Two buyers can receive quotes for the same product at very different landed costs, and neither supplier is cheating. The difference is usually the Incoterm. Getting the Incoterm right is the single most useful thing a first-time importer can do, because it decides who pays for what and who carries the risk at each stage.
The Incoterms you will actually be quoted
There are eleven Incoterms defined by the International Chamber of Commerce, but in practice ladder, tool and building material imports from China are quoted on a handful of them.
| Incoterm | Seller pays up to | Buyer pays from | Best for |
|---|---|---|---|
| EXW | Nothing — goods at factory gate | Everything including export clearance | Buyers with their own freight forwarder in China |
| FOB | Loading on board the vessel | Sea freight, insurance, import clearance | Most common ocean shipment term |
| CFR / C&F | Goods loaded on board | Sea freight and insurance | Buyers who want freight quoted but not insurance |
| CIF | Goods loaded, sea freight, minimum insurance | Insurance above the minimum, port charges, clearance | Common for first shipments; check the insurance value |
| DAP | Delivery to named place, ready for unloading | Import clearance and duties only | Buyers without a broker in China |
| DDP | Everything including import duty | Nothing | Door delivery; check who is importer of record |
First: who is the importer of record? It determines who pays duty and who carries customs liability. Second: is the quoted price firm all the way to my door, or is there a charge the supplier has not mentioned?
How to compare quotes fairly
A FOB price and a DAP price are not comparable as printed. To compare them, convert both to the same basis:
- Take the FOB price and add sea freight to your port, insurance if you want it, destination charges, import duty and VAT.
- Take the DAP price and subtract the duty and VAT you would pay anyway.
- Add inland transport from the port to your warehouse if the quote stops at the port.
- Add demurrage and detention risk — a few hundred US dollars if things go wrong at the port.
- Compare the two adjusted totals.
Quoting on the same Incoterm is the fastest way to compare suppliers. If one supplier quotes FOB and another quotes CIF, ask both to requote on the same term.
Payment terms and how to protect yourself
The standard arrangement in China trade is 30 percent deposit with the order and 70 percent against a copy of the bill of lading. This structure exists because it aligns money with physical progress in the shipment.
- T/T 30% deposit + 70% against B/L copy — the industry standard, and reasonable for repeat business.
- T/T 100% in advance — normal for small trial orders and custom tooling, where the supplier carries the full risk.
- L/C at sight — used for large orders where the buyer's bank offers it. Slower and more expensive in fees, but it protects the buyer and is often required by internal procurement policy.
- CIPS — the payment channel for Russian buyers, who cannot receive SWIFT payments due to sanctions. Used with 100% prepayment and inspection before shipment.
Protecting your first payment
Whatever terms you agree, these four things are non-negotiable for a new supplier relationship:
- The balance is only due against a copy bill of lading, after goods are produced and inspected.
- Inspection criteria are agreed in writing before production starts, not after.
- You are welcome to a video audit of the production line before the balance payment.
- Third-party pre-shipment inspection is permitted, at your choice of inspector.
A supplier who will not accept any of these is telling you that the inspection step is where their confidence ends. That is useful information.
Realistic lead times
| Stage | Typical duration |
|---|---|
| Sample production and dispatch | 7–10 days by express |
| Bulk production after deposit and artwork approval | 25–35 days |
| Sea freight to Europe (Rotterdam, Antwerp, Hamburg) | 30–40 days |
| Sea freight to Latin America (Santos, Callao, Cartagena) | 40–55 days |
| Air freight to Europe | 3–5 days, priced per kg |
These are typical ranges, not guarantees. Peak season, port congestion and customs inspection all add time. If you have a launch date, work backwards and tell your supplier, so the factory can schedule accordingly.
The documents you should receive
- Commercial invoice
- Packing list
- Bill of lading (B/L)
- Certificate of origin (COO)
- The factory's product certificates for your order
Originals are usually couriered to you before the vessel sails, so you are not waiting for them to arrive with the cargo. Ask for this explicitly if it is not the norm with your supplier.
Before your first order, get a quote on the same Incoterm from every supplier you are comparing. It removes more noise from the numbers than any other single step.