Incoterms decide two things: who pays for which leg of the journey, and at what exact point the goods become your problem. Pick the wrong one and you either overpay for freight marked up by the seller, or take on logistics in a country where you have no contacts. In practice, three terms cover almost every China purchase.
EXW — Ex Works
The seller makes the goods available at their factory gate. Everything else — export clearance, trucking, freight, insurance — is yours. On paper it looks cheapest; in reality, a foreign buyer arranging export paperwork from a Chinese factory is slow and expensive unless you have someone on the ground. Use EXW only if you have your own agent or forwarder in China.
FOB — Free On Board
The seller delivers the goods onto the ship at a named Chinese port (for example FOB Qingdao) and handles export clearance. You pay the ocean freight and everything after. FOB is the default choice for most small and mid-size buyers: the seller does what they are locally good at, and you keep control of the expensive international leg, where your own forwarder can often beat the seller's quoted freight.
CIF — Cost, Insurance & Freight
The seller pays freight and insurance to your named destination port. Convenient for first orders — but the freight is marked up, the insurance covers the seller's minimum, and once the container lands, the costs and risks snap back to you anyway. CIF rarely survives a side-by-side price comparison with your own FOB + forwarder arrangement.
The practical answer
- Small trial orders: courier or air freight via your agent — the Incoterm barely matters
- Regular orders: FOB from a major port like Qingdao, with a forwarder you chose
- Consolidating several suppliers: have your agent collect goods and export as one FOB shipment
One more thing: whatever the term, the export documents (commercial invoice, packing list, bill of lading) decide whether your goods clear customs at home. Make sure whoever books the freight sends the document set early and consistent.