A China buying agent is supposed to be your agent: a person or company in China that acts on your instructions when you buy from a factory, and that you pay. In US customs that label has a specific meaning. CBP doesn't go by what the agent calls itself. It looks at who controls the agent and who pays them.
This is easier to sort out than it sounds. Keep your factory. Find out which side your agent is on, and get it in writing before the next order.
What does "buying agent" mean to CBP?
CBP has a whole Informed Compliance Publication on this, "Buying and Selling Commissions" (October 2006). It describes a buying agent as someone acting on behalf of the importer, and mainly for the importer's benefit, with the importer in control of the purchase. A selling agent is the mirror image. It works for the factory or the seller.
The difference matters for the value you declare. Under 19 U.S.C. § 1401a, a selling commission the importer pays is added to the value of the goods. A commission paid to a real buying agent is not, as long as it isn't folded into what you pay the seller.
The rule has a plain reason behind it. Duty is supposed to be charged on what the goods really cost. If part of the money you send ends up back with the seller, it's part of the price, whatever the invoice calls it. That keeps the declared value honest, and it keeps an importer who declares the full price from losing to one who hides part of it.
How does CBP tell a buying agent from a selling agent?
It comes down to control. CBP's publication says the main question is whether you, the importer, have the right to control what the agent does. You decide which factory and what gets bought. The agent carries out your instructions. The more the agent decides on its own, the less it looks like your agent.
The publication lists the questions courts have asked:
- Who carries the risk if the goods are lost or damaged? A buying agent usually doesn't.
- Who pays for shipping and handling? A buying agent usually doesn't.
- Who controls how and when the factory gets paid? A buying agent usually doesn't.
- Could you buy from the factory without the agent? If you can't, the agent may be working for the seller.
- Is the agent running its own business, mainly for its own benefit?
- Is the agent financially separate from the factory?
- What do the documents show? Who is named as what, and is there a written buying agency agreement?
A few lines in that publication are worth reading twice. Calling someone a buying agent doesn't make them one. A signed buying agency agreement doesn't settle it either, if the agent picks the factory while the agreement says you do. And the importer carries the burden of proving the agency is real.
What does that look like from inside a Chinese factory?
Most suppliers are fine with an importer who wants this clear. The trouble sits in how the money moves, and you can see it from the factory side if you ask.
Some agents are paid by the factory, as a percentage of your order. That agent may work hard for you. Still, the factory pays them, and the bigger your order, the more they earn. In CBP's terms that starts to look like a selling agent.
Other agents are really the seller. If the "agent" issues the invoice, takes your payment and pays the factory out of it, they're a trading company. What they call a fee may be their markup, and that's part of the price.
Sometimes the agent is tied to the factory as a relative of the owner or as a partner or shareholder. CBP's publication says that doesn't rule out a buying agency, but it gets a closer look. If every order goes to that one related factory, it's much harder to show the agent works for you.
None of these setups is automatically wrong. You just need to know which one you have before you declare the value, because the answer changes what goes on the entry.
What paperwork shows who your agent works for?
CBP's publication says the cleanest setup is two invoices. The factory invoices you for the goods. The agent invoices you separately for its service. You pay each one directly.
Beyond that, keep:
- The factory's own invoice, showing who the seller is and the price you paid for the goods.
- A written agreement with your agent that says what they do for you and how they're paid.
- Proof that you actually run it that way. Your written approval on orders and your choice of factory should be on file, and your payments should go straight to the factory.
- The agent's invoices and your payment records for their fees.
If the invoice comes from a company that isn't the one making your goods, sort that out too. We wrote about matching the invoice to the license and the bank account in how to prove who made your goods in China.
What if your agent turns out to be paid by the factory?
Then talk to your customs broker before the next entry. If the agent is really a selling agent or the seller, their commission or markup is likely part of the value, and your broker needs to know.
Be honest with yourself about the cost. When the factory pays the agent, that money sits inside your unit price, so you never see it as a line. Paying an agent yourself puts it on your own books, and the total may not go down. Getting the papers straight also takes some work with your agent and your broker.
For the record, CBP's publication says that declaring non-dutiable buying commissions without the evidence to back it up isn't reasonable care and can lead to a penalty.
Where does China Agent fit?
We work for importers who already have a supplier or factory in China. You pay us a fixed fee, and nobody else pays us anything. No sourcing, no commissions.
Our work is face to face with your factories. We find out who really makes your goods, negotiate your terms with the factory, stand with you in a dispute and keep the China-side papers in order. There are a few ways in.
You have one supplier and one question: is this the company I think it is? Start with the $95 Supplier Reality Check. You get a written answer on one supplier you already chose, in two business days.
You want the suppliers you already have watched between shipments. That's Monthly Support. Our people read what the factory sends in Chinese, chase missing papers, keep the China-side record current and go to the factory. Visibility is $995 a month plus $1,000 setup, month to month, for up to three suppliers with one factory visit a month.
You want a contract the factory will be held to. That's our contracts work. We negotiate the terms with your factory and put them in a contract built to hold up in China.
You want your own person in that city, on salary, doing what you direct. That's Employee in China. The person works only for you and is paid a salary. They get no cut of your orders. We employ them under Chinese law through our hubs, legally registered in each city. It's $595 a month without an office, $895 with a seat in our office, or $1,595 with a Chinese law firm on retainer. Setup is from $1,800. Payroll and costs paid out in China run at cost plus a 10% handling fee for bank transfers, currency conversion, government and related fees.
Limits
China Agent works on the China side. We verify what's true there, and we prepare and draft the papers. Your licensed customs broker files, and you, as importer of record, certify. We don't file entries or give customs valuation or legal advice, and we can't promise you any CBP outcome. How any fee you pay in China is declared, ours included, is a question for your licensed broker or customs counsel.
What to do
Pull your last order and list every payment that went to anyone other than the factory. Next to each one, write who that party works for and who pays them. Then ask your agent, in writing, whether they get anything from the factory. Take both answers to your broker before the next entry.
If you want the commission question off the table for good, look at Monthly Support for suppliers you already have, or Employee in China for your own person there.
I'm Eldad Shashua, founder of China Agent. I've spent 17 years in China sitting with factory owners and negotiating for importers, and I've read a lot of their licenses along the way. LinkedIn
China Agent has worked on the client side in China since 2009. Today it is a Hong Kong company with people in Guangzhou, Foshan, Yiwu, Shenzhen and Jinan.
FAQ
What is a China buying agent?
A China buying agent is a person or company in China that acts for the importer when the importer buys from a Chinese factory, on the importer's instructions and paid by the importer. In US customs terms, CBP treats someone as a bona fide buying agent only if the importer controls the purchase and the agent works mainly for the importer, not the seller.
Is a buying commission part of the customs value?
Not if it is a bona fide buying commission paid separately from the price of the goods. Under 19 U.S.C. § 1401a, selling commissions the importer pays are added to the value, while bona fide buying commissions are not. If the buying commission is folded into what the importer pays the factory, it stays in the value. The importer should confirm how it is declared with a licensed customs broker or customs counsel.
How do I know if my China agent works for me or for the factory?
Ask in writing who pays them and whether they receive anything from the factory. CBP looks at who controls the purchase, who controls payment, who carries the risk of loss, whether the importer could buy without the agent, and whether the agent is financially tied to the seller. An agent paid by the factory, or one that invoices the importer as the seller, is not working only for the importer.
What documents prove a buying agency to CBP?
CBP's publication on buying and selling commissions points to the factory's own invoice showing the seller and the price, a written buying agency agreement, the agent's separate invoices for its fees, and evidence that the importer really controls the purchase. The importer carries the burden of proving the buying agency is real.
Is China Agent a buying agent?
No. China Agent does not find factories and takes no commission from factories or on orders. It works on the suppliers and factories an importer already has, for a fixed fee paid by the importer. A person hired through Employee in China works only for the client, is paid a salary, and does what the client directs.