What Are the Advantages of Buying Products from China。

Import from China Guide

For beginners who don’t know what to buy & sell, have 0 experience about importing from China, you can get all questions answered in this tutorial. (10 video courses included)

Start learning

Step 7.How to Get Precise Quote.

Home > How to import from China > Step 7

If you are thinking about importing products from China, the first step would be to find reliable suppliers, then get quotes from them. But in the international trading industry, there’re lots of things to keep in mind for getting precise quotations, when you are purchasing from manufacturers in large quantities.

You may have heard of trade terms like FOB, CIF, DDP, etc., but got confused when it comes to the detailed costs they cover, and don’t know the best choice when getting quotations from Chinese suppliers.

In this post, We will introduce the most frequently used trade terms, and the scenarios they apply. Besides, you can also learn about the 3 common traps that might occur when requesting quotations from Chinese suppliers. I’ll share practical tips to help you walk around the hidden traps, and get precise quotes that work the best for you.

1. Why is Choosing the Right Trade Term/Incoterm so important?

When getting quotes from suppliers, you would need to clarify the trade term used for this order.

Because importers have different requirements on where suppliers should handover the products, either at a port in China or your country, or at the supplier’s warehouse. Accordingly, supplier’s responsibilities would vary with different trade terms.

In international trading, there are tens of trade terms. In fact，The most frequently used trade terms are FOB, CIF, EXW, DDU/DDP. For details, please check “In-depth explanation of Incoterms 2020”，and We will give real-life examples to help you understand the situations in which they apply.

2.FOB, EXW, CIF, DDP Price, which is the best?

EXW Price

EXW stands for “Ex Works”. It’s the original manufacturing price of the products without any service or domestic shipping cost. You’ll need to find your own freight forwarder to pickup the products at the supplier’s warehouse in China.

So, if you want to know the original product price, you should ask your suppliers to quote you the EXW price. Other trade terms are not helpful for your product research.

CIF Price

CIF price is also a very commonly used trade term. It’s short for “Cost, Insurance, and Freight”. If you don’t have a freight forwarder to get the products shipped from the supplier’s place in China to your country, or you don’t want to bother to do this, then it’s better to ask the supplier for CIF price.

They will ship the products to the appointed seaport or airport in your country. You need to go through the customs check and clearance, and arrange the shipping from the port to your warehouse. You’d better find a local customs broker and logistics company to help you deal with these things.

Here I need to tell you a fact: The freight cost included in the CIF price is just a very small part of the total shipping cost from the supplier’s warehouse in China all the way to your warehouse in your country.

The biggest part of the whole shipping fee includes the costs in the import process, and the shipping fee from your domestic port to your address.

DDP/DDU Price

DDP is short for “Delivered Duty Paid”. It means the price supplier quotes you includes all the costs for sending products from the Chinese supplier all the way to the destination in your country. The supplier will also pay all the costs for the import & export processes and the customs duties.

It is very suitable for those importers who don’t have any shipping company resources or who don’t want to bother with the shipping and import & export issues.

So, if you were doing the product research and want to know how much it will cost to import the products from China, just let the suppliers quote you the DDP prices.

The DDP price includes import duty paid, but some suppliers still prefer the buyer to pay the customs duty before the product is delivered. In this situation, it’s called DDU price, which is short for “Delivered Duty Unpaid”.

3. Get Quotations Based on Quantity

If you are quite flexible about the purchase quantity, but you’d like to know the price offered by the supplier first. Then I strongly recommend you to ask the supplier to give you a price list for quantity breakdowns.

Most Chinese manufacturers or trading companies have MOQs starting from $1,000. And usually, when you can order over $5,000 or $10,000, there will be some related discounts. Ask the supplier about their discount details.

What is the best discount then, if you increase the quantity? It really depends, roughly around 5% or 10% for most cases. Because manufacturing is a low-profit industry, the price would tend to remain stable no matter if you order 10k or 100k units, as it has reached the lowest point.

4. Check Packaging & Private Label Costs

When you’re getting quotes from suppliers, double-check this: Does the price include packaging costs? And what kind of packaging is that?

Sometimes you want to make your own private label, by printing a logo on the products, or designed graphics on the packaging boxes.

If the suppliers told you they can help you with this, often times you wouldn’t ask about the cost. And you thought they were doing this for free. After placing the order, sending them a deposit, they start to charge you for customizations, which is not what you expected.

So, don’t count on the suppliers to tell you the detailed costs for specific packaging or customizations. Confirm again before placing an order.

5. Confirm the Price is for Inventory or New Production

When you are buying products in quantities, manufacturers usually start production after you place orders.

Sometimes when suppliers have inventories, they would clean them out at a very low price. Yet the price will recover to 20%-30% higher or even further next time to start a new production.

So, when comparing among suppliers, if one of them offers a super-low price, check if he is selling inventory items. Overstock products left in their warehouse for a long time are more likely to have dust, rust, or other defects.

Don’t always expect the supplier to tell you whether the price is for inventories or new production. You’ll have to check first.

To Wrap Up

I hope you have a clearer understanding of trade terms now, and get more aware of things you need to pay attention to when requesting quotes from suppliers. If you have any questions, please submit your inquiry.

We, a leading sourcing company in China, help our clients find the best manufacturers, ensure the quality of products and arrange the shipment to their doorsteps, making the whole sourcing process a lot easier and safer. If you’d like to source products from China, feel free to CONTACT US.

< All Steps

< Step6 Step8 >

Import from China Guide

For beginners who don’t know what to buy & sell, have 0 experience about importing from China, you can get all questions answered in this tutorial. (10 video courses included)

Start learning

Step 7. Get product quotes based on trade terms (FOB, CIF, DDP, etc.)

Home > How to import from China > Step 7

When you negotiate with suppliers, you will encounter the phrase, Incoterms.

There are many different trade terms, which will influence the quotation accordingly. I’ll list the 5 most commonly used in real business.

EXW Quote

Under this term, suppliers quote you the original product price. They aren’t responsible for any shipping costs. That is the buyer arranges to pick up goods from the supplier’s warehouse. Hence, it is not advisable if you don’t have your own forwarder or you are a newbie.

FOB Quote

Aside from product price, FOB also includes the shipping costs for delivering the goods to the vessel in your appointed seaport or airport. After that, the supplier is free of all risks of the goods, that is.

FOB quote=original product cost + shipping cost from supplier’s warehouse to agreed port in China + exporting process fee.

CIF Quote

The supplier is responsible for delivering goods to the port in your country, then you need arrange to ship your goods from the port to your address.

As for the insurance, it doesn’t help if your products got damaged during shipping. It only helps when the whole shipment gets lost. That is,

CIF quote = original product cost + shipping cost from supplier’s warehouse to the port in your country + insurance + exporting process fee.

< All Steps

< Step6 Step8 >