Sourcing glossary

Short, precise definitions of the terms used in China sourcing, trade and logistics.

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1688(1688.com, Alibaba 1688, 阿里巴巴1688): Alibaba Group's domestic Chinese wholesale marketplace, where factories and wholesalers sell to Chinese businesses in RMB, mostly with delivery inside mainland China.

A

Air waybill(AWB, Air consignment note, MAWB, HAWB): The transport document for air cargo, issued by the airline or its agent, that serves as a receipt for the goods and evidence of the contract of carriage but, unlike an original bill of lading, is not a document of title.
AQL(Acceptance Quality Limit, Acceptable Quality Level): The worst average defect rate a buyer will accept, used with ISO 2859-1 sampling tables to set inspection sample sizes and accept/reject limits.

B

Bill of lading(B/L, BOL, Ocean bill of lading): A document issued by an ocean carrier or its agent that acts as a receipt for the goods, evidence of the contract of carriage and, in its original negotiable form, a document of title needed to collect the cargo.
Binding tariff ruling(binding ruling, advance ruling, BTI, CBP ruling, 품목분류 사전심사): A written decision from a customs authority, issued before import on request, that fixes how a described product will be classified or treated, and binds customs for that transaction.

C

Canton Fair(China Import and Export Fair, 广交会): China's largest general trade fair, held every spring and autumn at the Canton Fair Complex in Guangzhou, where overseas buyers meet Chinese exporters across three product-based phases.
CBM(Cubic meter, m³, Cubic metre): Cubic meter, the unit of volume used to measure and price freight, calculated as length × width × height of each carton in meters, multiplied by the number of cartons.
CE marking(CE mark, Conformité Européenne): A mark the manufacturer places on products covered by specific EU legislation, such as toys, electronics, machinery and PPE, to declare that the product meets all applicable EU requirements.
Certificate of origin(CO, C/O, Form of origin): A document certifying the country in which goods were produced, used by customs to apply the correct duty rate, trade measures and, for preferential certificates, reduced rates under a free trade agreement.
CFR(Cost and Freight, C&F, CNF): An Incoterm for sea and inland waterway shipments under which the seller pays freight to the named destination port, while risk passes to the buyer once the goods are on board at the port of shipment.
Chargeable weight(Billable weight, Volumetric weight, Dimensional weight, DIM weight): The weight a carrier bills you for: the greater of the shipment's actual gross weight and its volumetric weight, which is calculated from its dimensions.
Children's Product Certificate (CPC)(CPC, Children's Product Certificate, 어린이제품인증서): A written certificate that US importers or domestic manufacturers of products for children 12 and under must issue, based on tests by a CPSC-accepted third-party laboratory, to certify compliance with applicable safety rules.
CIF(Cost, Insurance and Freight): An Incoterm for sea shipments under which the seller pays freight and minimum insurance to the named destination port, while risk passes to the buyer once the goods are on board in the origin port.
CIP(Carriage and Insurance Paid To): An Incoterm for any mode of transport under which the seller pays carriage and cargo insurance to a named destination, while risk passes to the buyer when the goods are handed to the first carrier.
Commercial invoice(CI, Customs invoice): The seller's final invoice for a shipment, stating the parties, goods description, quantity, unit price, total value, currency and Incoterm, which customs uses to assess duty on import.
Consolidation(Cargo consolidation, Consolidated shipping): Combining goods from several suppliers into one shipment, usually by collecting them at a single warehouse before loading one container or LCL consignment.
Container freight station(CFS, CFS warehouse, Consolidation warehouse): A warehouse near a port where LCL cargo from different shippers is received, consolidated and loaded into shared containers for export, or unloaded and sorted for release on import.
Container loading check(Container loading supervision, CLC, Loading inspection, 监装, 컨테이너 적입 검사): An inspection at the factory or warehouse in which an inspector checks the empty container, verifies carton counts and goods, supervises loading and records the container seal number.
Country of origin marking(COO marking, Made in China marking, origin marking, 원산지 표시): The legal requirement to mark imported goods or their containers with the English name of the country where they were made, such as "Made in China", so the final buyer can see it.
CPSIA(Consumer Product Safety Improvement Act, Consumer Product Safety Improvement Act of 2008, 미국 소비자제품안전개선법): The US Consumer Product Safety Improvement Act of 2008, which sets lead and phthalate limits for children's products and requires third-party testing, certificates and tracking labels.
CPT(Carriage Paid To): An Incoterm for any mode of transport under which the seller pays carriage to a named destination, while risk passes to the buyer when the goods are handed to the first carrier.
Customs bond(Import bond, CBP bond, Continuous bond, Single entry bond): A surety bond required by US Customs and Border Protection for most commercial imports, guaranteeing that the importer will pay duties, taxes and fees and comply with customs rules.
Customs broker(Customs agent, Licensed customs broker, Customs clearance agent): A licensed professional or firm that prepares and files import declarations with customs on the importer's behalf, including classification, valuation and payment of duties and taxes.
Customs valuation(customs value, transaction value, WTO Valuation Agreement, 관세평가): The method customs uses to set the taxable value of imported goods, based under the WTO Valuation Agreement on the transaction value: the price actually paid or payable, plus certain adjustments.

D

Dangerous goods (DG)(DG, hazmat, hazardous materials, DG cargo, 위험물): Goods that can endanger health, safety or property in transport, classified into nine UN hazard classes and shipped under special packing, labeling and documentation rules.
DAP(Delivered at Place): An Incoterm for any mode of transport under which the seller bears the cost and risk of delivering the goods to a named destination, ready for unloading, while the buyer handles import clearance and duties.
DDP(Delivered Duty Paid): An Incoterm under which the seller delivers goods to the buyer's named address, cleared for import with duties and taxes paid; the seller carries all costs and risk until delivery.
De minimis(de minimis threshold, Section 321, duty-free threshold, 소액면세): A value threshold below which a country lets imported shipments enter free of duty, and sometimes of tax, usually with simplified customs clearance.
Defect classification(Critical, major and minor defects, Defect categories, 缺陷分类, 결함 분류): The grading of inspection findings as critical (unsafe or non-compliant), major (likely to cause failure or a return) or minor (a small flaw unlikely to affect use), each with its own AQL limit.
Demurrage and detention(D&D, Demurrage, Detention, Container per diem): Daily charges from a shipping line or terminal when a container stays too long: demurrage while it sits full in the terminal beyond free time, detention while it is kept outside the terminal beyond free time.
Deposit and balance(30/70 payment, Down payment and balance, 定金和尾款, 선금·잔금): The common China payment structure in which the buyer pays a deposit (often 30%) to start production and the balance (often 70%) before shipment or against shipping documents.
Documents against payment(D/P, Cash against documents, CAD, 付款交单, 지급인도조건): A documentary collection under the ICC Uniform Rules for Collections (URC 522) in which the buyer's bank releases the shipping documents, including the bill of lading, only when the buyer pays.
Dropshipping(Drop shipping, Dropship): A retail model where the seller doesn't hold stock: when a customer orders, a supplier or fulfillment agent ships the product directly to the customer.
During production inspection(DPI, DUPRO, In-line inspection, 中期验货, 생산 중 검사): A quality check carried out while mass production is under way, usually once part of the order is finished, to catch defects early enough to correct the rest of the run.
Duty drawback(drawback, customs drawback, 관세환급): A refund of import duties, taxes or fees paid on imported goods when those goods, or goods made from them, are later exported or destroyed.

E

EORI number(EORI, Economic Operators Registration and Identification number, EORI 번호): The Economic Operators Registration and Identification number that businesses need to import into or export from the EU or the UK, used to identify them on customs declarations.
ETD / ETA(Estimated Time of Departure, Estimated Time of Arrival, ETD, ETA): ETD is the estimated time a vessel, flight or train departs from the origin, and ETA the estimated time it arrives at the destination; both are schedule estimates that carriers update as the shipment moves.
EXW(Ex Works): An Incoterm under which the seller only makes goods available at its own premises; the buyer handles loading, export clearance, freight and all later costs and risks.

F

Factory audit(Supplier audit, Manufacturing audit, 验厂, 공장 심사, 공장 실사): An on-site assessment of a supplier's legal status, facilities, production capacity, quality system and sometimes social compliance, done before placing orders or periodically.
FBA (Fulfillment by Amazon)(FBA, Fulfillment by Amazon, 아마존 FBA): Amazon's service in which sellers send inventory to Amazon fulfillment centers, and Amazon stores, picks, packs, ships and handles customer service and returns for those orders.
FCA(Free Carrier): An Incoterm for any mode of transport under which the seller clears goods for export and hands them to the carrier nominated by the buyer at a named place, where risk passes to the buyer.
FCC ID(FCC identifier, FCC certification, FCC 인증번호): A unique code, made of a grantee code plus a product code, that the US FCC links to a radio-frequency device authorized under its certification procedure.
FCL(Full Container Load): A sea freight service in which you book an entire container for your cargo alone and pay a flat rate per container, whether or not you fill it.
FNSKU(Fulfillment Network Stock Keeping Unit, Amazon barcode, X-code): Amazon's Fulfillment Network Stock Keeping Unit, a seller-specific barcode that identifies one seller's units of a product inside Amazon's fulfillment network.
FOB(Free On Board): An Incoterm under which the seller clears goods for export and loads them on board the vessel at a named port; risk and main freight cost pass to the buyer once the goods are on board.
Freight forwarder(Forwarder, Forwarding agent): A company that organizes the transport of your goods on your behalf, booking space with shipping lines, airlines or rail operators and arranging paperwork, customs clearance and delivery.

G

Golden sample(Approved sample, Reference sample, Sealed sample): The final approved sample, signed and sealed by buyer and supplier, that serves as the reference standard for mass production and inspection.
GS1 barcode(GTIN, UPC, EAN, GS1 Company Prefix, GS1 바코드): A retail barcode that encodes a Global Trade Item Number (GTIN) built from a GS1 Company Prefix licensed to the brand owner, such as a 12-digit UPC or 13-digit EAN.

H

HS code(Harmonized System code, HTS code, commodity code, tariff code): A product classification number from the World Customs Organization's Harmonized System; the first six digits are shared internationally and countries add their own digits to set duty rates.

I

Importer of record(IOR, Importer): The party named on the customs entry who is legally responsible for the import, including paying duties and taxes and using reasonable care to declare the goods' classification, value and origin correctly.
Incoterms(International Commercial Terms): A set of eleven standard trade terms published by the International Chamber of Commerce that define which party pays for each part of a shipment and where risk transfers.
Industrial cluster(Manufacturing cluster, Specialised town, 产业集群, 산업 클러스터, 산업 집적지): A city or town in China where many factories, component makers and suppliers of the same product category are concentrated, such as Shenzhen for electronics or Foshan for furniture.
ISF filing(Importer Security Filing, 10+2, ISF 10+2): A US Customs and Border Protection requirement that the importer electronically submit ten data elements about ocean cargo no later than 24 hours before it is loaded on a US-bound vessel.

K

KC certification(KC mark, Korea Certification, KC 인증): South Korea's mandatory product-safety conformity system, shown by the KC mark, under which manufacturers or importers must certify covered electrical, household and children's products before shipment or customs clearance.

L

Landed cost(Total landed cost, Landed cost per unit): The total cost of getting imported goods to your warehouse, including product price, freight, insurance, duty, fees, brokerage and delivery, usually expressed per sellable unit.
LCL(Less than Container Load, Groupage): A sea freight service in which your cargo shares a container with other shippers' goods and you pay for the space you use, per cubic meter or per 1,000 kg, whichever is greater.
Lead time(Production lead time, Delivery time, 交货期, 交期, 리드타임, 납기): The time from order confirmation (usually deposit receipt) until goods are ready to ship, which in China sourcing normally excludes transit time to the destination.
Letter of Credit(L/C, LC, documentary credit): A bank's written commitment to pay a seller once they present shipping and other documents that comply exactly with the terms of the credit, usually issued subject to the ICC's UCP 600 rules.

M

Market procurement trade(1039 export, Customs code 1039, 市场采购贸易, 시장구매무역): A Chinese export customs regime (supervision code 1039) for goods bought in approved wholesale market clusters such as Yiwu, with simplified declaration and a cap of USD 150,000 per declaration.
MOQ(Minimum Order Quantity): The smallest quantity a supplier will accept for one order, often set per item, per colour or per design, and usually negotiable.

N

NNN agreement(Non-disclosure, non-use, non-circumvention agreement, NNN, China NNN, NNN 계약): A contract with a Chinese manufacturer that bars it from disclosing your product information, using your design for itself, or going around you to sell to your customers.

O

ODM(Original Design Manufacturing, Original Design Manufacturer): A manufacturing model in which the factory supplies its own existing product design, which the buyer customises and sells under its own brand.
OEM(Original Equipment Manufacturing, Original Equipment Manufacturer): A manufacturing model in which the factory produces a product to the buyer's own design and specifications, usually sold under the buyer's brand.

P

Packing list(PL, Packing slip, Shipping list): A shipping document listing how the goods are packed, carton by carton, with quantities, carton numbers, net and gross weights and dimensions, used by forwarders, customs and warehouses to identify and check the cargo.
Pre-production sample(PP sample, PPS, 产前样, 생산 전 샘플, 양산 전 샘플): A sample made with the actual materials, processes and packaging intended for mass production, which the buyer approves before the factory starts the bulk run.
Pre-Shipment Inspection(PSI, Final Random Inspection, FRI): A quality check carried out when production is at least 80% complete and packed, in which an inspector samples finished goods before the buyer pays the balance and the goods ship.
Prep center(FBA prep center, FBA prep service, 프렙 센터): A third-party warehouse that receives goods and prepares them for Amazon FBA, including inspection, FNSKU labeling, bagging, bundling and carton labeling, before sending them to Amazon.
Private label(Own brand, Private labelling, 贴牌, 자체 브랜드, PB): Products made by a manufacturer but sold under the retailer's or seller's own brand, usually with some customisation of the product, packaging or specification for that seller.
Proforma invoice(PI, Pro forma invoice, 形式发票, 견적송장): A preliminary invoice the supplier issues before production or shipment, setting out goods, prices, payment terms and bank details, used to confirm the order and pay the deposit.
Purchase order(PO, 采购订单, 발주서): The buyer's formal written order to a supplier stating products, specifications, quantities, prices, Incoterm, payment terms and delivery date, which becomes binding once the supplier accepts it.

R

REACH(REACH Regulation, Regulation (EC) No 1907/2006, EU 화학물질 규정): The EU regulation (EC) No 1907/2006 on the registration, evaluation, authorisation and restriction of chemicals, which also limits hazardous substances in consumer products sold in the EU.
RFQ(Request for Quotation, Request for Quote, 견적 요청서): A written request that asks several suppliers to quote price, MOQ, lead time and terms against the same product specification, so their offers can be compared like for like.
RoHS(RoHS Directive, Directive 2011/65/EU, Restriction of Hazardous Substances, 유해물질 사용제한 지침): The EU directive 2011/65/EU that restricts ten hazardous substances, including lead, mercury, cadmium and certain phthalates, in electrical and electronic equipment.

S

Safety Data Sheet (SDS)(SDS, MSDS, Material Safety Data Sheet, 물질안전보건자료): A standardized 16-section document, aligned with the UN GHS, that describes a chemical product's hazards, safe handling, storage, emergency measures and transport information.
Sourcing agent(Buying agent, Purchasing agent, 采购代理, 소싱 에이전트): A person or company in China paid by the buyer to find suppliers, negotiate, place and follow up orders, check quality and arrange shipping on the buyer's behalf.

T

T/T (Telegraphic Transfer)(TT, Telegraphic Transfer, wire transfer, bank transfer): An international bank wire, usually sent over SWIFT, and the most common way importers pay Chinese suppliers for production orders.
Terminal handling charge(THC, OTHC, DTHC, Terminal handling fee): A fee for handling containers at a port terminal, such as lifting them on or off the vessel and moving them within the yard, charged separately at the origin port (OTHC) and the destination port (DTHC).
TEU(Twenty-foot Equivalent Unit, FEU, Forty-foot Equivalent Unit): Twenty-foot Equivalent Unit, the standard measure of container capacity: one 20ft container is 1 TEU and one 40ft container is 2 TEU, also called 1 FEU.
Third-party inspection(Independent inspection, QC inspection service, 第三方验货, 제3자 검사): A quality inspection performed by an independent company hired by the buyer, rather than by the supplier's own QC team, to report objectively on goods before payment or shipment.
Third-party logistics (3PL)(3PL, fulfillment center, fulfillment warehouse, 3PL 물류): An outside company that handles logistics for a seller, typically warehousing, order picking and packing, shipping and returns, and sometimes freight and customs coordination.
Tooling(Moulds, Molds, Tooling cost, 模具, 금형): The custom moulds, dies, jigs and fixtures a factory makes to produce a specific design, usually charged to the buyer as a one-off cost before mass production.
Trade Assurance(Alibaba Trade Assurance, TA order): Alibaba.com's free buyer-protection program that supports refunds when an order paid through Alibaba.com is not shipped, goes missing, or arrives defective or different from the agreed terms.
Trading company(Trader, Sourcing company, 贸易公司): A company that buys products from factories and resells them to buyers, adding a margin and usually handling communication and export paperwork, without making the goods itself.
Transshipment(Transhipment, T/S, Hub port transfer): Transferring cargo from one vessel or other means of transport to another at an intermediate port or hub on the way to its final destination.

U

UKCA marking(UKCA, UK Conformity Assessed, UKCA 마킹): The UK Conformity Assessed mark a manufacturer uses to declare that a product placed on the Great Britain market meets the applicable GB product-safety regulations.
UN38.3(UN 38.3, UN38.3 test, lithium battery transport test, UN38.3 시험): Section 38.3 of the UN Manual of Tests and Criteria: a series of eight tests a lithium cell or battery design must pass before it can be transported as dangerous goods.
Unified social credit code(USCC, 统一社会信用代码, Business licence number, 통일사회신용코드): The 18-character national ID assigned to every Chinese company and organisation under standard GB 32100-2015, printed on its business licence and searchable in official registries.

V

Verified Supplier(Alibaba Verified Supplier, Verified badge, 认证供应商, 인증 공급업체): A paid Alibaba.com membership tier whose holders have had their company, production capability and processes assessed by third-party inspection firms such as SGS or TÜV Rheinland.

W

White label(White labelling, Generic product, 화이트 라벨): A standard, unchanged product that a manufacturer sells to many resellers, each of whom puts its own brand on it, with no exclusivity or product customisation.

Y

Yiwu International Trade City(Yiwu Futian Market, China Commodity City, 义乌国际商贸城, 이우 국제상무성): The main wholesale market complex in Yiwu, Zhejiang, where tens of thousands of booths sell small commodities such as toys, jewellery, stationery, hardware and household goods.