Incoterms for China imports: three letters decide cost and risk
FOB Shanghai or EXW Shenzhen? The delivery term determines from which point costs and transport risk pass to you — and it decides whether a supposedly cheap offer is actually the most expensive. The four terms that actually occur in China business.
5 min read · For buyers and importers
EXW — ex works: maximum control, maximum responsibility
With EXW (Ex Works) the seller’s obligation ends at his factory gate: you organise pickup, export clearance in China, main carriage and import. The goods price is the lowest — but you need a forwarder with China expertise, because Chinese export declaration without the seller’s cooperation is tedious. EXW pays off when you consolidate anyway or bundle several suppliers.
FOB — the standard in China business
With FOB (Free On Board) the seller delivers export-cleared onto the vessel in the Chinese port; from there you bear cost and risk. That is the healthy division of labour: the supplier knows his local pre-carriage and Chinese export clearance, you (or your service provider) control the expensive main carriage and choose the forwarder yourself — instead of paying the seller’s opaque freight margin. For most importers FOB is the right choice.
CIF — sounds convenient, rarely is
With CIF (Cost, Insurance, Freight) the seller organises and pays freight to the EU port — yet the risk passes to you already upon loading in China. The trap: sellers buy the cheapest freight and earn on it, and at the destination port inflated “local charges” from the seller’s chosen agent await, which you must pay to get your goods. CIF offers look cheap in comparison and after local charges often are not.
DDP — the all-in price, when it is legitimate
With DDP (Delivered Duty Paid) you get a final price free at your dock, customs and tax paid — the most convenient term, and the right one when a service provider with regular German customs clearance stands behind it. Beware grey-channel DDP from Chinese sellers: under-declared customs values, consolidated clearance via third countries, no usable import VAT for you — and when customs audits, you as recipient are liable. You recognise legitimate DDP by an EU-compliant invoice with VAT shown.
Common questions about Incoterms
Which Incoterm is safest for beginners?
Legitimate DDP via a German or EU service provider: one price, one contact, no surprises at port or customs. Those who want to build their own freight competence choose FOB and thereby control the main carriage. EXW only with an experienced forwarder, CIF preferably not at all.
Where exactly does risk pass under FOB?
Upon loading on board the vessel at the port of shipment (Incoterms 2020). Practically this means: cargo insurance from the Chinese port is your responsibility — it typically costs 0.2–0.4 % of goods value and belongs in every FOB calculation. In our DDP offers it is included.
The supplier only offers EXW — is that a warning sign?
Not necessarily: small factories without their own export licence often only supply EXW and route exports via agencies. That is normal — but it reveals you are dealing with a small plant, and export handling then needs an experienced local partner. That is exactly what our buying office exists for.
Related topics
Prefer one price without small print?
We deliver DDP with regular German customs clearance: one final price free at your dock, transparently itemised — just send an inquiry.