Introduction:
When sourcing from China, you’ll come across terms like FOB, EXW, and CIF. These are Incoterms (International Commercial Terms) that define who is responsible for what—from production to final delivery. Misunderstanding them can lead to surprise costs and delays. Here’s a breakdown of the most common Incoterms used in Chinese trade.
1. EXW (Ex Works)
What it means: You (the buyer) handle everything after the product leaves the supplier’s factory.
You’re responsible for:
- Pickup from the factory
- Export documents
- Shipping, insurance, customs clearance
- Import taxes and last-mile delivery
👉 Best for: Experienced importers with their own freight forwarders
2. FOB (Free On Board)
What it means: The supplier handles delivery to the departure port and export clearance. You take over after goods are on the ship.
You’re responsible for:
- Ocean freight
- Import customs, duties
- Inland delivery
👉 Best for: Most buyers—it balances responsibility and control
3. CIF (Cost, Insurance, and Freight)
What it means: The supplier arranges and pays for shipping and insurance to your port. But once the goods arrive, you take full responsibility.
You’re responsible for:
- Import customs clearance
- Final delivery
👉 Watch out: Insurance may be minimal, and you still need to handle local clearance.
Quick Comparison Table:
| Term | Supplier Responsible For | Buyer Responsible For |
|---|---|---|
| EXW | Product only | Everything else |
| FOB | Product + local shipping + export docs | Freight, insurance, import customs |
| CIF | Product + freight + insurance | Import customs + local delivery |
Conclusion:
Understanding Incoterms protects you from hidden costs, logistics confusion, and shipping delays. Always clarify Incoterms in your contract before confirming a deal with a Chinese supplier.
Need help choosing the right Incoterm for your next shipment?
We’ll walk you through it and recommend what works best based on your order size, destination, and timeline.
