Incoterms for China Imports: FOB, EXW and DDP Explained
Short answer: for a first China order under roughly 100 kg, DDP via international courier is the most painless — one price to your door, duties included. For container and regular volume shipments, FOB with your own freight forwarder is the standard buyers use because it keeps control of the shipment and the cost layers visible. EXW looks cheapest on paper but makes you arrange everything from the factory gate onward. The term you choose does not change what the goods cost; it changes who arranges, who pays, and who carries the risk at each step — and that is where surprise charges hide.
Every China quote ends with a three-letter term and a city: EXW Dongguan, FOB Shenzhen, DDP your door. Buyers treat the term as a formality until the first invoice arrives with charges they did not expect, or a shipment is delayed because customs clearance was nobody's named job. Incoterms exist precisely to prevent that: they are a contract shorthand, published by the International Chamber of Commerce (the current edition is Incoterms 2020), that assigns export clearance, carriage, insurance, import clearance, duties and risk to either buyer or seller. This guide explains the terms you will actually be quoted from China, maps who pays for what, and shows the cost layers hiding behind each choice.
The Four Terms You Will Actually Be Quoted
Chinese suppliers quote a handful of terms in practice: EXW, FOB, FCA, and the D-family (DAP and DDP) that freight forwarders and couriers put on door-to-door quotes. Two of them — FOB and EXW — cover most factory quotes for precision metal parts; DDP dominates small parcel shipments. FCA (free carrier) is the technically recommended term for containerized cargo and is worth knowing even though many suppliers still quote FOB out of habit.
EXW (Ex Works) means the seller's only duty is to make the goods available at its own premises — typically packed for transport, but not loaded, not cleared for export, and not carried anywhere. Risk transfers to you at the factory gate. FOB (Free On Board) means the seller delivers the goods on board the vessel you nominate at the named port of shipment, and clears them for export; risk transfers once the goods are on the ship. DDP (Delivered Duty Paid) means the seller carries the goods all the way to your door, cleared for import, with duty and taxes paid — the maximum obligation a seller can take on.
| Obligation | EXW | FOB | DDP |
|---|---|---|---|
| Export packing | Buyer agrees with seller | Seller | Seller |
| Loading at origin | Buyer | Seller | Seller |
| Inland carriage to port | Buyer | Seller | Seller |
| Export clearance | Buyer | Seller | Seller |
| Main carriage (ocean/air) | Buyer | Buyer | Seller |
| Insurance during transit | Buyer | Buyer | Seller |
| Import clearance | Buyer | Buyer | Seller |
| Import duty and taxes | Buyer | Buyer | Seller |
| Final delivery to door | Buyer | Buyer | Seller |
Read the table as a risk map: under EXW the buyer owns nearly every step; under FOB the split happens at the ship's rail in the port of loading; under DDP the seller owns everything until the goods are at your address. The price quote moves inversely — an FOB quote is higher than EXW by roughly the cost of inland trucking and export clearance, and a DDP quote is higher again by freight, insurance, import duty and the seller's risk margin.
Why Most Chinese Factories Quote FOB — and What It Leaves Out
FOB Shenzhen, FOB Guangzhou, FOB Hong Kong: these are the default export terms of Chinese manufacturing, and the reason is practical. Factories are comfortable arranging inland trucking and export clearance through local forwarders, and most global buyers already have a forwarder and customs broker handling the ocean leg. The division matches how the industry actually works. What surprises new buyers is the list of costs that come after the FOB price, all of which are real and none of which the factory quote includes.
| Cost layer after an FOB quote | Typical range (indicative) | Paid by |
|---|---|---|
| Factory-to-port inland trucking and origin handling | $100–$400 per shipment | Buyer (already in FOB price if quoted that way) |
| Origin terminal handling and export documentation | $50–$150 | Buyer |
| Ocean freight, one 40 ft container, China to US/EU | $1,800–$3,500 (volatile) | Buyer |
| Cargo insurance | 0.1–0.5% of cargo value | Buyer (optional but wise) |
| Destination terminal and delivery charges | $150–$400 | Buyer |
| Customs clearance and broker fee at destination | $50–$150 | Buyer |
| Import duty and VAT at destination | Depends on HS code and country | Buyer |
The honest way to compare quotes is therefore to add the same freight estimate to every FOB quote you receive, or better, ask your forwarder for a door-to-door rate on the same cargo and compare total landed cost, not factory price. Factories know this and will usually tell you their EXW and FOB numbers side by side; BQUQ quotes EXW Dongguan and FOB Shenzhen on the same order so buyers can see exactly what the domestic leg costs before choosing.
EXW: The Price You See vs the Work You Take On
EXW is attractive because the unit price is lowest and there is no seller margin on logistics. It is also the term with the most buyer homework: you arrange the truck to the factory, the export declaration, the freight, insurance, import clearance and final delivery, and you carry the risk from the factory gate. That is routine for buyers with an established forwarder and broker. For a one-off purchase it can mean coordinating four vendors across time zones while the goods sit at the factory waiting for a truck you forgot to book. A useful middle step: many factories will quote EXW but help you arrange the domestic leg through their own forwarder at cost, which keeps the clean EXW price while removing the most awkward coordination step. If you have never imported, do not choose EXW for your first order; choose DDP and learn the cost layers from the invoice.
DDP: Convenience, and the Two Risks Most Buyers Miss
DDP is the default term on small shipments because international couriers (express services) sell it as a single door-to-door price: your parts leave the factory, and a price including freight, clearance and duties appears on your invoice. For samples, prototypes and orders under roughly 100 kg, DDP via courier is usually the fastest and most predictable way to buy from China, and it is why most first orders happen on DDP terms.
Two risks need attention. First, under DDP the seller controls the shipment end to end, so your visibility is limited to tracking numbers, and if anything goes wrong at customs you negotiate through the seller rather than directly with a broker you chose. Second, DDP requires the seller to clear your import — and clearing an import requires the commodity code, the correct valuation and any import licenses, which only you can supply accurately. Some sellers quote "DDP" but actually ship on terms closer to DAP (delivered at place, duty unpaid) or quietly exclude VAT, which surfaces as a customs bill after delivery. Ask explicitly whether the quoted DDP price includes import duty and taxes at your country's rates, and give the seller your HS code in writing. If the number is dramatically lower than your own landed-cost estimate, ask which duty rate was assumed. For volume shipments, note that sellers add a risk margin to DDP, so once your volume is regular, moving to FOB with your own forwarder usually cuts landed cost — see our manufacturing lead time explained guide for how delivery planning interacts with these choices.
How to Choose a Term for Your Shipment
Match the term to the shipment, not to habit. For samples and small parcels under roughly 100 kg, DDP via courier is the pragmatic default: one price, door delivery, minimal coordination. For a first container or regular production volume, choose FOB plus your own forwarder and broker, because control of the ocean leg and customs at your end matters more than the few hundred dollars of seller-side markup you avoid. For very large, high-value or critical shipments, add insurance under your own policy regardless of term. And whenever you negotiate a term, put the named place in writing — "FOB Shenzhen" not "FOB China," "EXW Dongguan" not "EXW factory" — because the named place defines the risk transfer and the price.
Before you commit, run the same landed-cost math on every quote: factory price plus the cost layers in the table above under your chosen term. That total, not the FOB number, is what you compare across suppliers, and it is the number that decides whether the cheapest quote really is the cheapest. Our MOQ and custom parts guide and the China sourcing red flags list cover the ordering pitfalls that sit next to freight terms — minimums that change with the term, and quotes that quietly assume the buyer handles everything. One final habit worth keeping: ask the factory to state the Incoterms edition in the quotation. A term quoted under Incoterms 2020 is unambiguous; a term quoted with no edition leaves room for the argument you do not want to have after the goods are on the water.
Frequently Asked Questions
Q: What is the difference between FOB and EXW?
A: Under EXW the buyer arranges and pays for everything from the factory gate onward, including loading, export clearance, freight and import. Under FOB the seller delivers the goods on board the vessel at the named port of shipment and clears them for export; the buyer takes over from there. FOB is usually a few hundred dollars higher per shipment than EXW because inland trucking and export clearance are included.
Q: Is DDP a good idea for a first China order?
A: Yes, for small parcels it is usually the most painless option: one door-to-door price including freight and duty, minimal coordination, and fast delivery by courier. Confirm in writing that the price includes import duty and taxes at your country's rates and that you have supplied the correct HS code, because some quotes that say DDP quietly exclude duties or VAT.
Q: Who is the importer of record under DDP?
A: Contractually the seller, because the seller clears the goods for import under DDP — but practically you must supply the commodity code, accurate value and any import licenses, since only you know what the goods are and what your market requires. Treat DDP as seller-arranged clearance that depends on buyer-supplied data, and keep your own records in case of a customs query.
Q: Are FOB prices from Chinese suppliers all-in?
A: No. An FOB price covers the goods, inland trucking to the named port and export clearance. Ocean freight, insurance, destination handling, import clearance, duty and final delivery are yours. Add those layers before comparing quotes, or ask your forwarder for a door-to-door rate on the same cargo.
Q: Which Incoterms should I use for a full container?
A: FOB with your own freight forwarder is the standard for regular container volume, because you keep control of the ocean leg, insurance and customs at your end, and the cost layers stay visible. Some suppliers quote FCA for containerized cargo, which the ICC recommends; both work if the named place and the edition are written down.
Related Resources
- Manufacturing lead time explained: planning delivery windows around production and freight.
- MOQ and custom parts guide: how order minimums interact with pricing terms.
- About BQUQ: an ISO9001-certified source factory in Dongguan quoting EXW and FOB on the same order.
- Contact us: get a quote with clear delivery terms within 12 working hours.
Authored by the BQUQ Engineering Team. BQUQ is an ISO9001-certified source factory in Dongguan, China, running CNC machining, metal stamping, custom springs, heat sink and collet lines under one roof. Send drawings to sc@bquq.com or WhatsApp +86 13713157787 for a quote within 12 working hours. www.bquq.com
