Why would you pay a factory an agency fee to import?

Is it legit for the factory to request buyer pays agency fee?

Mohamed in Egypt writes:

I’m import artificial grass from a China company and they offer me agency for product in Egypt and declare all products will be covered. They ask for 10,000$ for agency insurance/fee. Should I pay it?

Importer as exclusive agent of the factory?

I don’t know the details of your case, but here is my initial feedback.

1. If the relationship is mutually beneficial, it feels strange to charge you an upfront fee, especially if you can commit to a given annual purchase.
2. There are so many factories in China, if the one you found is not a good fit, find another one!
3. If you want some information about the pros/cons of setting up a distributor relationship with a China factory/brand. Here is are some relevant articles I wrote:

http://chinasourcinginfo.org/2011/07/27/finding-a-manufacturer-to-produce-and-distribute-worldwide/

http://chinasourcinginfo.org/2011/06/16/how-to-partner-with-a-factory/

4. If you do move forward with such a relationship, get a good contract in place.  I’m happy to recommend the lawyers that did a good job for me.  Send me an email and I’ll put you in touch.

Glad to help!

Question answered by Mike Bellamy

Founder of the PassageMaker Group of companies & business lecturer at the China Sourcing Academy