Let's have a frank chat about something most sourcing guides gloss over: when you decide to buy from China, you're not just choosing a product — you're choosing who you buy it from. Get this decision wrong and you'll pay 20% more than you need to, receive goods that don't meet UKCA requirements, or find yourself unable to get production restarted when your bestseller sells out.
Every week, UK businesses come to us having made this mistake. They went with a trading company when they should have used a sourcing agent. Or they tried to go direct to a factory before they were ready. Or they worked with a "sourcing agent" who turned out to be little more than a finder's fee arrangement with a trading company they'd already found on Alibaba.
This guide cuts through the confusion. It explains exactly what sourcing agents, trading companies, and direct factories are, when each option makes sense for a UK business, and what the real cost and risk implications are at each stage of your importing journey.
This guide is for UK business owners and buyers who are preparing to source from China (or Vietnam) and need to understand the three main routes to market. Whether you're placing your first order of 100 units or scaling to 10,000 units per run, the choice of supplier type will shape your costs, your control, and your compliance exposure. We assume you already have a product in mind — if not, start with our complete China sourcing guide for beginners.
In international sourcing, "supplier type" refers to the entity you actually place orders with: a sourcing agent (an intermediary paid to find and manage factories on your behalf), a trading company (a commercial intermediary that buys from factories and re-sells to you), or a direct factory (the manufacturer itself). Each has fundamentally different cost structures, risk profiles, and minimum order requirements.
Most beginner sourcing guides tell you to "find a supplier on Alibaba" and leave it there. But Alibaba lists all three supplier types — sourcing agencies, trading companies, and factories — often without clearly distinguishing between them. A factory calling itself a "trading company" is common. A trading company pretending to be a factory is just as common. And a dodgy "sourcing agent" with a nice website might be nothing more than a second Alibaba account.
The decision matters for three core reasons. First, it determines your unit cost. Going direct to a factory typically gives you the lowest price per unit, but only if you're ordering in sufficient volume and have the expertise to manage the relationship directly. A trading company adds margin, but may be the only route available to you at lower quantities. A sourcing agent adds a fee — but if they're good, they'll often find you a factory price that more than offsets their commission.
Second, it shapes your quality control exposure. The further you are from the factory floor, the harder it is to enforce quality standards, correct mistakes before shipment, and ensure your products meet the technical requirements of UK law — particularly UKCA marking for regulated product categories. Third, it determines your MOQ. UK brands at the early stage often can't commit to 2,000 units of a new product. Understanding which supplier types will accommodate lower quantities is critical to managing cash flow and inventory risk.
Alibaba does provide verified supplier badges and factory audits, but these verify legal registration — not whether a company calling itself a "factory" is actually manufacturing your product, or reselling it from another factory. Many "Gold Supplier" accounts on Alibaba are trading companies. This is not necessarily a problem — but you need to know what you're dealing with before you negotiate price and terms.
A sourcing agent is an individual or company, typically based in China or with strong China operations, that works on your behalf to find, vet, and manage factories. They are not buying and selling product themselves — they are a service provider. Their commercial relationship is with you, the UK buyer, not with the factory. In theory, at least.
A good sourcing agent will: identify suitable factories for your product based on your specifications; negotiate price, MOQ, and payment terms on your behalf; conduct or arrange factory audits and product inspections; manage production timelines and chase up orders; and handle the logistics coordination from factory to the port — whether that's Guangzhou, Shanghai, or another export hub before your cargo arrives at Felixstowe or Southampton.
There are two common payment models. The first is commission-based: the agent charges you a percentage of your order value, typically between 5% and 15%. The second is a fixed service fee, often used by more established agencies that want to demonstrate independence from the factories they recommend.
The commission model creates an inherent conflict of interest: an agent paid a percentage of your order has a financial incentive to recommend higher-priced factories, or to direct you towards factories that offer them a referral kickback (called "rebates" in the trade). This is not universal — many agents are transparent and ethical — but it's a structural issue you should understand and ask about explicitly before engaging anyone.
The sourcing agent category is extremely broad. At one end, you have freelance agents working out of a WeChat account, handling a handful of clients and offering a very personal service. At the other end, you have established sourcing companies with offices in multiple Chinese cities, dedicated QC teams, compliance specialists, and full-service operations covering everything from product design to landed delivery.
For UK businesses, the key questions when evaluating a sourcing agent are: Do they have experience in your product category? Do they have an established team on the ground in China, or are they a lone operator? How do they handle quality control? Are they transparent about their factory relationships? And crucially: can they demonstrate knowledge of UK-specific compliance requirements, including UKCA marking?
A sourcing agent is typically the best option when: you're entering a new product category and don't have existing factory relationships; your volumes are too small to attract serious attention from major factories directly; you want someone managing the China side of the relationship on your behalf; or you've had a bad experience trying to manage factories directly and need expert intermediary support.
Before engaging a sourcing agent, always ask whether they have any exclusive or preferred commercial arrangements with specific factories. A good agent will be upfront about this. The answer doesn't necessarily disqualify them — but you need to factor it into how you evaluate their recommendations.
A trading company is a commercial business that sources products from factories, holds stock (sometimes) or manages order flow, and sells finished goods directly to overseas buyers. Unlike a sourcing agent, a trading company is your supplier — they invoice you, they take ownership of the goods, and they take the margin between what the factory charges them and what you pay.
Trading companies are extremely common across all product categories in China. Many are highly professional, well-resourced, and offer genuine value — particularly for UK businesses that need lower MOQs, mixed orders across multiple product lines, or a supplier with strong English communication and export experience.
The most common complaint about trading companies is the price premium. Because they add a margin over the factory price, you'll pay more per unit than if you could source directly. For some buyers, particularly those focused purely on unit economics, this is a dealbreaker. For others, the tradeoffs — lower MOQ, simpler communication, consolidated ordering — are worth it entirely.
The reputation problem also stems from opacity. A trading company typically won't tell you which factory they use, and will actively work to prevent you finding out — because their entire business model depends on maintaining the relationship and the margin. This is understandable from a commercial perspective, but it creates challenges for UKCA compliance, quality audits, and long-term supply chain security.
Trading companies shine in several situations. If you need mixed orders — say, five different SKUs across three product categories — a trading company can consolidate these into a single shipment and a single commercial relationship. If you need low MOQs (under 300 units), a trading company is often your only realistic route, as most factories won't engage directly with buyers at that scale. If you value professional export documentation, strong English, and reliable payment terms, a good trading company will often outperform a direct factory relationship at early volumes.
Many UK businesses start with trading companies and transition to direct factories once their volumes justify it and they've built the internal expertise to manage those relationships. This is a perfectly sensible progression.
Buying directly from a factory means your supplier is the manufacturer. No middlemen, no hidden margins — you're dealing directly with the people who will make your product. This is generally where the best unit economics sit, particularly at scale, and it offers the greatest potential for quality control, product customisation, and supply chain transparency.
However, "going direct" is not as simple as finding a factory on Alibaba and placing an order. A direct factory relationship requires you — or someone acting on your behalf — to conduct proper due diligence, negotiate commercial terms, manage production scheduling, oversee quality control, and navigate the inevitable communication challenges that come with working across time zones, languages, and cultural expectations.
Most Chinese factories set minimum order quantities based on their production economics. Running a manufacturing line has a fixed cost — whether you produce 100 units or 10,000 units, the setup is largely the same. This is why MOQs for direct factories in most categories start at 500 units and often go significantly higher — 1,000, 2,000, or 5,000 units per run is common in apparel, electronics, and consumer goods.
Some factories will accommodate lower initial orders to build a relationship, particularly if you can demonstrate scale potential and your product is genuinely interesting to them. But this is the exception, not the rule. If you're starting out with a new product line and can't commit to 500+ units, a direct factory is likely not your best first step.
The major advantage of a direct factory relationship is the potential for deep quality control integration. When you're dealing with the factory directly, you can specify exactly how your product should be made, conduct factory audits, arrange third-party pre-shipment inspections, review production samples at each stage, and hold the factory accountable directly when things go wrong.
This is particularly important for regulated products. If your goods need UKCA marking — electronics, toys, PPE, machinery, pressure equipment, and other categories — being close to the factory means you can directly manage the testing, documentation, and Declaration of Conformity process that compliance requires. A trading company or poorly briefed agent may not prioritise these requirements in the same way.
Many Chinese factories, particularly those that don't focus on export markets, have limited English capability at the commercial level. A factory owner or production manager may speak no English at all, with communication going via a junior sales assistant whose English is functional but not detailed enough for complex product specifications or compliance conversations. This is not a criticism — it's a practical reality that has real implications for the quality of your working relationship.
Before committing to a direct factory relationship, assess honestly whether your business has the language capability, time, and export expertise to manage this. Many UK businesses find that the apparent cost savings of going direct are eroded by miscommunication, rework, and delays that a properly briefed sourcing agent or specialist intermediary would have prevented.
Here's an honest comparison across the factors that matter most to UK importers. These are general industry ranges — specific situations will vary based on your product, supplier, and volumes.
| Factor | Sourcing Agent | Trading Company | Direct Factory |
|---|---|---|---|
| Unit Cost | Factory price + 5–15% fee | Factory price + 10–30% margin | Lowest (ex-factory price) |
| Typical MOQ | Factory minimum (negotiated by agent) | 50–500 units | 500–5,000+ units |
| Communication | Agent bridges language gap | Usually good English | Variable — often limited English |
| Quality Control | Agent manages on your behalf | Limited — factory hidden | Direct — maximum control |
| Factory Transparency | Agent knows factory; may or may not share | Factory identity usually hidden | Full transparency |
| Customisation | Possible (agent facilitates) | Limited | Full |
| Product Development | Some agents offer this | Rarely | Yes — directly with factory |
| UKCA Compliance Support | Varies — check before engaging | Minimal — your responsibility | Your responsibility; direct access |
| Minimum Experience Required | Low (agent guides you) | Low–Medium | Medium–High |
| Best Stage | Testing to scaling | Testing phase | Scaling and beyond |
| Sea Freight Lead Time (to UK) | 25–35 days from China; 30–35 days from Vietnam (all three routes similar) | ||
Note: MOQ ranges and fee percentages are general industry figures based on Epic Sourcing's experience across hundreds of UK client projects. Your specific product category, supplier selection, and order history will affect actual terms.
Here's something that catches a lot of UK importers off guard: the choice of supplier type does not change your compliance obligations. Whether you buy through a sourcing agent, a trading company, or a direct factory, you — the UK importer and brand owner — are the "Responsible Person" under UK product safety law.
Since January 2021, the UK Conformity Assessed (UKCA) mark has replaced the CE mark for most regulated products sold in Great Britain. This applies to a wide range of products including electronics and electrical equipment (under UKSI 2016/1101), toys (UKSI 2011/1881), personal protective equipment, machinery, and more.
Crucially, it is the brand owner or importer who bears legal responsibility for ensuring the product meets the relevant UK safety legislation, has been appropriately tested, and carries the correct marking. Your factory can assist by providing test reports, technical files, and declarations — but they can't do this for you, and a trading company almost certainly won't.
Products with only CE marking (the EU standard) are not legally compliant for sale in Great Britain as of 1 January 2025 (the deadline for most categories has now passed). If your supplier — whether agent, trading company, or factory — is telling you CE is fine for the UK market, they are wrong. You need UKCA testing and documentation for regulated products. Enforcement is handled by the Office for Product Safety and Standards (OPSS) and Trading Standards.
Regardless of who you buy from, all UK imports require an Economic Operators Registration and Identification (EORI) number — your legal import identifier with HMRC. You'll also need to submit customs declarations through the Customs Declaration Service (CDS), the UK's live system that replaced CHIEF in 2023.
When your goods arrive at Felixstowe or Southampton, your freight forwarder will typically handle the customs declaration on your behalf — but they'll need your EORI number, the correct commodity codes, accurate valuation, and a Certificate of Origin if you're claiming preferential duty rates (such as under the UK-Vietnam Free Trade Agreement for goods manufactured in Vietnam).
The UK Global Tariff determines the rate of import duty applied to your goods. Rates vary significantly by commodity code — from 0% for some raw materials and components, to 12% or more for certain consumer goods. Your supplier type doesn't change your duty liability — what matters is the commodity code, the declared value, and the country of origin.
If you're sourcing from Vietnam via a trading company or direct factory, it's worth checking whether your goods qualify for preferential tariff rates under the UK-Vietnam Free Trade Agreement (UKVFTA). When properly documented with a valid Certificate of Origin (Form EUR.1 or Origin Declaration), UKVFTA can deliver meaningful duty savings for eligible product categories — a benefit that applies regardless of which supplier type you use.
The vast majority of sea freight from China and Vietnam arrives at Felixstowe (handling around 36% of the UK's container throughput) or Southampton. Your freight forwarder will typically arrange customs clearance at the port of arrival. Make sure your commercial invoice, packing list, and Bill of Lading are accurate — discrepancies are a common cause of delays and HMRC queries at the border.
Let's make this concrete with a worked example. Imagine you're a UK brand looking to source a private label water bottle — a simple consumer product with some product safety requirements (material compliance for food contact items, leak testing).
| Scenario | Order Size | Approx. Unit Cost (FOB China) | Total Landed Cost Factors | Notes |
|---|---|---|---|---|
| Trading Company | 150 units | £4.20–£5.50/unit | + freight + UK duty + VAT | Factory may be hidden; limited customisation |
| Sourcing Agent | 300 units | £3.10–£4.00/unit + 8–12% fee | + freight + UK duty + VAT | Agent negotiates directly; quality oversight included |
| Direct Factory | 1,000 units | £2.50–£3.20/unit | + freight + UK duty + VAT | Lowest unit cost; you manage the relationship |
The pattern here is consistent across most product categories: direct factories offer the lowest unit costs, but only at higher minimum orders. Trading companies enable lower minimum quantities but at a price premium. Sourcing agents sit in the middle — their fee is often offset by the factory pricing they can negotiate, particularly once you factor in quality control costs that you'd otherwise pay separately.
Whatever supplier type you use, your total landed cost includes significantly more than the ex-factory price. UK importers need to budget for: sea freight (which varies considerably based on container size, route, and market conditions); UK port handling and customs clearance; import duty at the UK Global Tariff rate for your commodity code; 20% VAT on the sum of goods value + freight + duty (reclaimed through your VAT return if you're VAT registered); and any inspection or testing fees for compliance purposes.
A product that looks cheaper through a direct factory can quickly become more expensive once you factor in the cost of arranging your own QC inspections, the rework cost if defects aren't caught pre-shipment, and the management time required to run the relationship. This is where a well-structured sourcing agent arrangement, or a specialist like Epic Sourcing, often delivers better total-cost outcomes than the headline unit price suggests.
Here's the reality: there's no universal right answer. The best supplier type for your business depends on where you are in your importing journey, what you're sourcing, and what your priorities are. Here's a practical framework:
If you've never imported from China before, going direct to a factory is almost certainly the wrong first step. You don't yet have the supplier evaluation skills, the factory relationships, or the operational infrastructure to manage a direct factory relationship well. The cost savings are real, but so are the risks — and the learning curve.
Your best options at this stage are either a reputable sourcing agent (who can guide you through the whole process) or a well-established trading company with a track record in your product category. Both reduce your execution risk significantly while you build knowledge of how the supply chain actually works.
At test volumes, a trading company is often the most pragmatic choice. They'll accommodate lower MOQs, provide reliable documentation, and give you the product quickly enough to test market demand before committing to a full production run. The price premium is real, but so is the risk of over-investing in stock that doesn't sell.
This is where the conversation about direct factories becomes serious. At 500+ units per run, the unit economics start to justify the investment in building a direct factory relationship. A sourcing agent can still be valuable here — particularly for complex products, new factories, or markets where your existing relationships are thin — but the case for going fully direct gets stronger as volumes grow.
If your product requires significant customisation, proprietary tooling (injection moulds, dies, custom components), or close UKCA compliance management, you'll almost always need to deal directly with the factory at some point — even if you use a sourcing agent to manage the day-to-day. Trading companies generally can't offer the product development depth that complex products require.
The same logic applies to Vietnam sourcing. Vietnamese factories are increasingly sophisticated across furniture, garments, electronics, and homewares — and the UKVFTA makes Vietnamese-origin goods particularly attractive for duty-sensitive categories. The factory-direct route is viable in Vietnam with the right support; a sourcing agent with Vietnam-specific expertise (like Epic Sourcing, with on-the-ground operations in Vietnam) can bridge the gap for businesses who aren't yet ready to manage those relationships directly.
At Epic Sourcing, we've helped hundreds of UK businesses navigate exactly this decision — and we've seen every version of it go wrong. The brand that tried to go direct to a factory on order one and received 2,000 non-UKCA-compliant units. The business that used a trading company for three years and never knew their supplier had changed factories mid-run. The entrepreneur who paid a "sourcing agent" who turned out to be a trading company in disguise.
Our model is different. We operate as a genuine UK-side sourcing partner, with our own teams in China and Vietnam, established factory relationships across dozens of product categories, and a full compliance workflow for UKCA and other UK regulatory requirements. We are transparent about the factories we work with, and our pricing model is based on the service we provide — not on commissions from suppliers.
Depending on where you are in your journey, we offer three main service tiers:
Perfect for businesses testing a new product or expanding into a new category. We source a quality existing product, rebrand it with your label and packaging, and manage the full import process.
For brands ready to develop a genuinely differentiated product. We work with you on product specification, source the right factory, manage samples and revisions, and oversee full production.
Our most comprehensive service, designed for established brands who want the full benefits of a direct factory relationship without the operational complexity. We act as your full supply chain team.
Book a free consultation with our UK-based sourcing team. We'll look at your product, your volumes, and your stage of business — and give you an honest recommendation on the best supplier approach for your situation.
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The sourcing agent market is almost entirely unregulated. Anyone with a LinkedIn account and a plane ticket to Guangzhou can call themselves a sourcing agent. This doesn't mean the good ones don't exist — they very much do — but it does mean the due diligence is entirely on you. Here's how to approach it.
Start with the commercial structure. Ask directly: how are you paid? A commission-based agent should be transparent about their percentage. A fee-based agent should be able to explain why this model serves your interests better. If an agent is evasive about compensation, that's a warning sign. Then ask: do you receive any payments, kickbacks, or rebates from factories or logistics providers? The answer you want is no. The answer you often get is deflection.
Next, ask about their on-the-ground capacity. Do they have a physical team in China, or are they a UK-based broker relying on local contacts? Neither is automatically wrong — but a UK-based agent with strong in-country partners is a different proposition to an agent with their own audit and QC team on the factory floor. Ask to see their factory vetting process in writing. Ask who conducts quality inspections and whether they're employees or contractors.
Ask for references from UK clients in a similar product category to yours. Any agent worth their fee will have satisfied clients willing to speak on their behalf. And ask specifically: have you dealt with UKCA compliance requirements? Can you provide support for technical files and Declaration of Conformity documentation? If they look blank, keep looking.
Several patterns should raise concern when evaluating a sourcing agent. The first is a guarantee of unrealistically low prices — often expressed as "I know a factory that can beat any quote." Experienced sourcers know that price is a function of quality, quantity, and specification. Anyone promising rock-bottom prices before seeing your specifications is either promising something they can't deliver or cutting corners they haven't told you about yet.
The second red flag is resistance to factory transparency. A legitimate sourcing agent should have no problem telling you which factory they're recommending and why, and allowing you to conduct (or observe) an audit. If an agent insists on keeping the factory anonymous "for commercial reasons," ask yourself whose commercial interests they're actually protecting.
The third is a very wide product range with no evident specialisation. Genuine expertise in sourcing is category-specific. An agent who confidently offers to source electronics, apparel, furniture, and food packaging simultaneously is unlikely to have the depth of factory relationships and technical knowledge that any one of those categories requires. Specialists consistently outperform generalists in sourcing outcomes.
Not all trading companies are created equal. At the top end, you have well-established export businesses with their own quality control teams, compliance experience, strong factory relationships built over years, and genuine commitment to their buyers. At the bottom, you have opportunistic traders who'll promise anything to close a deal and then disappear when problems emerge.
A reputable trading company will have an established business registration, typically verifiable on the Chinese government's National Enterprise Credit Information Publicity System (NECIPS). They'll be willing to provide their business licence on request. Their English-language communication will be prompt, clear, and specific — not generic marketing copy copy-pasted from a template.
Look for evidence of export experience with UK and European buyers specifically. A trading company that regularly exports to the UK will understand UKCA requirements, be familiar with UK customs documentation, and know how to correctly complete origin declarations and commercial invoices for UK clearance. Ask them directly what their process is for ensuring products meet UK regulatory requirements. A vague answer is a red flag.
The best trading companies will also be transparent about their supply chain limitations. They'll tell you that factory switching is a risk and explain how they mitigate it. They'll have quality control processes that they can document. They'll be willing to arrange third-party pre-shipment inspections — even if they're not offering them as standard.
Many UK businesses accept trading company terms without negotiation. This is a missed opportunity. The areas where there is usually room to negotiate include: payment terms (a 30/70 split — 30% deposit, 70% on Bill of Lading — is standard, but more favourable terms are often available with the right commercial relationship); sample costs (reputable trading companies should absorb sample costs for serious buyers, or apply them to the first order); and inspection rights.
On inspection rights, always negotiate the explicit right to conduct a third-party pre-shipment inspection at your cost, before your final payment is released. If a trading company objects to this, walk away. Any reputable supplier — trading company or factory — will welcome independent quality verification. Resistance is almost always a sign of something they don't want you to find.
Over the past decade, Vietnam has emerged as a genuine alternative to China for a growing range of product categories. UK-Vietnam trade reached approximately £9.6bn in 2024, with the UK-Vietnam Free Trade Agreement (UKVFTA) making Vietnamese-origin goods particularly attractive for UK importers in duty-sensitive categories.
The same three-tier structure exists in Vietnam — sourcing agents, trading companies, and direct factories — but the dynamics are somewhat different. The Vietnamese manufacturing sector is less developed than China's in terms of export infrastructure, and the language barrier (Vietnamese is considerably harder for Western buyers to navigate than Mandarin with the help of Cantonese-speaking intermediaries) means that sourcing agents with genuine in-country expertise are arguably even more valuable in Vietnam than they are in China.
Vietnam's manufacturing strengths are concentrated in garments and textiles, furniture and homewares, electronics assembly, footwear, and some categories of consumer goods. If your product falls into these categories, Vietnam sourcing is worth serious consideration — not necessarily instead of China, but potentially alongside it as part of a dual-sourcing strategy that reduces your single-country risk.
The UK-Vietnam Free Trade Agreement provides for preferential import duty rates on qualifying Vietnamese-origin goods. When your goods arrive at Felixstowe or Southampton under UKVFTA, the applicable duty rate can be significantly lower than the UK Global Tariff rate — potentially zero for many categories — provided you have the correct Certificate of Origin documentation.
This applies regardless of whether you use a sourcing agent, trading company, or direct factory in Vietnam — but it requires that your supplier can correctly document the origin of the goods and provide a valid EUR.1 certificate or origin declaration. Not all Vietnamese suppliers are familiar with UKVFTA documentation requirements; make sure any supplier you engage understands what's needed before you commit to an order.
One of the most common questions we receive from established UK importers is: "I've been working with a trading company for two years. I know the product sells. How do I move to a direct factory without disrupting my supply chain?"
The honest answer is: it takes planning, and you should expect the transition to take three to six months from decision to first direct-factory order. Here's how to approach it.
The worst approach is to tell your trading company you're moving on and then scramble to find an alternative. Your trading company holds leverage in this scenario — they know your product, your specifications, and your timeline, and you have nothing on the other side of the equation yet.
The better approach is to start sourcing a direct factory in parallel, while continuing to place orders with your trading company. This takes longer, but it means you have continuity of supply during the transition and never find yourself in a position where you've cut off one supplier before the other is ready.
Unless your trading company has been unusually transparent, you won't know which factory makes your product. There are several approaches to finding comparable factories. The most reliable is to engage an experienced sourcing agent to conduct an independent factory search in the relevant category — they can typically identify three to five suitable factories in your product category within a few weeks, with the right brief.
You can also examine the packaging and product itself for manufacturing clues — factory codes sometimes appear on compliance labels, and product testing labs can sometimes identify manufacturing origin from materials analysis. Canton Fair (held twice yearly in Guangzhou) is another option: factories in your product category exhibit directly, and attending gives you the opportunity to evaluate multiple options in person. Our guide to attending Canton Fair as a UK buyer covers this in detail.
When transitioning to a direct factory, budget for: an initial factory audit (either independent or conducted by your sourcing agent); a sampling round and specification review with the new factory; a first production run at cautiously smaller quantities than your eventual target; and a pre-shipment inspection on that first run. Allow for the possibility that the first run won't be perfect and budget both time and money for corrections before committing to a full-scale rollout.
The businesses that manage this transition well treat it as a project with its own timeline, budget, and success criteria — not as something to be squeezed in alongside normal operations. The payoff is real: lower unit costs, greater supply chain transparency, and the ability to develop products more closely with the factory. But it requires genuine commitment to execute properly.
No — and this is one of the most common sources of confusion in China sourcing. A sourcing agent is a service provider paid by you (the buyer) to find and manage factories on your behalf. A trading company is a commercial entity that buys products from factories and sells them to you, taking a margin in the process. In practice, the lines blur: some businesses that call themselves "sourcing agents" are actually trading companies with undisclosed factory relationships, and some trading companies offer genuine sourcing services. The key test is: who invoices you for the product, and does anyone in the chain have a financial interest in steering you towards a particular factory? Always ask explicitly how any agent is compensated and whether they have commercial relationships with the factories they recommend.
Yes, and this is a completely normal progression for UK businesses. The challenge is that your trading company won't tell you which factory makes your product, so you'll need to start from scratch on supplier identification. Some businesses try to source their factory by examining product labels, inspection reports, or by having samples tested to identify the manufacturing origin — but this is unreliable. The cleaner approach is to engage a sourcing agent to identify and vet factories in your product category when you're ready to transition, treating it as a fresh sourcing project rather than a continuation of your trading company relationship.
Alibaba's supplier profiles indicate whether a business is listed as a "Manufacturer" or a "Trading Company" — but this self-declaration is not reliable. The more dependable methods are: requesting a factory inspection (either in person or via a third-party audit firm); asking for the factory's business licence and production licence (which should reference manufacturing activities); checking whether the address corresponds to an industrial zone or a commercial district; and reviewing the range of products they offer. Factories typically specialise in a narrow product category; trading companies often list a very wide range. A third-party audit — available from inspection companies like SGS, Bureau Veritas, or Intertek — will provide the most reliable verification.
Yes. Your EORI number is required regardless of which supplier type you use, because it is attached to you as the UK importer — not to your supplier. When your goods arrive at Felixstowe, Southampton, or another UK port, your freight forwarder will declare the import using your EORI number. If you don't have one, your goods can't be cleared through UK customs. EORI registration is free and straightforward via the HMRC website, and your number is typically issued within a few business days of application.
This is one of the most significant risks of the trading company model, and it happens more often than buyers expect. A trading company may subcontract your order to a different factory (sometimes called "factory switching") if their primary supplier is at capacity, is cheaper elsewhere, or has closed. You may receive goods that meet the original specification — or you may receive goods with different quality characteristics, different materials, or different compliance status. The only reliable mitigation is to build inspection rights into your commercial terms and conduct pre-shipment inspections on every order, regardless of how confident you are in your supplier. If you have specific factory requirements (e.g., a named factory that has passed a UKCA technical audit), these must be contractually documented with the trading company.
Whether you're placing your first test order or rethinking a supply chain that isn't working, Epic Sourcing's UK-based team can help you find the right factory, the right tier of service, and the right approach for your business.
We've helped UK brands from solo founders to established retailers. Every conversation starts with an honest assessment — not a sales pitch.
Epic Sourcing UK — 71–75 Shelton St, London WC2H 9JQ
