Incoterms 2020 Explained for China Importers
Quick Definition: Incoterms (International Commercial Terms) are standardized trade terms published by the ICC that define who pays for what in international trade — covering transport, insurance, customs, and risk transfer between buyer and seller.
The 4 Most Common Incoterms in China Trade
| Term | Full Name | Best For |
|---|---|---|
| EXW | Ex Works | Experienced importers who want full control |
| FOB | Free on Board | Most China imports — good balance of control and simplicity |
| CIF | Cost, Insurance, Freight | First-time importers, small LCL shipments |
| DDP | Delivered Duty Paid | When you want the factory to handle everything |
All 11 Incoterms 2020
The 2020 revision includes 11 terms split into two groups:
Any Mode of Transport (7 terms)
- EXW — Ex Works: buyer bears all costs from factory gate
- FCA — Free Carrier: seller delivers to carrier at named place
- CPT — Carriage Paid To: seller pays freight to destination
- CIP — Carriage and Insurance Paid To: seller pays freight + insurance
- DAP — Delivered at Place: seller delivers to destination (before unloading)
- DPU — Delivered at Place Unloaded: seller delivers and unloads
- DDP — Delivered Duty Paid: seller covers everything including import duties
Sea/Inland Waterway Only (4 terms)
- FAS — Free Alongside Ship
- FOB — Free on Board
- CFR — Cost and Freight
- CIF — Cost, Insurance, and Freight
Which Incoterm Should You Use?
For most China sourcing projects, FOB is the recommended starting point. It gives you control over shipping while keeping the factory responsible for getting goods to the port. Use CIF for simplicity on small orders, and DDP only when you want a fully landed price with zero logistics management.
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