Plain-English import basics
Incoterms explained for small importers: what EXW, FOB and CIF really mean
Incoterms are three-letter codes that decide who pays for what, and where the risk passes from the supplier to you. For most small importers buying from China, only three matter at the start: EXW, FOB and CIF. This page explains each one in plain English and gives you the exact questions to ask your supplier before you agree.
By Renata · October 26, 2026 · 6 min
What an Incoterm actually decides
An Incoterm is a short code in your quotation that answers two questions: who arranges and pays for each step of the journey, and at which point the goods are your problem if something goes wrong. It is not a price and it is not a shipping method. It is a division of tasks and risk between you and the supplier.
The three codes below are the ones you will see most often in a first quotation from a Chinese supplier. They are not the only Incoterms that exist, but they are the ones worth understanding before you reply to a message.
- The code tells you where the supplier's responsibility stops.
- The code tells you which costs are already inside the quoted price.
- The code does not tell you whether the price is good, only what it includes.
EXW: ex works, the supplier's door
EXW means ex works. The supplier makes the goods available at their own premises and that is where their job ends. You, the buyer, arrange and pay for everything after that: loading, inland transport in China, export paperwork, the main freight and import clearance.
For a small importer, EXW often looks cheaper on the quotation because almost nothing is included. In practice it is the code that asks the most of you. If you do not already have a forwarder who can collect from a Chinese address and handle export documents, EXW can leave you with goods you cannot easily move.
- Ask: can you load the goods onto a truck at your factory, and is there a loading cost?
- Ask: who prepares the export declaration, and is that cost included?
- Ask: what is the exact address and the pickup hours?
FOB: free on board, the port in China
FOB means free on board. The supplier delivers the goods onto the vessel at the named Chinese port, and the cost of getting them there and clearing them for export is normally inside the quoted price. From the moment the goods are on board, the main freight and everything after it is yours.
This is the code most small importers end up using, because it puts the Chinese side of the journey in the hands of the party who knows it, and leaves you to book the international leg with your own forwarder. The port name matters: FOB Shenzhen and FOB Ningbo are different quotes.
| Code | Supplier handles | You handle |
|---|---|---|
| EXW | Making the goods available at their premises | Loading, inland transport, export papers, freight, import |
| FOB | Inland transport to the Chinese port and export clearance | Main freight, insurance if you want it, import clearance |
| CIF | Inland transport, export clearance, main freight and minimum insurance | Import clearance, inland delivery in your country, any extra insurance |
CIF: cost, insurance and freight, the port in your country
CIF means cost, insurance and freight. The supplier pays to move the goods to a named port in your country and includes a minimum level of marine insurance. It sounds like the easiest option, and for a first small order it can be, because one price covers most of the journey.
Two things are easy to miss. The insurance included under CIF is a minimum cover, not a full replacement guarantee, and the risk still passes to you once the goods are on board in China, even though the supplier paid the freight. Also, CIF usually stops at your port, not at your door, so import clearance and delivery to your address are still yours.
- Ask: which port in my country is this CIF price quoted to?
- Ask: what level of insurance is included, and can I see the certificate?
- Ask: is unloading at destination included or charged separately?
How this plays out in the conversation with the supplier
In a WeChat or email exchange, the Incoterm is usually one short line in a quotation, often written in capitals next to a port name. If you are not sure what is included, the honest move is to ask directly rather than assume. A useful phrase is 这个价格包含什么 (zhège jiàgé bāohán shénme), which means what does this price include.
Suppliers are used to this question and it is not rude. If the answer comes back in fast Chinese with several cost lines, that is exactly the kind of message where a live call helps. Renata sits in on supplier calls and reads and writes supplier messages in Chinese; her Chinese is HSK 4, which is solid everyday and operational business Chinese, not legal or technical level, and she does not act as a sourcing agent, inspect factories, arrange freight or clear customs.
| Chinese | Pinyin | Meaning |
|---|---|---|
| 出厂价 | chūchǎng jià | ex-works price |
| 离岸价 | lí'àn jià | FOB price |
| 到岸价 | dào'àn jià | CIF price |
| 这个价格包含什么 | zhège jiàgé bāohán shénme | what does this price include |
| 运费 | yùnfèi | freight cost |
| 保险 | bǎoxiǎn | insurance |
A simple way to choose for a first order
If you already have a forwarder you trust, FOB is usually the clearest starting point, because you keep control of the international leg and you can compare freight quotes yourself. If you have no forwarder and the order is small, CIF to a port near you can be simpler, as long as you remember the insurance is minimal and the goods still need clearing and delivery.
EXW is best treated as a price reference rather than a shipping plan. It tells you what the goods cost at the factory gate, which is useful when you are comparing suppliers, but it leaves the whole export side to you. Whichever code you agree, write it in the order confirmation with the port name, so there is no argument later.
Common questions
What does EXW mean in a supplier quotation?
EXW means ex works: the supplier makes the goods available at their own premises and their responsibility ends there. Loading, inland transport, export paperwork, freight and import clearance are all yours. It often looks cheap because very little is included.
Is FOB or CIF better for a small importer?
FOB is usually clearer if you already have a forwarder, because you control the international freight and can compare quotes. CIF is simpler for a first small order because one price covers most of the journey, but the insurance is minimal and you still handle import clearance and delivery.
Does CIF include delivery to my address?
Usually not. CIF normally stops at a named port in your country. Import clearance, duties and inland delivery to your door are still your responsibility unless you agree something else in writing.
Who is responsible if the goods are damaged in transit?
Under FOB and CIF, risk passes to you once the goods are on board in China, even though under CIF the supplier paid the freight. That is why the level of insurance matters. Under CIF the included cover is a minimum, so check what it actually covers before you rely on it.
Can Renata explain what my Chinese supplier means about Incoterms?
Yes. She provides live interpreting and message support between a Portuguese- or English-speaking buyer and a Chinese supplier, by video or WeChat call, and she reads and writes supplier messages. Her Chinese is HSK 4, solid everyday and operational business Chinese, not legal or technical level. She is not a sourcing agent and does not arrange freight or clear customs.
How do I ask my supplier what the price includes?
A simple phrase is 这个价格包含什么 (zhège jiàgé bāohán shénme), meaning what does this price include. You can also ask for the port name and whether insurance and unloading are included. If the reply is long and detailed, a short call is often faster than several messages.
Want someone on the call?
Renata joins the call with you and your supplier, reads and writes the Chinese messages, and tells you what the answer really meant. Remote it is 25 EUR per half hour. She is not a sourcing agent and does not do sworn translation.
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