays U.S. ad valorem customs duties (including base Normal Trade Relations / MFN duty plus Section 301 China tariffs) on the trading company’s markup. Similarly, if a purported “buying agent” shares common ownership with the factory or collects a commission/kickback from the manufacturer, CBP reclassifies the agent’s fee as a dutiable selling commission or part of dutiable merchandise value.
   • Conversely, a bona fide buying commission paid to an independent agent acting exclusively under the buyer’s control (PRC Civil Code Art. 919–927)—where the agent never takes title on its own account, receives zero rebate from the seller (Art. 927), and its commission is either billed on a separate service invoice or separately itemized on the commercial invoice under 19 CFR § 141.86(a)(8)—is excluded from dutiable transaction value.
   • Note also that under 19 CFR § 152.103(a)(4), any rebate or decrease in price effected between buyer and seller after the date of importation is disregarded by CBP in determining transaction value.
2. Production Tooling, Dies, and Molds as Dutiable “Assists” (19 CFR § 152.102(a)(1)(ii) & § 152.103(d)(2), (e)):
   • Under 19 CFR § 152.102(a)(1)(ii), tools, dies, molds, and similar production items supplied directly or indirectly by the buyer (free of charge or at reduced cost) for use in producing exported goods are statutory assists.
   • Under 19 CFR § 141.86(a)(11), every commercial invoice must disclose all assists (such as dies, molds, tools, and foreign engineering work) not included in the unit invoice price. Under 19 CFR § 152.103(d)(2), the dutiable value of a mold assist is its acquisition or production cost plus transport to the foreign factory (engineering or CAD design performed inside the United States is excluded under § 152.102(a)(1)(iv) and § 152.103(d)(2) Example 1).
   • Under 19 CFR § 152.103(e)(1)–(2), the importer may apportion the dutiable value of the mold assist in accordance with Generally Accepted Accounting Principles (GAAP) over: (i) the first shipment (full lump-sum declaration), (ii) the number of units produced up to the time of the first shipment, or (iii) the entire anticipated production volume under the contract.

Core Landed-Cost & Customs Valuation Formulas

1. Model A Dutiable Transaction Value (Independent Buying Agent — Written Entrustment Contract):
   • Dutiable Value_A = True Factory FOB Merchandise Value + Apportioned Tooling Assist (19 CFR 152.103(d)(2))
   • (Bona fide buying commission and independent third-party inspection fees are excluded from Dutiable Value_A when separately invoiced/itemized under 19 CFR § 141.86(a)(8)).
2. Model B Dutiable Transaction Value (Trading Company or Kickback Middleman):
   • Dutiable Value_B = True Factory FOB x (1 + Trader Markup % + Factory Kickback Cushion %) + Marked-Up Tooling Assist
3. Excess U.S. Customs Tariff Paid on Middleman Spread:
   • Excess Tariff Paid = (Dutiable Value_B - Dutiable Value_A) x Combined Ad Valorem Duty Rate
4. Total Out-of-Pocket Landed Cost (Ex-International Freight):
   • Total Cost_A = True Factory FOB + Tooling Assist + Non-Dutiable Buying Commission + Independent QC Fee + (Dutiable Value_A x Duty Rate)
   • Total Cost_B = Invoiced Trader FOB + Marked-Up Tooling Assist + (Dutiable Value_B x Duty Rate)

Conditional 3-Tier Cost & Customs Comparison ($10,000, $50,000, and $150,000 Profiles)

The table below evaluates three conditional import profiles for custom-molded commercial hardware imported from Ningbo/Shenzhen to the United States at a baseline $10.00/unit true factory FOB price (EXW RMB inclusive of 13% VAT plus China origin port drayage, net of export VAT rebate) and a 20.0% combined U.S. ad valorem customs duty rate (representing a 3.9% base MFN rate plus 16.1% effective Section 301 tariff benchmark; actual duty depends on your specific 10-digit HTSUS classification).

• Model A (Independent Buying Agent — Art. 919–927 Entrustment): Charges a stepped transparent buying commission of 8.0% on Tier 1 ($10,000), 6.0% on Tier 2 ($50,000), and 5.0% (or a negotiated $6,000 fixed project retainer) on Tier 3 ($150,000), plus at-cost third-party ISO 2859-1 Level II pre-shipment inspection ($300 per man-day on Tiers 1–2; $600 for 2 man-days on Tier 3) under Article 921.
• Model B (Trading Company / Kickback Middleman — Art. 595 Sales / Violated Art. 962): Quotes a bundled USD FOB price embedding a 12.0% trader markup plus a 5.0% undisclosed factory rebate cushion (17.0% combined FOB inflation, raising invoice price from $10.00/unit to $11.70/unit), and marks up Tier 2 custom mold fabrication by 20.0% ($4,800 vs $4,000 actual mold shop cost).

Step-by-Step Audit of the Three Order Profiles

• Tier 1 ($10,000 Trial Order — Why an 8% Transparent Agent Beats a “No-Fee” Quote by $940):
  • First-time importers frequently reject a transparent buying agent quoting an 8.0% commission ($800) plus $300 for an independent Code J (n = 80) pre-shipment inspection ($1,100 in explicit service lines) in favor of a trading company or “free/low-fee” middleman quoting $11.70/unit FOB with “zero commission.”
  • In reality, Model B’s 17.0% embedded spread adds $1,700 to the merchandise invoice and forces the importer to pay $2,340 in U.S. customs duties instead of $2,000 (+$340 in extra tariff paid to CBP on the middleman’s margin). Model A delivers verified factory privity and independent AQL 2.5 inspection at $13,100 ($13.10/unit), saving $940 compared to Model B’s $14,040 ($14.04/unit).
• Tier 2 ($50,000 Scaling Order + $4,000 Custom Injection Mold Assist):
  • Scaling to 5,000 units with a dedicated steel injection mold introduces two compounding exposures under Model B: assist valuation inflation and captive tooling lock-in.
  • Under 19 CFR § 152.103(d)(2) and § 141.86(a)(11), the custom mold is a dutiable assist. If apportioned 100% onto the first scaling shipment under 19 CFR § 152.103(e)(1), Model A declares $50,000 FOB plus the $4,000 at-cost mold ($54,000 dutiable base → $10,800 duty, or $0.80/unit in amortized mold cost plus $0.16/unit assist duty; if apportioned over 10,000 anticipated units under § 152.103(e)(2), only $2,000 of the assist attaches to the first 5,000-unit entry).
  • Under Model B, the trading company marks up both the merchandise ($58,500) and the mold ($4,800), raising the dutiable base to $63,300 ($12,660 duty, including +$1,860 in excess tariff) for a total of $75,960 vs $68,100 (+$7,860 overpayment). Worse, because the trading company contracted the mold shop in its own name, the buyer cannot move the $4,800 mold to another factory when prices rise on Tier 3.
• Tier 3 ($150,000 Repeat Container Program — Percentage Compression vs Fixed Retainer):
  • On a 15,000-unit full-container reorder, supplier vetting and sample development are already complete. An independent buying agent either steps down its commission rate to 5.0% ($7,500) or converts to a fixed container management retainer ($6,000) plus 2 man-days ($600) for a Code M (n = 315) inspection.
  • A trading company or kickback middleman locked into a 17.0% unit spread quietly extracts $25,500 in hidden margin plus $5,100 in excess U.S. tariff ($35,100 vs $30,000 duty), costing the buyer $22,500 to $24,000 per container.

Calculation takeaway: Always model sourcing fees together with U.S. ad valorem tariffs in your landed cost calculation worksheet and landed cost calculator: every $1.00 of hidden trading markup or factory kickback baked into the commercial invoice FOB price costs $1.20 out of pocket at a 20% tariff rate, whereas a properly documented buying agency commission (19 CFR § 152.102(b)) carries zero customs duty.

Four-Gate Counterparty Audit: Raw EXW RMB Quotes, Tripartite Contracts, NNN Tooling Bailment, and Export VAT

To qualify a buying commission as non-dutiable under 19 U.S.C. § 1401a and prevent off-book factory kickbacks in China, importers must enforce four documentary verification gates before wiring any deposit.

Gate 1: Bilingual Entrustment Contract (Art. 919 / 927) & Corporate Registry Match

1. Verify Entity Registration Before Signing:
   • If the sourcing agent contracts through a Hong Kong company, run the 8-digit Business Registration Number (BRN) and match the certificate name, Companies Register record, contract party, and bank beneficiary using our Hong Kong sourcing agent verification guide.
   • If the agent or factory is a mainland Chinese enterprise, verify its 18-digit Unified Social Credit Code (统一社会信用代码) and registered business scope (经营范围) via our Chinese supplier verification procedure. Confirm that the shortlisted factory’s business scope explicitly lists manufacturing/processing (生产, 加工, or 制造), not solely wholesale or import/export trade (批发, 贸易, or 进出口).
2. Execute an Explicit PRC Civil Code Chapter XXIII Entrustment Agreement (委托合同):
   • Cite PRC Civil Code Articles 919, 922, 923, 924, 927, 928, and 929 directly in the contract text.
   • Include a mandatory Article 927 Anti-Kickback & Rebate Turnover Clause stating that 100% of any vendor discount, cash rebate (回扣), sample credit, or tax-refund sharing belongs to the Principal (Buyer), and stipulate contractual liquidated damages (forfeiture of all commission under Article 962 principles plus 3x the undisclosed payment) if any unapproved payment flows between the factory and the agent.

Gate 2: Raw Factory EXW RMB (13% VAT) Quote & Export VAT Rebate Bridge

Never allow a sourcing agent to present a self-typed USD spreadsheet as “factory pricing.” Exercise your statutory reporting right under PRC Civil Code Article 924 to require:

1. Three Original Factory Quotation Sheets (原始出厂含税报价单):
   • Each quote must be issued on the manufacturer’s own letterhead in Chinese Yuan (RMB), stamped with the factory’s official company chop (公章) or quotation chop (报价专用章), stating the Ex-Works (EXW) unit price inclusive of 13% PRC Value-Added Tax (含13%增值税出厂价), minimum order quantity (MOQ), lead time, and packaging specs recorded on your wholesale RFQ template.
2. Transparent EXW RMB to FOB USD Bridge Formula:
   • Reconcile the factory’s domestic 13% VAT quote against the export USD FOB commercial invoice using the export VAT rebate bridge:
   • Net Export FOB (USD) = [Factory EXW (RMB incl. 13% VAT) + Origin Port Drayage & Customs Docs (RMB) - Export VAT Rebate Credited (RMB)] / Agreed Spot FX Rate (RMB/USD)
   • How Export VAT Rebates (出口退税) Work: When manufactured goods are formally exported from China accompanied by a 13% special VAT invoice (增值税专用发票), China’s tax authority refunds a statutory percentage of the VAT base (commonly 9% or 13% depending on the product’s HS code). Trading companies routinely charge foreign buyers the full 13% tax-inclusive price plus a 12% markup while pocketing the 9%–13% export tax rebate internally. Under an open-book Article 927 Entrustment Contract, the export VAT rebate is explicitly netted against the factory price or itemized on the settlement sheet.

Gate 3: Tripartite Purchase Contract, China Trademark Filing & NNN Tooling Bailment

According to the U.S. International Trade Administration’s China Country Commercial Guide on Protecting Intellectual Property, China operates a first-to-file trademark registration system where bad-faith actors frequently register foreign buyers’ marks to hold exports hostage, and U.S. IP registrations confer no automatic rights in mainland China. Moreover, under U.S. ITA Common Export Documents standards, the final Commercial Invoice and Packing List establish the legal audit trail between seller and buyer.

To prevent a middleman or factory from capturing your custom molds or selling replicas of your product on 1688.com:

1. Sign a Tripartite Purchase & Entrustment Contract (PRC Civil Code Article 925):
   • Structure the production contract among Party A (Foreign Buyer / Principal), Party B (Mainland Manufacturing Factory / Seller), and Party C (Independent Sourcing Agent / Supervisor).
   • Under Article 925, because the factory has direct notice of the agency relationship and signs directly with the buyer, the contract binds the buyer and the factory directly. The buyer wires the 30% deposit and 70% balance directly to the factory’s verified bank account (or through an itemized dual-invoice structure) and pays the agent’s 5%–8% commission on a separate invoice.
2. Execute a Bilingual NNN (Non-Disclosure, Non-Use, Non-Circumvention) & Tooling Bailment Deed:
   • Standard Western NDAs only restrict public disclosure. A China-enforceable NNN Agreement bars the factory and agent from using your CAD files, molds, or bill of materials to produce goods for any third party (Non-Use), disclosing specs to sub-contractors (Non-Disclosure), or soliciting your customers (Non-Circumvention).
   • Attach a Tooling Ownership & Bailment Schedule covering all 19 CFR § 152.102(a)(1)(ii) molds and dies: state that 100% legal title vests in the Buyer upon payment, require permanent steel stamping ("PROPERTY OF [BUYER LEGAL NAME] - MOLD #[ID]"), and grant the Buyer the unconditional right to retrieve the mold within 5 working days without penalty.

Dominant Failure Modes, Statutory Violations & Preventive Controls

Buying takeaway: Lock down the counterparty chain in three sequential documents before any deposit leaves your bank: (1) a bilingual PRC Civil Code Art. 919–927 Buying Agency / Entrustment Agreement, (2) three chopped EXW RMB (13% VAT) factory quotes reconciled to the export VAT rebate, and (3) a tripartite Art. 925 purchase and tooling bailment contract signed directly by the manufacturer.

ISO 2859-1 / ANSI Z1.4 General Inspection Level II (AQL 2.5 / 4.0) Release Gates

Even when a sourcing agent operates under a transparent 5%–8% commission, a structural conflict of interest arises at the end of production: if the agent’s commission (PRC Civil Code Article 928) is payable only upon shipment—or if an unvetted middleman is waiting on a 5% factory kickback—delaying a shipment to rework defective units delays the middleman’s own payday.

To eliminate this conflict, separate production follow-up (performed by the sourcing agent) from final lot release authority (held exclusively by the buyer based on an independent third-party Pre-Shipment Inspection report).

Statistical Equivalence & Operational Protocol (NIST / ISO 2859-1 / ANSI Z1.4)

As documented by the National Institute of Standards and Technology (NIST) in NIST/SEMATECH e-Handbook Section 6.2.1 (Acceptance Sampling) and Section 6.2.3.1 (Choosing a Sampling Plan: MIL-STD-105D / ANSI Z1.4 / ISO 2859), attribute lot acceptance sampling tables across MIL-STD-105D / MIL-STD-105E, ANSI/ASQ Z1.4, and ISO 2859-1 share the exact same mathematical master tables (Table I for Sample Size Code Letters and Table II-A for Single Sampling Plans under Normal Inspection).

When 80% to 100% of the production lot is manufactured, assembled, and packed into export cartons, an independent inspector draws a random sample (n) across the cartons according to General Inspection Level II (Normal Single Sampling) and evaluates units against three defect severity classes (detailed in our pre-shipment inspection in China guide and quality control inspection standard):

• Critical Defects (AQL 0 / Zero Tolerance): Any defect that poses a safety hazard to the end user or violates mandatory destination regulations (e.g., sharp burrs on commercial kitchen hardware, electrical short risk, missing mandatory country-of-origin marking). Finding 1 Critical defect (Re = 1) automatically rejects the entire lot.
• Major Defects (AQL 2.5 Standard Commercial Tolerance, or AQL 1.5 Tightened): Functional, dimensional, or structural failures that reduce usability, durability, or marketability (e.g., hinge misalignment, failed drop test, dimensional deviation exceeding drawing tolerance).
• Minor Defects (AQL 4.0 Standard Commercial Tolerance): Slight workmanship or cosmetic departures from the approved golden sample that do not impair function or saleability (e.g., minor surface scratch < 3 mm on an interior non-visible surface).

Master Lookup Table: ISO 2859-1 / ANSI Z1.4 General Inspection Level II (Normal Single Sampling)

How to Enforce the Ac / Re Payment Hold Across the Three Order Tiers

1. Tier 1 (1,000 units → Code J, n = 80 units, 1 Inspector Man-Day = $300):
   • The inspector pulls 80 units at random from packed cartons. Under AQL 2.5 (Major) and AQL 4.0 (Minor), the lot passes only if Critical defects equal 0, Major defects are 5 or fewer (Ac = 5), and Minor defects are 7 or fewer (Ac = 7).
   • The moment the inspector records a 6th Major defect (Re = 6) or an 8th Minor defect (Re = 8), the lot fails statistically.
2. Tier 2 (5,000 units → Code L, n = 200 units, 1 Inspector Man-Day = $300):
   • The inspector pulls 200 units. The lot passes at <= 10 Major defects (Ac = 10) and <= 14 Minor defects (Ac = 14), and fails automatically at 11 Major (Re = 11) or 15 Minor (Re = 15) defects.
3. Tier 3 (15,000 units → Code M, n = 315 units, 2 Inspector Man-Days = $600):
   • The inspector pulls 315 units. The lot passes at <= 14 Major defects (Ac = 14) and <= 21 Minor defects (Ac = 21), and fails automatically at 15 Major (Re = 15) or 22 Minor (Re = 22) defects.
4. Mandatory Failed-Lot Hold & Re-Inspection Chargeback:
   • Write into the tripartite contract (PRC Civil Code Art. 596 & Art. 922) that if any defect class reaches Re, the buyer freezes the 70% T/T balance wire and places a booking hold on the freight forwarder. The factory must perform 100% sorting and rework of all cartons and pay the $300 re-inspection man-day fee before the lot is re-sampled.

Key takeaway: Never delegate final shipment release authority to a commission agent or trading company; write ISO 2859-1 General Inspection Level II (AQL 0 Critical / 2.5 Major / 4.0 Minor) directly into the factory purchase contract and make the 70% balance wire strictly conditional on a signed third-party PASS report.

Engineering Rules of Thumb and Copyable Commission & Counterparty Audit Worksheet

Apply these four quantitative threshold rules of thumb when screening sourcing candidates and supplier quotes:

1. Rule of Thumb 1 (The < 3% Commission Kickback Warning Threshold): If a China sourcing agent advertises a commission rate below 3.0% (or "0% free sourcing") on orders under $50,000 while refusing to hand over raw factory EXW RMB (13% VAT) quotes with the factory’s 18-digit Unified Social Credit Code, treat the counterparty as a disguised trading reseller or kickback broker embedding 10%–17% into the unit price (PRC Civil Code Art. 595 / Art. 962).
2. Rule of Thumb 2 (The 1.20x Tariff Multiplier on Bundled FOB Markups): At a 20.0% combined U.S. customs duty rate (19 U.S.C. § 1401a & 19 CFR § 152.103), every $1,000 of trading company markup or factory kickback bundled inside the commercial invoice FOB price costs the importer $1,200 out of pocket ($1,000 price spread + $200 excess tariff), whereas $1,000 paid as a documented, separately invoiced bona fide buying commission (19 CFR § 152.102(b) & § 141.86(a)(8)) costs $1,000 flat ($0 customs duty).
3. Rule of Thumb 3 (The >$50,000 Commission Compression / Retainer Threshold): Once repeat order volume exceeds $50,000 to $150,000 per SKU run, auditing and follow-up labor scales with inspection man-days rather than order value. Step the buying agency commission down from 8% (trial) to 5%–6% (scaling) or transition to a fixed project retainer ($5,000–$6,000 per container) so repeat production does not leak $20,000+ per shipment.
4. Rule of Thumb 4 (The 0 / 2.5 / 4.0 AQL Balance-Wire Freeze Threshold): If an ISO 2859-1 Level II pre-shipment inspection records >= 1 Critical defect, >= 6 Major defects on a 1,000-unit lot (Code J, n = 80), >= 11 Major defects on a 5,000-unit lot (Code L, n = 200), or >= 15 Major defects on a 15,000-unit lot (Code M, n = 315), freeze the 70% balance T/T wire immediately and require 100% factory rework plus a vendor-paid re-inspection.

Copyable Buyer Counterparty, Commission, Customs Assist & AQL Audit Worksheet

Copy the verification worksheet below into your procurement file before selecting a sourcing agent or trading counterparty. Record only verified figures and statutory identifiers printed on the counterparty’s written contract, raw factory RMB quotation sheets, or customs broker entry file. Browse our full China sourcing guide library for companion verification checklists.