Incoterms for China imports, explained without the jargon
Incoterms decide one thing: where the supplier's job ends and yours begins. Get this wrong and you'll either pay for things twice or discover, too late, that a shipment is your problem in a port you've never heard of. Here's what the common terms actually mean.
EXW (Ex Works)
The supplier just makes the goods available at their factory. Everything after that — local trucking, export clearance, freight, insurance, import duty — is on you. It looks cheap on paper, but you're taking on the whole chain. Most new importers should avoid EXW unless they have a strong agent in China.
FOB (Free On Board)
The supplier handles everything up to loading the goods on the vessel at the Chinese port. From there, the freight and the rest are yours. This is the sweet spot for most importers. You keep control of the main freight (so you can shop for a better rate), and you're not stuck managing trucking inside China.
CIF (Cost, Insurance, Freight)
The supplier arranges and pays the freight and insurance to your destination port. Convenient, but you lose control of the carrier and often pay a marked-up rate baked into the goods price. You still handle import customs and delivery from the port.
DDP (Delivered Duty Paid)
The supplier delivers all the way to your door, duties included. Easiest for you, but the most expensive and the least transparent — you're trusting them with customs in your own country, and any savings disappear into one bundled number.
So which should you choose?
- New importer, want control and a fair freight rate: FOB.
- You have a trusted agent in China: EXW can work and save money.
- You want zero hassle and don't mind paying for it: DDP.
- CIF: fine for small orders, but compare the all-in cost against FOB plus your own freight quote.
The honest test is simple. Take the FOB price, add your own freight quote, and compare it to the CIF or DDP number. Nine times out of ten, FOB plus a competitive carrier wins — and you can see live carrier rates on our China freight lanes for any destination.
One thing people forget
Whatever term you pick, write down exactly which port or address it ends at. "FOB China" isn't enough — it should read "FOB Shanghai" or "FOB Ningbo." That one detail prevents a surprising number of arguments later.