Risk
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EXW quotes that later add "export fees" or "document charges". Ask for FOB and compare landed cost instead.
EXW vs FOB vs DDP: Which Incoterm to Use When Buying from China
- Topic
- Incoterms & Payment
- Updated
- ⏱
- 3 min read
Quick answer
For most buyers importing from China, FOB is the best default: the supplier delivers the goods onto the vessel at a Chinese port and pays export clearance, and you control the main freight and insurance. EXW looks cheapest but pushes Chinese export formalities onto you. DDP is the simplest for beginners because the seller delivers duty-paid to your door, but the freight and duty margin is hidden in the price.
On this page
Incoterms are standard trade terms published by the International Chamber of Commerce (ICC). They define who pays for each leg of the journey and the exact point where risk passes from seller to buyer. They do not set the price or transfer ownership — that is what your purchase contract does.
Three terms cover the vast majority of China quotes: EXW, FOB and DDP.
Quick comparison#
| EXW (Ex Works) | FOB (Free On Board) | DDP (Delivered Duty Paid) | |
|---|---|---|---|
| Seller delivers at | Their factory or warehouse | On board the vessel, named Chinese port | Your named address |
| China export clearance | Buyer | Seller | Seller |
| Main sea/air freight | Buyer | Buyer | Seller |
| Import duties & taxes | Buyer | Buyer | Seller |
| Risk transfers | At the factory door | Once goods are on board | At your door |
| Best for | Buyers with their own China forwarder | Most importers | First-time or small buyers |
EXW: cheapest on paper, hardest in practice#
Under EXW the supplier only makes the goods available at their premises. Everything after that — loading the truck, inland transport, export customs declaration, port charges — is on you.
The catch in China is that export clearance normally has to be filed by a Chinese entity with export rights. Many small factories quote EXW because they cannot export themselves. Unless you have a forwarder in China who handles it, EXW creates more work and more surprises.
FOB: the practical default#
With FOB, the supplier delivers the goods to the named port (for example Ningbo, Shanghai or Shenzhen), clears export customs and loads them on board. From that moment the risk and freight cost are yours.
Why FOB works well for most buyers:
- You choose the forwarder, so you can compare freight rates and control transit time.
- Export paperwork stays with the supplier, who does it every day.
- Costs are transparent: product price and freight are separate lines.
FOB is intended for sea and inland waterway transport. For air freight or containers handed over at a terminal, FCA is the technically correct term, though many Chinese suppliers still write "FOB" on air quotes.
DDP: door-to-door, with hidden margins#
DDP means the seller handles everything, including import duties and delivery to your address. It is popular with Amazon FBA sellers and first-time importers because there is only one price to compare.
Things to check before accepting a DDP quote:
- Who is the importer of record? If a forwarder imports under their name, you may not own the customs history — and you may not be able to reclaim VAT/GST.
- Is the duty rate correct? A low DDP price can mean goods are under-declared, which puts your shipment at risk of seizure.
- What happens on delay or damage? Get the claims process in writing.
How to choose#
- First order, small volume: DDP, from a reputable forwarder, with the importer of record clarified.
- Regular orders, your own forwarder: FOB.
- You already have a consolidation warehouse in China: EXW or FCA to your warehouse can work.
Whatever you choose, write the term, the named place and the edition in your purchase order — for example FOB Ningbo Incoterms 2020.
Frequently asked questions
Is FOB or EXW cheaper when buying from China?
EXW quotes look lower, but you then pay for inland trucking, export customs and port handling in China yourself, usually at worse rates than the supplier gets. Compared on a landed-cost basis, FOB is often equal or cheaper.
Who pays import duty under DDP?
Under DDP the seller is responsible for paying import duties and taxes in the destination country. In practice many China DDP offers use a freight forwarder as importer of record, so confirm who is named on the customs entry.
Which Incoterms version should my contract use?
Write the version explicitly, for example 'FOB Ningbo Incoterms 2020'. Incoterms 2020 is the current edition published by the International Chamber of Commerce.
References
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Sourcing & logistics editors, Yiwu
Guides are researched and written by sourcing and logistics editors who work day to day with factories, QC inspectors and freight forwarders in Yiwu, Zhejiang. Every guide cites its sources and is reviewed when rules or prices change.
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