Incoterms for China imports: practical guide

Incoterms in an import from China are the international rules defining, in a single code, who bears cost and risk on each transport leg. Published by the International Chamber of Commerce, they translate a complex agreement, where the seller's responsibility ends and the buyer's begins, into a three-letter code both parties read the same way. Choosing the right Incoterm is no formality: it determines how much you overpay, what risks you take and where you may lose control of your cargo.

This guide explains the most used Incoterms in trade with China, ordered from least to most supplier responsibility. It does not cover them all: it focuses on the four an importer meets in practice.

The question an Incoterm answers is simple: how far does the Chinese supplier's responsibility reach and where does yours begin? That cost-and-risk boundary is what each code defines.

EXW (Ex Works): maximum responsibility for the buyer

Under EXW, the supplier only makes goods available at its factory. From there, inland transport in China, export clearance, international freight and customs clearance are the importer's responsibility. It is the Incoterm giving the buyer most control, but also the most demanding: without an operator at origin, handling Chinese inland transport and export from outside the country is complex.

• The importer takes on pickup, inland transport and export from the factory door.
• It suits those with origin representation able to handle the Chinese leg.

FOB (Free On Board): the most common balance

Under FOB, the supplier delivers goods on board the ship at the Chinese port, with export already cleared. From that point, international freight, insurance and customs clearance are the importer's responsibility. It is the most used Incoterm in trade with China because it splits responsibilities clearly: the supplier controls its domestic leg and the importer controls the international one.

• The supplier covers inland transport and export clearance to the port.
• The importer controls international freight and chooses its freight forwarder.
• It is the recommended option for most first operations.

CIF (Cost, Insurance and Freight): the supplier books freight

Under CIF, the supplier pays freight and minimum insurance to the destination port. It seems convenient, but has a trade-off: the importer loses control over carrier and freight forwarder choice, and the contracted insurance is usually minimum cover. CIF applies to ocean transport only.

• The supplier books freight and insurance to the destination port.
• The importer cedes logistics control and takes on clearance at destination.

DDP (Delivered Duty Paid): the supplier delivers everything settled

Under DDP, the supplier delivers goods at the agreed destination with everything paid: freight, insurance, duties and import taxes. It is the Incoterm of maximum seller responsibility. For the importer it is convenient, but demands full trust that the supplier handles clearance correctly in a country that is not its own, which in practice creates opacity over costs and taxes.

• The supplier takes on clearance and final delivery at destination.
• The importer gains convenience but loses visibility over real costs.

Quick comparison and how to choose

Frequently asked questions

How PLT Logistic helps with the Incoterm choice

PLT Logistic advises on the most suitable Incoterm by operation and, based in Guangzhou since 2018, executes the origin leg each term requires. Under EXW we handle inland transport and export. Under FOB we coordinate port delivery, Yantian, Nansha or Shenzhen, and international freight. The importer chooses the Incoterm with an operator able to fulfil it at origin.