When I say I “spent the last three weeks with a sourcing agent in China” I don’t mean in person. I mean going back and forth in Skype and Alibaba. Sorry if I wasn’t clear.

I said I would pay some fees. They said they don’t do Pay Pal over $300 and they can’t do Alibaba because they are taking that money and going to other factories and it had something to do with tax receipts.

I would offer to pay the fee in full. That’s common practice.
They should be open provide a payment method that gives you protection, why should you take the risk for supporting their tax avoidance scheme?

I don’t do wire transfer until after several orders and build trust with a supplier.

Report them to Alibaba or let them know you are going to report them. From what I understand, if they get the Trade Assurance Icon, then they need to allow you to use Trade Assurance. Personally I don’t put up with the games they try to play and readily call them out (in a nice/diplomatic way)… they usually back down or I walk.

Understand the frustration, but don’t give up. Just politely tell them your integrity will require you to report them to Alibaba or you want Trade Assurance at a 30/70 split (30% up front, 70% after inspection)… period. I am willing to bet they back down. Even better is to send the email, then ask them to get on a Skype video chat… they struggle to say no when they can see you.