Created in 1936 by the International Chamber of Commerce (ICC), incoterms (International Commercial Terms) are rules that regulate international trade whose main objective is to guarantee good commercial practices between different countries. Today there are 11 incoterms in force to import from China. Three of them: FOB, CIF and EXW are the most recommended to do business with the Asian giant.
The 3 Incoterms you should know to import from China
The rules contained in the FOB, CIF and EXW incoterms (they are essential when importing from China) regulate that the processes of purchase and delivery of goods are carried out correctly. In addition, they establish both the obligations and the rights of importers and exporters to avoid possible conflicts. The three incoterms that we detail below are the most recommended since they allow the optimization of the logistics chain.
FOB incoterm
With this China Incoterm you can have greater control of import processes and price negotiation. It has a lower VAT tax burden and allows you to choose the route and transit times.
- The responsibilities of the buyer. He is in charge of the payment of duties and taxes, sea freight, arrival costs and customs from the port to the destination warehouse.
- The responsibilities of the seller. The seller must deliver the goods and the appropriate certificates. He also must take care of the port costs of departure, as well as the management of land transport and customs from China.
CIF incoterm
China’s CIF incoterm increases the supplier’s responsibilities but does not include liability for damage or loss of goods. They usually have a lower cost for the buyer, although sometimes it can be associated with expenses or arrival taxes.
- The responsibilities of the buyer. It deals with arrival costs, customs, payment of goods and transportation from the country of destination.
- The responsibilities of the seller. As for the seller, he must manage the delivery of the goods, the contracting of the sea freight. As well as the payment associated with the departure and insurance expenses.
EXW incoterm
The importer is responsible for transporting the goods to the place of destination. Since the control is carried out by the importer, it is advisable to have a contingency plan to deal with the unforeseen events that may arise.
- The responsibilities of the buyer. Their responsibility is the management of transport, the payment of goods, customs, arrival and departure expenses and tariffs. He also must take care of international freight.
- The responsibilities of the seller. In this China incoterm the seller only manages the delivery of goods as agreed and the documents corresponding to the shipment.
FOB, CIF or EXW. Which of the three incoterms to choose to import from China?
As you can see, every China incoterm is associated with responsibilities and rights. Both by the buyer and the seller. Therefore, when doing business, you not only have to know the supplier, but you also have to be aware of what the laws mark.
Choosing the most convenient incoterms will depend on how the imports, business objectives and logistics are. Without forgetting the delivery times and other details that cannot be left in the hands of chance.
It is not to have the best knowledge of logistics, but to know how to choose your right partner. At IBMH we will take care of the complete management of your imports of furniture and construction hardware from China. All the efforts and strategies that help grow your business, including quality control, will be our priority. Contact us today!
