Sourcing and import glossary
The terms you meet in every quote from China, explained in plain language.
- MOQ (minimum order quantity)MOQ, or minimum order quantity, is the smallest number of units a supplier will accept for one order of a product.
- Lead timeLead time is the time from confirming an order and paying the deposit until the goods are finished and ready to ship. It does not include shipping.
- IncotermsIncoterms are standard international trade terms, published by the International Chamber of Commerce, that define where the seller's responsibility for cost and risk ends and the buyer's begins.
- EXW (Ex Works)EXW, or Ex Works, means the seller makes the goods available at their own premises and the buyer arranges and pays for everything from there: pickup, export clearance, freight, insurance and import.
- FOB (Free On Board)FOB, or Free On Board, means the seller delivers the goods on board the ship at the named Chinese port and handles export clearance. The buyer pays for ocean freight, insurance and everything after.
- CIF (Cost, Insurance and Freight)CIF means the seller pays the ocean freight and minimum insurance to bring the goods to the buyer's named destination port. The buyer handles import clearance, duties and delivery from the port.
- DAP (Delivered At Place)DAP means the seller delivers the goods to a named place in the buyer's country, ready for unloading. The buyer handles import clearance and pays duties and taxes.
- DDP (Delivered Duty Paid)DDP means the seller delivers the goods to the buyer's address with all transport, import clearance, duties and taxes already paid. The buyer only receives the goods.
- OEM (original equipment manufacturer)In sourcing, OEM means a factory makes a product to the buyer's own design or specification and puts the buyer's brand on it.
- ODM (original design manufacturer)ODM means a factory sells a product it has already designed, and the buyer rebrands it, often with small changes such as color, logo or packaging. It is also called private label or white label.
- Sourcing agentA sourcing agent is a person or company that finds suppliers, negotiates prices, checks quality and arranges shipping on behalf of a buyer, usually in the country where the goods are made.
- Pre-shipment inspectionA pre-shipment inspection is a quality check of finished goods at the factory before they are shipped, usually when production is complete and most of the order is packed.
- Sample orderA sample order is a small paid order of one or a few units, made so the buyer can check quality, size and finish before placing a full production order.
- Bill of lading (B/L)A bill of lading is the document issued by the ocean carrier that acts as a receipt for the cargo, the contract of carriage, and the document of title needed to collect the goods at destination.
- HS codeAn HS code is the Harmonized System number that classifies a product for customs. The first six digits are international; countries add more digits for their own tariff lines.
- FCL and LCLFCL (full container load) means your goods fill and travel in their own container. LCL (less than container load) means your goods share a container with other shippers' cargo and you pay for the space you use.